Total Bailout Bill = $900 Billion

From Reuters:

Between the $29 billion the Fed pledged to swing the Bear Stearns sale to JPMorgan in March, $100 billion apiece to rescue mortgage finance firms Fannie Mae and Freddie Mac, up to $300 billion for the Federal Housing Authority, Tuesday's $85 billion loan to insurer AIG and various other rescue deals and loans, taxpayers are potentially on the hook for more than $900 billion.

Think about that for a minute. $900 billion dollars, racked-up before your very eyes. This at a time when the federal government is already bleeding money. Note the following numbers from the Bureau of Public Debt:

09/30/2007 $9,007,653,372,262.48
09/30/2006 $8,506,973,899,215.23
09/30/2005 $7,932,709,661,723.50
09/30/2004 $7,379,052,696,330.32
09/30/2003 $6,783,231,062,743.62
09/30/2002 $6,228,235,965,597.16
09/30/2001 $5,807,463,412,200.06
09/30/2000 $5,674,178,209,886.86

Currently the total outstanding debt = $9,634,090,464,815.55

And now, thanks the the geniuses in charge of the US government, we've got the following bills to add:

- $200 billion for Fannie Mae [FNM 0.42 -0.061 (-12.68%) ] and Freddie Mac [FRE 0.26 --- UNCH (0) ]. The Treasury will inject up to $100 billion into each institution by purchasing preferred stock to shore up their capital as needed. The deal puts the two housing finance firms under government control.

- $300 billion for the Federal Housing Administration to refinance failing mortgage into new, reduced-principal loans with a federal guarantee, passed as part of a broad housing rescue bill.

- $4 billion in grants to local communities to help them buy and repair homes abandoned due to mortgage foreclosures.

- $85 billion loan for AIG [AIG 2.06 -1.69 (-45.07%) ], which would give the Federal government a 79.9 percent stake and avoid a bankruptcy filing for the embattled insurer. AIG management will be dismissed.

- At least $87 billion in repayments to JPMorgan Chase [JPM 38.12 -2.62 (-6.43%) ] for providing financing to underpin trades with units of bankrupt investment bank Lehman Brothers [LEH 0.11 -0.19 (-62.37%) ]. U.S. Treasury Secretary Henry Paulson said over the weekend he was adamant that public funds not be used to rescue the firm.

- $29 billion in financing for JPMorgan Chase's government-brokered buyout of Bear Stearns in March. The Fed agreed to take $30 billion in questionable Bear assets as collateral, making JPMorgan liable for the first $1 billion in losses, while agreeing to shoulder any further losses.

- At least $200 billion of currently outstanding loans to banks issued through the Fed's Term Auction Facility, which was recently expanded to allow for longer loans of 84 days alongside the previous 28-day credits.

All of the profits have been privatized. Now the US taxpayer is responsible for all the losses.

Comments

[Paul SD]

How can we follow a path set out by greed and avarice? The bailout plan does just that by bailing out the mistakes made those that would take chances with our future. The financial system does need help but help should respond to those that are affected by those poor choices of others. Both businesses and individuals are in that group but there are banks that are still capable of lending money to those groups but if they need help to keep the economy moving. The government could provide loans to those banks with the intent of those banks of supporting both businesses and individuals and with sound judgment lending them the money they need to move into a safer future.

[money4theppl]

I saw we ditch bailing out some companies and give the money to the people! We the people can do more with that money than any company can. We can invest in companies we could buy cars pay off housing debts.

If the people will have the money it would go into banks, so banks can have the capital to do loans and such.

The government shouldn't have a hand in everything. They think we are stupid. Which Frannie and Freddy is a government backed company who screwed people up!

This government that runs our country has run it to the group from our economy to the education.

Change this bill to bail out the people not the businesses who made these foolish loans and played with peoples money with these "Variable interest rates".

[deliriousgod]

are you people going to put up with this?

[MajorKong]

It would sure be nice to have that $500 billion we spent on the Iraq war right about now.

