Tuesday, March 31, 2009

Take what you produce in a year, and bet it on a coin flip

Financial Rescue Nears GDP as Pledges Top $12.8 Trillion

(If you're an Obama fan, "GDP" refers to the amount the rest of us produce in a year.)

By Mark Pittman and Bob Ivry

March 31 (Bloomberg) -- The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.

Well, they have other motives besides stemming the recession. Rewarding donors, remaking the economy, and taking advantage of the crisis to move more slop from the private to the public trough.

New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008.

The $42,105.00 amount doesn't include the amount you owe from previous government adventures in helpfulness.

President Barack Obama and Treasury Secretary Timothy Geithner met with the chief executives of the nation’s 12 biggest banks on March 27 at the White House to enlist their support to thaw a 20-month freeze in bank lending.

“The president and Treasury Secretary Geithner have said they will do what it takes,” Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said after the meeting. “If it is enough, that will be great. If it is not enough, they will have to do more.”

Does anyone with enough breath to fog up a mirror doubt that these clowns will want to do more? Anyone disagree? Have they not telegraphed their next moves clearly enough?

Commitments include a $500 billion line of credit to the FDIC from the government’s coffers that will enable the agency to guarantee as much as $2 trillion worth of debt for participants in the Term Asset-Backed Lending Facility and the Public-Private Investment Program. FDIC Chairman Sheila Bair warned that the insurance fund to protect customer deposits at U.S. banks could dry up because of bank failures.

‘Within an Eyelash’

The combined commitment has increased by 73 percent since November, when Bloomberg first estimated the funding, loans and guarantees at $7.4 trillion.

“The comparison to GDP serves the useful purpose of underscoring how extraordinary the efforts have been to stabilize the credit markets,” said Dana Johnson, chief economist for Comerica Bank in Dallas.

Yes. Extraordinary. Truly Extraordinary. They're working haaaaard for you. Rolling up their sleeves while they print more and more money, and rake it in with both hands.

“Everything the Fed, the FDIC and the Treasury do doesn’t always work out right but back in October we came within an eyelash of having a truly horrible collapse of our financial system, said Johnson, a former Fed senior economist. “They used their creativity to help the worst-case scenario from unfolding and I’m awfully glad they did it.”

There are worse things than this ?????

Federal Reserve officials project the economy will keep shrinking until at least mid-year, which would mark the longest U.S. recession since the Great Depression.

The following table details how the Fed and the government have committed the money on behalf of American taxpayers over the past 20 months, according to data compiled by Bloomberg.

The amount on the left is how much spending is approved, or "pledged" (another way of saying "how much they're going to spend....") The amount on the right represents the first shovels full of slop going into the trough. Remember, these numbers are billions.

--- Amounts (Billions)---
Limit Current
Total $12,798.14 $4,169.71
Federal Reserve Total $7,765.64 $1,678.71
Primary Credit Discount $110.74 $61.31
Secondary Credit $0.19 $1.00
Primary dealer and others $147.00 $20.18
ABCP Liquidity $152.11 $6.85
AIG Credit $60.00 $43.19
Net Portfolio CP Funding $1,800.00 $241.31
Maiden Lane (Bear Stearns) $29.50 $28.82
Maiden Lane II (AIG) $22.50 $18.54
Maiden Lane III (AIG) $30.00 $24.04
Term Securities Lending $250.00 $88.55
Term Auction Facility $900.00 $468.59
Securities lending overnight $10.00 $4.41
Term Asset-Backed Loan Facility $900.00 $4.71
Currency Swaps/Other Assets $606.00 $377.87
MMIFF $540.00 $0.00
GSE Debt Purchases $600.00 $50.39
GSE Mortgage-Backed Securities $1,000.00 $236.16
Citigroup Bailout Fed Portion $220.40 $0.00
Bank of America Bailout $87.20 $0.00
Commitment to Buy Treasuries $300.00 $7.50
FDIC Total $2,038.50 $357.50
Public-Private Investment* $500.00 0.00
FDIC Liquidity Guarantees $1,400.00 $316.50
GE $126.00 $41.00
Citigroup Bailout FDIC $10.00 $0.00
Bank of America Bailout FDIC $2.50 $0.00
Treasury Total $2,694.00 $1,833.50
TARP $700.00 $599.50
Tax Break for Banks $29.00 $29.00
Stimulus Package (Bush) $168.00 $168.00
Stimulus II (Obama) $787.00 $787.00
Treasury Exchange Stabilization $50.00 $50.00
Student Loan Purchases $60.00 $0.00
Support for Fannie/Freddie $400.00 $200.00
Line of Credit for FDIC* $500.00 $0.00
HUD Total $300.00 $300.00
Hope for Homeowners FHA $300.00 $300.00
the FDIC’s commitment to guarantee lending under the
Legacy Loan Program and the Legacy Asset Program includes a $500
billion line of credit from the U.S. Treasury.


