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Re: Government Bailout Hits $8.5 Trillion
The federal government committed an additional $800 billion to two new loan programs on Tuesday, bringing its cumulative commitment to financial rescue initiatives to a staggering $8.5 trillion, according to Bloomberg News.
That sum represents almost 60 percent of the nation's estimated gross domestic product.
Given the unprecedented size and complexity of these programs and the fact that many have never been tried before, it's impossible to predict how much they will cost taxpayers. The final cost won't be known for many years.
The money has been committed to a wide array of programs, including loans and loan guarantees, asset purchases, equity investments in financial companies, tax breaks for banks, help for struggling homeowners and a currency stabilization fund.
Most of the money, about $5.5 trillion, comes from the Federal Reserve, which as an independent entity does not need congressional approval to lend money to banks or, in "unusual and exigent circumstances," to other financial institutions.
To stimulate lending, the Fed said on Tuesday it will purchase up to $600 billion in mortgage debt issued or backed by Fannie Mae, Freddie Mac and government housing agencies. It also will lend up to $200 billion to holders of securities backed by consumer and small-business loans. All but $20 billion of that $800 billion represents new commitments, a Fed spokeswoman said.
About $1.1 trillion of the $8.5 trillion is coming from the Treasury Department, including $700 billion approved by Congress in dramatic fashion under the Troubled Asset Relief Program.
The rest of the commitments are coming from the Federal Deposit Insurance Corp. and the Federal Housing Administration.
Only about $3.2 trillion of the $8.5 trillion has been tapped so far, according to Bloomberg. Some of it might never be.
Relatively little of the money represents direct outlays of cash with no strings attached, such as the $168 billion in stimulus checks mailed last spring.
Where it's going
Most of the money is going into loans or loan guarantees, asset purchases or stock investments on which the government could see some return.
"If the economy were to miraculously recover, the taxpayer could make money. That's not my best guess or even a likely scenario," but it's not inconceivable, says Anil Kashyap, a professor at the University of Chicago's Booth School of Business.
Full article
Re: Government Bailout Hits $8.5 Trillion
The history of the last century shows that the advice given to governments by bankers, like the advice they gave to industrialists, was consistently good for bankers, but was often disastrous for governments, businessmen, and the people generally.
-Carroll Quigley
Re: Government Bailout Hits $8.5 Trillion
Aren't we officially in a recession now?
Since December 07 they are saying now. They officially declared it Monday.
I didn't think they were allowed to do that. We needed two consecutive quarters of negative GDP growth, and so far the 4th quarter isn't over.
Re: Government Bailout Hits $8.5 Trillion
Weren't the 1st & 2nd qtr negative though?
Anyway, I was surprised also, because it never seems they "officially" announce it, usually you just hear 5 years later "Remember the recession of 08?" Kinda like huh, what??
Anyway, it's pretty obvious the economy is bad. & will be throughout 2009. So it's a matter of accepting it & hoping & waiting for it to end & take off again (crosses fingers)
Re: Government Bailout Hits $8.5 Trillion
Weren't the 1st & 2nd qtr negative though?
Anyway, I was surprised also, because it never seems they "officially" announce it, usually you just hear 5 years later "Remember the recession of 08?" Kinda like huh, what??
Anyway, it's pretty obvious the economy is bad. & will be throughout 2009. So it's a matter of accepting it & hoping & waiting for it to end & take off again (crosses fingers)
The first and second quarter GDP growth was around 2-3%. We have gone over all this so much in my Economics class. 
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