The real bailout cost? $7.4 trillion - Top Stocks Blog - MSN Money
 
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The real bailout cost? $7.4 trillion

Posted Nov 24 2008, 12:28 PM by Kim Peterson
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We were suckered into believing the bailout would only cost $700 billion. Turns out the government is set to lend at least $7.4 trillion to rescue the financial system, says Bloomberg. That's half the value of everything produced in the country last year.

How is this possible? In an impressive bit of investigative reporting, Bloomberg went out and collected data from the Fed, the Treasury and the FDIC to figure out the full extent of the government rescue effort. I suspect not even the government has done this kind of research on its spending programs.

How does the government blow through $7.4 trillion? Here are the ways:

$2.8 trilion -- Already been tapped by banks and other financial institutions

$2.4 trillion -- Set aside to buy short-term notes, or commercial paper, that companies use to pay bills

$1.4 trillion -- Used by the FDIC to guarantee loans banks make to each other

$29 billion -- To help with the Bear Stearns takeover

$123 billion -- Bailout for AIG 

$326 billion -- Bailout for Citigroup

$200 billion -- Promised to Fannie Mae and Freddie Mac

$139 billion -- Loan guarantees for General Electric's finance unit

To put this into perspective: That money is equal to spending $24,000 on every man, woman and child in the country, Bloomberg says. It would pay off more than half of the mortgages in the U.S.

Related reading:

Fed pledges top $7.4 trillion to ease frozen credit

Insurance companies angle for bailout

Treasury defends bailout bait-and-switch

$50 billion of bailout going to employee bonuses

Economists criticize bailout plans

Who isn't getting bailout money these days?

Comments

 

Oh on the other end of the issue Elkhart county highest unemployment in Indiana, I don't have a job we need money, Census bearu is highering I went to the test told the neighbor woman wel-fare mom spending your money hey the work might be temporairy but at least it's something. Her response I'm to good to go door to door and ask questions. She is just one out of how many millions of other welfare parents that think they are above certain kind of work. I got the call to today I go and take my training next week. I will now receive a goverment check again once in uniform and now as census taker at least I'm working for it..

I can understand the government failing at managing monies, they have mis approperiated funds for so long without accountability that they actually believe their own diluted arrogance.

Now they want to provide the same for their lobbist....share what little wealth is left, keep taxing the little people..... history has a way of rearing it's head.

Good luck big three..... take a long hard look at yourselves before you ask the people to help bail you out...... What have you done for us lately!!!!

Ok I'm confused fed pumps money into mis managed banks in hopes they will open up more credit to the consumer in which bankruptcy was up 40% last year and unemployment is rising how is this a good idea? Here you have no job no money and we just bailed out the guys that are idiot's that started the whole thing and we hope some how you the american public will max out your credit cards again buy houses they can't afford and maybe things will get better, and direct relief to the american household is a bad idea why? Foreclosures will still happen if you have no job no money you can't afford your payments. Why not give every home owner in america $100,000.00 to pay toward their own debt we can't be as a whole as stupid as that plan or why not start the organzation of "the average american mortgage holder association" apply for a 800,000 bail out and pay off our own debt to our own banks and buy a new car from the big three we could place our orders now for a hybrid that would be ready maybe in 2010. If there is anything left we divide it up and go shoping. Banks get their money big three gets their money and retail gets their money. Factories have build or make the product they get their money everybody wins and no one gets a 20million dollar pay check and the men and women who started the mess go to jail and loose all their assests and their kids will have to get a public education.

You may have noticed or maybe not that performance from our representatives and the CEO's is no longer tied to their paycheck and or employment. Pork barreling, golden parachutes have come to be expected once you achieve a certian level in government or business. The only way out and permenantly so is to stop paying these people and make them earn every dollar they get. Quit allowing them to set their own salaries. This can be done under the RICO act of organized crime and a good Attorney General could set a precedent by engaging and carrying through even if some most go to jail. And in order to do this the Attorney General would have to be elected along with President,et al. This will require a strong will by Americans, good luck

(mad as hell)  i total agree with you...... give everyone in my household 24k and i could pay off all my debt and have lots of money left over to purchase more items that would drive up the market.  no matter how much money you use to bailout companys the people have no money to spend.  and if the people have no money to spend how is that going to help anything.  give us the tax payers 24k and will spend which in return will create more jobs/ stop forclosures/ stop defalts on loan/ stop collections/ etc.

GIVING ALL TAX PAYER MONEY(24K EACH IF CORRECT) INSTEAD OF TO THE BIG COMPANIES SOUNDS GOOD FROM THE SURFACE.  THESE EXTRA MONEY WOULD HELP MANY WHO ARE IN DEBTS, HOWEVER, IF YOU THINK ABOUT IT, WHAT IF THESE MONEY GETS INTO THE HANDS OF THE" NOT SO IN DEBTS".  THESE MONEY COULD END UP IN OTHER COUNTRIES ONCE THESE "NOT SO IN DEBTS "INDIVIDULS SPENDS IT ELSE WHERE.  ALSO, IS THERE ANY GAURANTEE THAT ALL INDIVIDUALS WILL BUY AMERICIAN MADE PRODUCTS?  MONEY TO THE PEOPLE WILL NOT DO US ANY GOOD NOR SOLVE OUR PROBLEMS IN THE LONG FUTURE.

The heck with these american companies,we should give it all to these foreign countries,and call it bailout instead of aid. what a mess we are in.and no real answers.Hey George you have got a few days left,maybe you could help,being you have been asleep for the last eight years.

The true cost of the bailout is the total loss of the people's confidence in our elected politicians.  Robert Rubin made $115 million while working at Citibank after leaving the Clinton administration as Sec. of Treasury.  He claims that he could have made even more "working" for another bank.  His primary "work" apparently involved convincing influential members of Congress and the administration not to regulate large financial institutions in a way that would interfere with their investment in  and promotion of securitized subprime mortgages and other toxic assets.  His influence peddling was undoubtedly instrumental in insulating the rating agencies (S and P, Moodys and Fitch) from regulatory scrutiny as they, like Rubin, were paid by the issuers of those toxic assets.  One could easily surmise that other administration officials also received large financial rewards for their  complicity.  The pungent odor of corruption will not easily be eradicated  from the halls of Congress.  Its cost to the people will far exceed the $7 trillion burden now imposed on the taxpayer by these same politicians.

I agree with some of these posts, but, the ones that either blame it on a Democrat or a Republican is wrong. When does the American people have a voice, whether you are a Dem. or Rep.? NEVER. Once a politician is elected, they never ask the people they represent whether they want to bail out corporate america or what they want as a welfare reform or defense budgets or anything else that our money is spent on. The US Government is unconstitutional and America needs to change. We need America to be ran as the Constitution meant it to be. The voice of the people need to be how America is ran. Our government is not operated as a democratic government as intended. It borders on Socialist or Communist. Alot of the people reading my post will think that I am a fanatic, however before you think that, look up the definitions of communism and socialism and then tell me I am wrong.

I say let these companies fail! It will hurt at first, but new companies will rise from the ashes.

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