[jhNY]

Welcome to your new corporatist police state! Thanks to the ramp-up of domestic spying technology and programs, we're now under view at all times while we stand on the sidelines and watch the capitalists shake down the politicians for one bail-out after another for which we are now and forever liable. The government has been drowned in Grover Norquist's fabled bathtub, drowned in corporate debt that now belongs to the public. And all this happened without anybody voting, and is plainly unconstitutional, something even a neo-con like Joe De Napolitano recognizes. But no matter. It's a crisis! Do something fast!

[swift goat pet for truth]

That's GREAT NEWS!!

I thought it was over a $trilllion....

[ThePeacemakers]

Don't you get it?

This was planned...to keep the government in debt, without money for health care reform, public schools, anything for the public....no money - our tax dollars are for the privileged only and this is intentional robbery of the treasury to ensure that the federal government is incabaple of doing anything to help the public.

They want to privatize everything...and socialize any losses.

Hello, slaves.

[jhNY]

Correct. The treasury has now been siphoned clean, its contents safely in the hands of degenerate gamblers who, having lost all private capital to which they had access, are now in receipt of whatever the government can raise on their behalf in our name, we who must hold the bag. But the bag is empty, and we must pay.

[FrictionSoul]

Bail out is a misleading terms because technically, all the government did was tell those investment banks "we don't know what debts you have, but we'll take them on anyways."

Therefor, these banks no longer need to write off home mortgage debts. Therefore more homes will be foreclosed upon. Therefore city government will be stuck with the actual bill as they are forced to cut back services due to drastic decline in tax revenue from property taxes.

As credit shrinks, so do small businesses. The Feds actions this week guarantee that neither Obama nor McCain will be able to undo this mess. Oh, Obama could but it would be political suicide because the Feds basically averted an economic catastrophe...... wait for it.....

the wealthy. There you have: a bail out for the wealthy, pure and simple.

So in this sense, the Feds acted to send a really strong message to Obama: you might win, but we will make sure that it's just for 1 term.

[racom]

Maybe it's time for the US to stop fighting against nation debt cancelation and embrace it.

[racom]

What's the big deal, we already know 'deficits don't matter', straight from dick cheney, AKA darth vader. Now, who you gonna believe, darth vader or your depleted savings and retirement funds?

[dadw5boys]

WHAT IS THE POINT NOW ?? WHY WASTE THE EFFORT ??? THE NUMBER SAY IT ALL !!!!


Oct 1st, 2008 a Interest payment of $ 511,000,000,000.00 is due on the National Debt. When the USA does not make that payment in cash plus a payment on the Principle of $9 Trillion plus the USA crosses the POINT OF NO RETURN.

The USA will never be albe to pay the ever increasing amount of interest due on the National Debt and never be able ot make a payment of the Principle.

We have lost the battle of debt, interest, and repayment !

Just to think a few years ago the National Debt was on the way out with full repayment in 15 years.
We have truely come a long ways in 8 years.

Our grandchildren will never know the freedom of not having a National Debt unless the USA goes bankrupt

[swift goat pet for truth]

Not exactly.

The Treasury can just print money.
We can be like some countries where 40,000 rupiah equals one dollar.

Of course, there are certain problems that come with this type of strategy.....

[joebhed]

My friend,

Just to be clear.

There are still a few tricks lined up in the Paulson-Bernanke neighborhood, all of them with THEIR hand (the bankers') in OUR pockets (the taxpayers).

And, without a doubt, the burdens on the American taxpayer will INCREASE with the economy in the tank, amid increasing the national debt.

But, just to clear, let us state, it is NOT the Treasury, nor the FED itself, that can "just print money".
That is a euphemism for anti-governmentalists.

The FED can "create" new money by issuing DEBT instruments THAT MUST BE BOUGHT by somebody. On the first order, that right goes to US private bankers within the FED, but they don't really have any money, as we all know, so they must sell them to som eone who does have the money.

Today that somebody is primarily Asian centrals and MiddleEast sovereigns.

The real worry is that they will not buy these things with an interest coupon based on FED economic policy. That is where there could be THE breakdown.

Either we put the foreigners in charge of our economic policy and our economy, or they refuse to buy those "thingies" that the FED keeps using to keep the game going.

