Friday, September 19, 2008

So what's this gonna cost?...

As near as I can tell, government action to restore normalcy in the financial markets is going to cost taxpayers:
  • Less than we think.  
So what's the real cost to taxpayers for all these interventions? No one can say for sure, and probably won't be able to for some time. The Savings & Loan crisis of the early 1990s cost taxpayers a net of $124 billion in 1999 dollars, according to the FDIC - more than initially estimated but below projections made during the height of the crisis.

But one thing is certain: The price tags on today's bailouts bear "no direct translation to the taxpayer cost," said Lyle Gramley, a former Fed governor now with the Stanford Group, a Washington policy research firm.

Indeed, he said, "None of us knows yet if there'll be any cost to the taxpayer at all." [More]
  •  $500,000,000,000  (or half a trillion, if you are tired of counting zeroes)
The proposal to create a massive facility to buy mortgage-backed securities could cost as much as a half-trillion dollars and would involve the purchase of both private-label and government-guaranteed mortgages, according to an administration official. [More]

  • $2,000,000,0 - oh, never mind: $2 TRILLION
There were growing fears today that the financial-industry bailout being worked out by US authorities could take a heavy toll on the American economy, with cost estimates as high as $2 trillion (£1.09 trillion).

Treasury Secretary Hank Paulson and Federal Reserve chairman Ben Bernanke hope to unveil their proposals on Monday, with the most likely option being to establish an $800bn fund to purchase so-called failed assets, and a separate $400bn pool at the Federal Deposit Insurance Corp to insure investors in money-market funds.

They say they will need legislative support for their scheme, and key US politicians have pledged to pass any necessary measures within days.
But questions are being raised over whether even the US government's pockets are deep enough. Estimates of the eventual price the US taxpayer will have to pay to end the credit crisis vary from $500bn to $2 trillion. [More]
  • The good life
So much for the American Dream and the politicians who not only promised a chicken in every pot but a Viking Stove to cook it on and a granite counter top on which to place the warming tray. Perhaps this is the catharsis we needed to understand that not everyone should own a house or other bought on credit goodies beyond our means. It may be the only way out of this nightmare where we end up on the ground like Kong with no one capable of administering CPR.

The pursuit of happiness has cost us dearly. [More]

I'm glad we cleared that up.

Next question, please. 

I'm here to help.

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