Dr Ralph said...

I'll neither condemn or defend the amount of money pledged, promised, committed (or whatever else you want to say) to deal with our current financial situation.

Agreed: it's a f**king mess.

I did a search on this blog for the 2 years it has been in existence and found not one word of protest or outrage for the estimated 3 trillion plus spent by the Bush administration on the Iraq war (which was largely and conveniently left off the budget). Not to mention the disrupted lives of our fighting men and women.

Your selective outrage in light of this leaves me feeling more than a little curious.

What exactly does it take to get you pissed?

The Whited Sepulchre said...

I don't mean to quibble over the amounts in question here, but your figure represents the anticipated expense (retirement pay for military, disability, social security for the families of the killed in action, etc.)
Here's the generally agreed upon amount (also from an anti-war site)


Regarding my own admittedly lukewarm opposition:




To name a few.....
Anyway, I'll affirm that the Iraq war isn't my big issue.
Agreed: it's a f***ing mess.

Sadaam gassing 90,000 Kurds reminds me of another character who should've been taken out earlier, a character whose name I can't mention without invoking Godwin's Law.

These situations are the ones where I come closest to parting ways with the Snake handling, Foot washing, fundamentalist branch of the Libertarian movement. Since the United Nations is a joke, perhaps there may come a time when we need to stick our noses in some other nation's business.

And if we do, we need to be really, really good at it. We haven't been.

What got me really pissed about Sadaam? It wasn't gassing the Kurds, the abuses at Abu Ghraib and other dungeons(by Sadaam), or even the invasion of Kuwait.

It was his sons' mistreatment of Olympic athletes. Losing track teams were beaten and forced to crawl on hot asphalt.

Sorry to post so many links.

Dr Ralph said...

My previous post was a little too personal (at least in my opinion), and I beg your indulgence and forgiveness for any offense I may have given.

One of the problems with Bush's Iraq adventure was that it was conducted largely off the books: never really included in any budgets. So, of course, things like disability, support for families of the dead and disabled --things we will be paying-- were never mentioned. And that's not the least of it.

The war was sold on non-existent "Weapons of Mass Destruction," which were as real as Tinkerbell. Sadaam Hussein, I will freely grant you, was a devil of the first degree: a walking incarnation of Godwin's Law. But the world has many devils of his ilk, not a few who have been on the US's payroll when it suited our political or economic interests.

He was an awful human being, but no imminent threat to our safety. It was bait and switch on a global level. And we will be paying for it.

All that being said, I have to say Ron Paul was one of the few members of Congress, Republican or Democrat, willing to call bullshit on the Bush administration on Iraq.

The Whited Sepulchre said...

I wake up every morning, typing and spewing venom against everything you consider holy, and you're worried about hurting MY feelings?

It can't be done that easily, sir.
As stated by others of our mutual acquaintance, you're actually half of this thing. Flame wars don't really get started around here until you light the match. Otherwise its just me in an echo chamber.

About the world's tyrants....Some of the things currently going on in Saudi Arabia make me ill. Women who have been raped sentenced to prison and whippings, etc. Very hard to find info on it except on the anti-clerical anti-god sites. I think if we knew what was going on with a lot of our "allies", our troops might be spread very, very thin.

TarrantLibertyGuy said...

Whited... If you haven't had the Road to Damascus via Baghdad conversion to the more fundamentalist side of the First Libertarian Church of Ft. Worth, come to the chapel (at Pops) and handle some more snakes and drink more poison!

Just keep read (or re-read) "A Foreign Policy of Freedom" by Dr. Ralph's favorite Republican...

Now, here's a list of other current dictatorships and despots we should go after:
- Saudi Arabia
- Cuba
- Kim Jung Il
- Zimbabwe
- Teodoro Obiang Nguema of Equatorial Guinea
- Libya: Muammar al-Gaddafi
- Gabon: Omar Bongo
- Angola: José Eduardo dos Santos
- Yoweri Museveni, Uganda

Heck, I could cut and paste names of murderous dictators currently in power until my Windows clipboard melts... They've killed their own, rule through brutality, etc. They've even mistreated their own athletes! I bet Kim Jung Il would even flog performers who miss a note in the Broadway-style musical/romantic comedy about him.

But, sadly, it's not our fight to fight... as much as it seems right, you have to let the fight come to you. If you're trading with everyone PROPERLY (and I say you can use correctly economic diplomacy) - the fight never comes to you.

But I know you know all this - and I've been very fond of your Obama War Counter and your other anti-war posts... don't worry. I know you're 'one of us'!!! :-)

Yikes... I just realized it sounded like I sided with Dr. Ralph to gang up on you. I'm kind of scared. And apologize for aping him. I apologize to myself.