Bailout cost compared to other government expenditures

[vhx]

From here: http://www.ritholtz.com/blog/2...bailouts-bigger-bucks/

Whenever I discussed the current bailout situation with people, I find they have a hard time comprehending the actual numbers involved. That became a problem while doing the research for the Bailout Nation book. I needed some way to put this into proper historical perspective.

If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. People have a hard time conceptualizing very large numbers, so let?s give this some context. The current Credit Crisis bailout is now the largest outlay In American history.

Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures ? combined:

? Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
? Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
? Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
? S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
? Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
? The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
? Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
? Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
? NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

TOTAL: $3.92 trillion
data courtesy of Bianco Research

That is $686 billion less than the cost of the credit crisis thus far.

The only single American event in history that even comes close to matching the cost of the credit crisis is World War II: Original Cost: $288 billion, Inflation Adjusted Cost: $3.6 trillion

The $4.6165 trillion dollars committed so far is about a trillion dollars ($979 billion dollars) greater than the entire cost of World War II borne by the United States: $3.6 trillion, adjusted for inflation (original cost was $288 billion).

Go figure: WWII was a relative bargain.

I estimate that by the time we get through 2010, the final bill may scale up to as much as $10 trillion dollars?

Just saw the cost comparison to these things and it's just crazy that all of these things combined pale in comparison to how this bailout is going. And with the numbers growing every day, who knows what kind of crazy comparisons you'll be able to make.

 

[Farang]

This is not really accurate because the government isn't spending that amount right now. They are leveraging it. So yes, if GDP fell to $0 in the U.S. we would have spent that much money.

 

[StageLeft]

Can we stop? I know it's a lot, but at least so far, the government has guaranteed these high risk liabilities and that IS NOT THE SAME as having spent the money. Think of it as free insurance for those liable for the debt.

 

[Dufusyte]

Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion

What I find scary is that there has been 600% inflation in the last 40 years.

Thank goodness the Fed is maintaining price stability. /sarc

 

[Thump553]

I'm very impressed with the cost of the Marshall Plan, we definately got our money's worth there.

 

[LegendKiller]

Originally posted by: Dufusyte

Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion

What I find scary is that there has been 600% inflation in the last 40 years.

Thank goodness the Fed is maintaining price stability. /sarc

How much have wages increased in 40 years?

Wait...what?

http://www.census.gov/hhes/www...ome/histinc/f07ar.html

This is why Fed bashers are probably lower in brain power than Amoebas.


The dollar amounts are silly. Not to mention the fact that the government, to the extent it is buying assets, is actually BUYING ASSETS, items that yield cashflows over time to repay the purchases. Not to mention that all its really doing is buying what others won't buy *RIGHT NOW*, not what they won't buy in the future.

 

[Dufusyte]

Wait, how much have people's savings been sapped by inflation during their lifetime? Oh yeah, 600%. Looks like I better heve some stellar ROI on my savings just to keep pace with inflation.

And let's see how the people with debts are doing: their 40yr mortgage has become 600% easier to repay, as dollars become cheaper.

Given this dynamic, it is no wonder Americans do not save, but rather they are in debt to their eyeballs.

Now, if the Fed had actually maintained price stability at 0%, then there would be more incentive to save.

 

[zephyrprime]

Every financial institution that has received significant aid from the government should be 100% by the government. The only thing those companies have to give in exchange for the help they are receiving is their equity (aka stock) and even then the equity is not enough to cover the prive tag of this bailout by a long shot.

 

[sandorski]

Originally posted by: LegendKiller

Originally posted by: Dufusyte

Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion

What I find scary is that there has been 600% inflation in the last 40 years.

Thank goodness the Fed is maintaining price stability. /sarc

How much have wages increased in 40 years?

Wait...what?

http://www.census.gov/hhes/www...ome/histinc/f07ar.html

This is why Fed bashers are probably lower in brain power than Amoebas.


The dollar amounts are silly. Not to mention the fact that the government, to the extent it is buying assets, is actually BUYING ASSETS, items that yield cashflows over time to repay the purchases. Not to mention that all its really doing is buying what others won't buy *RIGHT NOW*, not what they won't buy in the future.

Not to mentions that approx(guesstimate) half that 600% occured within a span of approx a decade, middish 70's to middish 80's. Since Inflation was brought under control, the Fed has certainly done well to stabilize Prices.

 

[ElFenix]

a lot of the bailout money is only 'just in case.' for each asset that performs that is bailout money that is allocated but not spent

 

[JS80]

Compare apples to oranges much? Those are expenditures, what the fed is doing is exchanging for assets. Not only that the fed is not government. Get the fuck over it.

 

[LegendKiller]

Originally posted by: Dufusyte
Wait, how much have people's savings been sapped by inflation during their lifetime? Oh yeah, 600%. Looks like I better heve some stellar ROI on my savings just to keep pace with inflation.

And let's see how the people with debts are doing: their 40yr mortgage has become 600% easier to repay, as dollars become cheaper.

Given this dynamic, it is no wonder Americans do not save, but rather they are in debt to their eyeballs.

Now, if the Fed had actually maintained price stability at 0%, then there would be more incentive to save.

How many people do you know keep all of their assets in a bank account? That's pure stupidity and people *DESERVE* to have negative real return. Even then the negative return is marginal. Indeed, they are getting risk-free rates at banks, which should just keep up with inflation, if not be barely ahead or behind. Most other assets price inflation into the rate of return.

As far as your mortgage example, that's idiotic. Inflation is built into the rate of return of the mortgage through the forward yield curve.

0% price stability is a pipe dream. Giving yourself a cushion to ensure you don't get forced into a deflationary spiral is far more important, provided long-term wages keep up with inflation, which we already proved they did.