Then the fun begins.

See monetary.org on money creation and the printing press.

ciao.

[susie1776]

I know there is alot I don't understand about this financial mess but, technically, if we have a $9.7 trillion debt...not counting the latest $900 billion.....isn't the US Gov't bankrupt? I heard one analyst discussing that the Fed doesn't actually HAVE the $85 billion they are loaning AIG. They are auctioning that debt...which means putting it out there for other companies, countries etc to buy so the Fed can then write a check to AIG. Wall Street throws these huge numbers around but neglect to say that these bailout funds are money the US Gov't doesn't have...just like the money we are spending to finance the Iraq War. We have to borrow that too. At my house, if you need $100 because you're broke and I promise to loan you the money but I only have $20 in my wallet, I have to go to my next door neighbor and borrow $80.00 from him to give to you. He's a friend but he only has $10 and I need $80 so he goes to his neighbor and borrows $70 to give to me. Now, you owe me $100 and I owe my neighbor $80 and HE owes HIS neighbor $70. Isn't that what's happened on Wall Street?

[pastgone]

The exact same corrupt fools who got us into this mess are now getting us deeper into it. If John McCain is elected president, there will be a global economic meltdown that will make the great depression look like a Sunday school picnic. This is what happens when interest rates are artificially depressed for years to generate a fake economy at the same time as taxes on the wealthy are cut, government services are inefficiently privatized, massively expensive, unnecessary and immoral wars are waged, banking and insurance is deregulated, and gargantuan deficits are run. It's not just a "liberal fantasy". THIS IS WHAT HAPPENS.

[schatsie]

This is the most OUTRAGEOUS OCTOBER SURPRISE!!!

The economists all saw it coming and this is so much worse than Ronny ransoming the hostages the very day he got elected!!

Would have paid for 3 years of the Iraq war, right... Would have paid for the cost of the Medicare DRUG program for the next 20 years..
Would have paid for lots of things...

I have the PRINTOUT for the GM loss of 39 billion last October 2007, and Bush and McCain have been fiddling while ROME is BURNING... Send the bastards to JAIL....

[liz123]

Okay, a foray into basic math. If current US mortgages total about 1.3 trillion and we estimate that 10% are bad and doomed to fail - wouldn't it have been cheaper at 130 billion to just buy out the bad mortgages?

[Mycall]

Unfortunately it's not so basic. There are jobs tied to the existence of these companies, not to mention their respective stock prices etc that directly or indirectly have potentially adverse impacts on a million other aspects of the econmony. Their failure represents a little more than 130 billion in bad mortgages.

[23000Days]

However, if the mortgages were paid, most of the institutions wouldn't fail......Yet!

[Thermodynamics]

I think liz123 has a valid point.

If the federal government rescued the weakest mortgages directly at the homeowner level --- blam!

That move would secure the pooled mortgages and the whole CDO (Collateralized Debt Obligation) pyramid. It would have the same effect as if the homeowners had continued to pay every month.

We are talking about a lot of money so the fed would have to be selective about who would receive aid. Also, some kind of compromise is probably the right approach, aid, but with strings attached. Of course, this is anathema to the proponents of trickle-down economics. They think aid can only be directed to the very biggest because it is a "moral hazard" for the sweating ordinary citizen.

[joebhed]

Well, yes.

Were it not for fractional-reserve banking.

And, were it not for the selling and the re-selling, and the slicing and dicing of the RMBS and the CMBS into derivative pieces, which are again sold, resold, cut and sliced and sold and resold and sliced and diced.

If we even ever got back to community banking, where banks that loaned for mortgages held those mortgages, rather than that first re-selling, we may have a way to back out of this thing.

Except to some degree for our credit unions and cooperative banks, we don't live in a world of manageable financial vehicles.

It's the financial services industry now.
They sell financial services, with thingies that you and I cannot understand.
That's their currency.
Which is now going, but not gone, bankrupt.

[23000Days]

"AIG management will be dismissed"

It will be interesting to see the totals on all those golden parachutes!

[11907281]

Isn't free market capitalism great !!!