Stunning graphic representation of the cost of the bailouts.

[girl gone mad]

Even though I've seen similar analysis, this graph kind of took my breath away. From http://www.ritholtz.com/blog/">Barry Ritholtz:



It includes the total outlay for all the bailouts to date. In just about one short year (March 2008 - March 2009), the bailouts managed to spend far in excess of nearly every major one time expenditure of the USA, including WW1&2 (omitted from graphic), the moon shot, the New Deal, total NASA budgets (omitted from graphic), Iraq, Viet Nam and Korean wars — COMBINED.

206 years versus 12 months. Total cost: ~$15 trillion and counting . . .

[grantcart]

1. Is this the gross or the net

In other words did they subtract out the money that has already been returned?

[HamdenRice]

6. Exactly the right question. It's a graph about scale, not cost. See below. nt

[grantcart]

9. And that was my point.

Also the Chrysler and Mexican guarantees resulted in exactly 0 $s being lost by the Treasury.



But an even more important point is what would have been the cost if we hadn't had the bailout and unemployement went to 15%?



The domino effect would have caused some pretty large squares of actual revenue lost.

[ZombieHorde]

2. One dollar could buy more 200 years ago. nt

[CatholicEdHead]

18. So true

I want to see the right side adjusted for inflation and then compared.

[get the red out]

3. So what would have been the solution?

What would have been a solution other than the bailouts? Well, something that would have prevented the second great depression that is. I don't like the bailouts, I hate these banks, but would letting them just fail have been a solution?

[Just-plain-Kathy]

4. I would have liked to have seen banks start doing business the way they use to.

I remember when banks wanted our money so much they would give us toasters just to get us to put $2.50 every week in a Christmas savings account.

It wasn't too long ago when some lucky senior citizens were able to live off of the interest from their savings account. My sister's inlaws use to make $2,000 every month on their savings interest. Now they're in their late seventies, they felt they had to take their savings and invested in a store. Now they're working hard and not making money.

Banks use to work for our money. Now our taxes are "lent" to them, now they charge us more so they could pay us back.

[get the red out]

5. I wish they would too

They are just corporate crooks now, not community participants. They are disgusting entities.

But could they have done that just by being denied a bail out? Or would they just have closed their doors and cut off needed short-term business loans necessary for everyday functioning and meeting payroll?

[Just-plain-Kathy]

13. These bailouts are just a way of filtering our wealth to corporations....

...American corporations which will become so wealthy they will lead in "the New World Order".

[Common Sense Party]

19. There are still small, community banks serving clients and doing

what's right--probably in your neighborhood.

[On the Road]

16. Fair Enough, But That Does Not Address the Situation

Bush and Obama were faced with.

What would have been the cost to all of us of allowing the financial system to collapse? Forgetting for a minute the human consequences, the lost taxes would be staggering. That is the part it's easy to forget.

[Triana]

7. But we can't afford health care. n/t

[HamdenRice]

8. Stunning graphic representation of the SCALE of the bailouts, not the COST of the bailouts

At least Barry Ritholtz was careful to phrase it in terms of "outlays" not costs.

The lesson: nationalization is big, but not necessarily nationalization is costly.

For example, because of the Commercial Paper facility, the Fed became in essence the entire money market for corporations needing short term borrowing.

That was a big market, obviously.

But those were outlays for commercial paper that paid interest and was generally repaid within 30, 60 or 90 days. It is therefore not a "cost" but an extension of credit that actually made money for the Fed.

So it did not help the bailout "cost" this big number. On net, it "cost" nothing -- except perhaps in terms of risk.

The same is more or less true of every item labeled "facility" -- which simply means in the financial sector, "the amount we are ready to lend."

Iirc, the "swap lines" are also generally costless although big and were swaps of currency between central banks and the fed of various currencies.

Also, he seems not to have adjusted for constant dollars.

[girl gone mad]

11. Actually, Ritholtz titled this graphic "Bailout Costs vs. Big Historical Events"

As long as the Fed is accepting junk collateral as securitization, the expected returns will fall short of 100%.

Many of the actions on the right side of the picture paid for themselves and even earned a decent return, eventually. Likewise, health care reform could boost our GDP and raise tax revenues over time. However, beacause the administration has blown so much political capital on these bailouts, getting decent reform will now be more of an uphill battle.

[HamdenRice]

12. Your and Wolfowitz's prediction that the Iraq War paid for itself or "earned a decent return"

has turned out not to be true, although I realize you can cite as authority that Paul Wolfowitz and other neo-cons made the argument you are making. I was under the impression that war is always a dead weight economic loss -- as well as a catastrophe for civilian populations -- so I'm inclined not to believe the Iraq War, Korean War, or Vietnam "paid for themselves" or "made a decent return."

With TARP 1 money being paid back at a profit, and with no "breaking the buck" in the commercial paper market, it seems that the likelihood of the bailouts being cost neutral is far, far higher than such being true of the wars.

The main thing that has to be considered is whether an outlay is an "expenditure" (war, some expenditures under the New Deal, the S&L crisis, etc.) or an "investment" (Louisiana Purchase, New Deal Civilian Conservation Corp projects, TARP 1, Fed commercial paper facility, etc.).

[girl gone mad]

14. I never said that the Iraq war paid for itself.

Please read my post a little more closely next time. I said "many" of the things on the right side earned a return, not "all". I was referring specifically to the Louisiana Purchase, the S&L bailout, the reconstruction and the moon landing.

There is no profit on TARP. The only in depth analysis done to date shows that we've http://www.businessweek.com/investor/content/apr2009/pi20090417_182503.htm">lost $104 Billion thus far.

Please explain how we're going to break even or make a profit on these bailouts. We're in the midst of a recession, if you haven't noticed. The only possible way we will make money off of this fiasco is through inflation via Fed printing, which most people wouldn't consider an economic positive. Not only that, but there has been a tremendous opportunity cost involved, as is now so apparent with polling showing that people are extremely concerned with deficits and foreign investors becoming less interested in our debt.

[GeorgeGist]

10. Neither Moses, nor Jesus, nor Mohammad ...

prophesied that the World could not afford the luxury of rich people. So the World learned the hard way.

[Joe Chi Minh]

15. Oh, I think Jesus was very outspoken about the accumulation of wealth

by individuals. Even the seemingly common-sensical building of another barn by a farmer, in order to accommodate his bumper harvest, was categorised as utter, utter folly; for which, indeed, he would pay that very night. Worldly priorities.

Well, we don't know that he was condemned on Judgment Day; the parable seems to indicate just that he preferred to risk maximising his profits to the full, rather than to concentrate on using his disposable income and assets, to buy himself friends in the courts of eternity.

[Turbineguy]

17. A small part of the cost

of the Bush Presidency and all it entails.