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Bailout Commitments Approaching $24 Trillion
The government's maximum exposure to financial institutions since 2007 could total nearly $24 trillion, or about $80,000 for every American, the watchdog overseeing the federal government financial bailout said Monday.The watchdog also said the Treasury Department has repeatedly failed to adopt recommendations aimed at making the TARP program more accountable and transparent.
$80,000 apiece for every man, woman, and child in the United States!
Who knew?
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Thanks. I was waiting for a tally like this. But you forgot this crucial detail
"No one has suggested that the full amount, in fact, will be used."
- I mean, c'mon, maybe it'll only be 70'000 per head! And there's the radical reform package we're getting in return. Almost seems good value for our money...
July 20, 2009 3:45 PM | Reply | Permalink
Right.
Let me correct that oversight...
I hereby suggest that the full amount will be used.
So now MSNBC should probably revise their article to say...
"No one (except Rutabaga Ridgepole) has suggested that the full amount, in fact, will be used."
Harharharhar!!!
July 20, 2009 4:05 PM | Reply | Permalink
I remember way back when I thought a $1 trillion bailout was outrageous, and then...
Surprise! A headline appears from nowhere with a figure in the range of $6 trillion.
Then silence for a few months, and...
Surprise! It's $14 trillion, and now $24 trillion, and who knows what's next.
Somebody should put up one of those visual aids that measures donations to the United Way, where you see a red line slowly rising on something that looks like a thermometer toward the fundraising goal...
Except that this thermometer would have no limit, no top, just endless donations to the banks forever and ever.
July 20, 2009 8:05 PM | Reply | Permalink
Ruta, I don't know how much further this can go. I mean what's the global total in financial assets as far as credit instruments go? A wild guess - 50-60 T...?
July 20, 2009 8:34 PM | Reply | Permalink
Get ready for a shock!
The low estimate of financial derivatives worldwide is...
$592 trillion.
The high estimate is over $1 quadrillion.
That would be...
One million billion dollars.
July 20, 2009 9:44 PM | Reply | Permalink
There's a lot of double counting in your $592 trillion estimate.
July 20, 2009 10:41 PM | Reply | Permalink
Tell that to the Bank of International Settlements, if you think you know more about financial derivatives than they do.
It's their figure.
July 21, 2009 3:21 AM | Reply | Permalink
It's correct, but you are quoting the gross number instead of the net number which is more accurate of the true exposure. The gross number you are quoting does not take into account offsetting trades. For example, when a broker sells a derivative to someone for $10mm notional, the broker then goes and hedges that exposure with someone else. It gets recorded as $20mm of transactions even though there's really just $10mm of value.
July 21, 2009 6:15 AM | Reply | Permalink
Read this. http://politics.randomplayground.net/2009/02/01/granted-the-death-of-cds-is-an-exaggeration/
July 21, 2009 6:16 AM | Reply | Permalink
Bill has a point about the net vs. gross exposure. Beyond that, there's also the fact that guaranteeing a cash instrument thereby guarantees the derivatives based on that instrument. So if I hold a bond and you write CDS on that bond, we're both bailed out if the government guarantees the bond.
The point about the huge derivatives market isn't that a government bailout could put the tax-payer on the hook for hundreds of trillions. It's a way for the major players to ensure that no one knows where the the risk is distributed in the system, and what the knock-on effects of a mid- to large-size bankruptcy would be. This forces the government to throw up its hands and bail out all and sundry, since 'who knows what could happen?'.
July 21, 2009 7:52 AM | Reply | Permalink
Actually you should listen to MiddleClassBill, he speaks for the Banks.
July 21, 2009 12:37 PM | Reply | Permalink
THE SKY IS FALLING, THE SKY IS FALLING...
July 20, 2009 4:55 PM | Reply | Permalink
THE DUMBASS JONNIENOHANDS IS TROLLING...
July 20, 2009 8:01 PM | Reply | Permalink
Thank you, you have know idea how gratifying it is to have YOU call me a dumb ass.
