My husband is an economist, and a very good one. He has tried to explain some of the craziness of the last month or so to me, but it has been difficult for me to get my head around. Here is the “bullet point” version, which I still find difficult to digest. The reality is, there is no easy explanation for what has happened, or analysis of what might happen next. However, here followeth something to really put you off your cornflakes.
Posted Nov 12, 2008 10:16am EST by Aaron Task in Newsmakers, Recession, Banking
Yes, $3.45 trillion has already been spent, as Bailoutsleuth.com details:
$2T Emergency Fed Loans (the ones the Fed won't discuss, as detailed here)
$700B TARP (designed to buy bad debt, the fund is rapidly transforming as we'll discuss in an upcoming segment)
$300B Hope Now (the government's year-old attempt at mortgage workouts)
$200B Fannie/Freddie
$140B Tax Breaks for Banks (WaPo has the details)
$110B: AIG (with it's new deal this week, the big insurer got $40B of TARP money, plus $110B in other relief)
Tallying up the "true" cost of the bailout is difficult, and won't be known for months if not years. But considering $3.5 trillion is about 25% of the U.S. economy ($13.8 trillion in 2007) and the U.S. deficit may hit $1 trillion in fiscal 2009, hyperinflation and/or sharply higher interest rates seem likely outcomes down the road.
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