Numerous news stories report that the cost of the “bailouts” so far has “reached” $8.5 trillion. Some more cautious stories say they “could” reach $8.5 trillion. ABC News Chris Cuomo says reassuringly that we might get about half back in loan repayments.
The source of this $8.5 trillion is apparently Bloomberg, and their scorecard is here. First, the totals don’t add to $8.5 trillion, only $8.35 trillion. But that’s quibbling. A closer look reveals a far greater portion of the claimed $8.5 trillion isn’t real.
Second, the $8.35 trillion is the total of the “maximum commitment” column. The “tapped so far” column totals to just $3.17 trillion.
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Of the $3.17 trillion, $2.65 trillion (plus virtually all of the “untapped” funds) are clearly loans. Some of the rest is guarantees of various “toxic” assets that may or may not need to be guaranteed. Total cost to taxpayers of the bailouts so far might be about $357 billion. That’s a lot of money, but a lot less than $8.5 trillion.
The bailouts are costly, some if not a lot of them are probably stupid, and so far they have done little to help the economy. But why is the media blowing up $357 billion to $8.5 trillion? My guess is that trillion is the new billion.
Remember the statement attributed (incorrectly) to Everett Dirksen? “A billion here, a billion there, pretty soon you are talking real money.” It seems, to convince audiences we are talking about real money today, we now have to talk trillions, not billions.
And still no transparency, accountability, or oversight.
Joke.
DS
Quick! Someone bail my wife and me out! We’ve got a mountain of student loan debt. Since my wife’s loans are through Chase, we’ll have to pay directly and indirectly (tax).
Randall, you should post about student loans and their connection to the rapid rise (far above inflation) of tuition.
Here’s a coupon for your bailout Frank. Mind the expiration date.
DS
Dan Says:
“And still no transparency, accountability, or oversight.”
Wow that sounds just like the FHWA!