July 21, 2009 8:37 AM | Reply | Permalink
More so than Health care reform, carbon-caps or credit cards. The so called Bank Bailout will be Washington's undoing. Both parties and Obama may suffer politically with this one. People are still very, very upset about this one thing.
Unless Obama sacks Geithner and Summers and get in people who will kick some Wall Street buts, he will have a very tought time getting re-elected.
C
July 20, 2009 11:09 PM | Reply | Permalink
I'm not happy with the bailouts, and I do think they've been poorly managed (although I'm not so sure that hasn't been entirely a function of how they were written originally, combined with the fire-sale oversight during the first 6 months of TARP that has forced their hands more recently) But I also think that if there had been no bailout at all, we would be up to our necks in shit (not necessarily from total collapse, but BOA and AIG may well have drowned us, who's to say?
Washington was left with a serious catch-22 when the bailouts were first considered. Overall, they've made the right choice, but did the job just about as poorly as they possibly could have.
Essentially, they faced a fork in the road with danger on both paths, second guessed themselves, and plowed into the the jersey barrier separating the forks.
July 21, 2009 1:56 PM | Reply | Permalink
Unfortunately, the dire straits that I and my son and his wife and her parents are in will require that all of our obligations to this bailout fall to my one y.o. granddaughter. So she was basically born into this world owing at least a quarter $million. I'm running old videos like Wall Street over and over for her. Greed...is good. The only way she'll ever survive is to join the banksters (or the government, same thing).
July 20, 2009 11:11 PM | Reply | Permalink
(hands DonKey pitchfork)
You can all come live with me.
July 20, 2009 11:16 PM | Reply | Permalink
Thanks. You're right. I think I'll get the little one a tiny nerf pitchfork and change her viewing schedule to Frank Capra movies!
July 21, 2009 12:49 AM | Reply | Permalink
Ummm . . .
and JacobJuly 21, 2009 9:11 AM | Reply | Permalink
From the same Times blog...
I'm glad jsfox cleared everything up, with one blog-quote that he didn't even bother to link...
...but that same blog leaves $11.6 trillion in the misty realm of "various mortgage-related programs" and "possible Treasury programs," what ever the fuck that may mean.
So there's obviously nothing to worry about.
July 21, 2009 9:54 AM | Reply | Permalink
Apologies I did screw up the link. So here it is: NYTimes
However I think my point still stands. You are screaming the sky is falling because a acorn fell on your head.
And more from the same article:
July 21, 2009 10:19 AM | Reply | Permalink
Um, no, LISTEN to Neil Barofsky on CNBC, these are the figures he collected from Treasury, :
http://market-ticker.org/archives/1245-CNBC-Attempts-Assasination-on-Barofsky.html
He was being viciously attacked by the media but he stood his ground, his job is to bring transparency, and that is all he is putting out in his report.
July 21, 2009 12:35 PM | Reply | Permalink
Well then we better keep those printing presses in high gear. The way the Fed's been expanding the money supply this year we should be able print our way out of this by 2015.
U! S! A!
July 21, 2009 11:38 AM | Reply | Permalink
A more reasoned look at this topic;
By contrast, during the July 21 edition of CNN's American Morning, correspondent Christine Romans stated that "this isn't total potential losses. This is how much money has been guaranteed out there." She further reported:
ROMANS: TARP has created 12 programs involving $3 trillion. They've launched 35 investigations of waste and pilfering and mismanagement. The rescue efforts overall -- the total potential government support is the way they put it -- could top $23.7 trillion.
Now, a Treasury official calls that a distorted number. It doesn't take into account the fees and interest that has been paid. Fees and interest like this: Taxpayers have had $6 billion in dividend payments paid back, $200 million in interest payments. And also, you look, there was a bridge loan, to JPMorgan Chase to buy Bear Stearns. It was, I think, $14 billion. That's been paid back in full with interest and dividends.
There are other things like that, that we've gotten money back for. So the $23 trillion number -- it's a huge number -- but you know, serious economists will look at that number and say, hmm, they'll be able to kind of pull back where -- that's -- that would be -- that would essentially be the United States stopping -- just stopping business completely if we were to lose all that money.
July 21, 2009 6:58 PM | Reply | Permalink