Yesterday, a friend of mine brought to my attention a set of figures concerning our government’s injection of money (it doesn’t have) into businesses (that have mismanaged themselves into needing it).
According to Berry Ritholtz:
In doing the research for the “Bailout Nation” book, I needed a way to put the dollar amounts into proper historical perspective.If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars.
Crunching the inflation adjusted numbers, we find 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
I was shocked–nay, appalled–at these numbers. And that was just what boingboing wanted. My outrage and incredulity — they like it when I get incensed because then I come back often — so I can get incensed some more — to feed my anger and shake my fist in the air… damn those DC clowns!
I knew that the Citibank “infusion” was around 20 billion, I knew that because I had just read it. But when I look above, the figures go from 3.92 trillion to 4.6165 trillion (a difference of 697 billion) by adding the cost of Citibank. Even stranger, the 20 billion came from the TARP (that’s the 700 billion “bail-out package” passed by Congress), so it shouldn’t affect the numbers at all (since since the TARP was part of the 3.92 trillion number). So what is going on?
Well, it seems that some folks are using numbers in vastly different ways. At the root of the Citibank “math problem” are “loan guarantees” that the government is on the hook for. Loan guarantees are not direct costs, although they may (and probably will) incur some costs down the line depending on how many people default on their loans. The default number is, of course, a function of how bad or good the economy is. Yes, it’s all tied together.
Now I have no desire to debate the finer points of loan guarantees and their eventual/possible costs, but I am interested in the inflammatory and misleading rhetoric — all the demagoging and fear-mongering. I don’t know what’s going to happen with our economy — perhaps we’ll all be begging on the streets in a year, waiting in line at soup kitchens and going to fisticuffs over moldy bread — but preying on people’s ability to worry and publishing purposefully misleading information is not going to help prevent that possible future.
And it’s not just boingboing, far-right entertainers like Rush Limbaugh are getting in on the game (love that “fat-cat” ceegar) and even Bloomberg.com seems to be willing to let the murkiness of the numbers sell ad-space (although they are far less alarmist in their reporting).
Again, I’m not an expert, but I think a bit more level-headedness is needed — especially now. When it comes time to panic, I’ll panic with the rest of you, don’t worry about that… but now is not the time. Now is the time to take steps to make sure you have cash stashed away in case you lose your job — now is the time to focus on your own financial positions, to make sure your manager likes you, to update your resume, to take a night course, to be prepared for all the things one needs to be prepared for in life — whether our economy is in the middle of collapse or not.