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How much exactly are Bush & Co. proposing to spend to buy up toxic financial paper that no one else wants?

It's hard for me to think about numbers larger than, say, $1 million. It's like trying to wrap my brain around the number of stars in the Milky Way. So I went looking for something that would help me grasp the concept of $700 billion.

Follow me.

How much is $700 billion? If my calculations are correct:

It's the total cost of the wars (occupations) in Iraq and Afghanistan, from September 12, 2001 through June 2008.

It's enough to fund Head Start for every preschool child in the US for five years. (Sources:American Friends Service Committee and U.S. Census Bureau)

It's about the annual Gross Domestic Product of Chad, or twice the annual GDP of Barbados, and exceeds the GDP of 51 other countries.

It's $5,072 from each of the 138 million taxpayers in the United States. (Source: Wikipedia, citing Internal Revenue Service Data Book for 2007)

It's about $2300 from each man, woman, and child in the United States.

It's about one-third of the federal government's TOTAL annual revenue (from all sources) of $2 trillion.

It's about one-third of the $2 trillion in the Social Security Trust Fund -- the one that some "conservatives" are screaming is going to go broke so soon that we gotta fix (privatize) it right now.

It's almost a third of the $2.3 trillion TOTAL cost of health care for everyone in the United States for a year.

It's the ENTIRE Federal deficit each year since 2004. As I read this, that means this bailout would instantly DOUBLE the already humungous Bush deficit for FY 2009.

It's 42 times the total of all earmarks in the FY 2008 Federal budget.

It's 3,000 times the Federal grant of $233 million that Alaska wanted for building the Bridge to Nowhere.

In other words, with the possible exception of the wars, every other major issue of spending policy that we've been discussing for the past ten years is chicken scratch compared to this single item.

All this, for pieces of paper (or their electronic equivalents) that are so toxic and worthless that the all-knowing all-wise Market is valuing them at essentially zero.

In other words, my car doesn't run and the body is totally rusted out, and I've put it up on craigslist repeatedly and no one will give me even $100 for it. I'm up a creek, so I just have to sell it to the government -- you suckers -- for $100,000.

No wonder the stock market zoomed up on Thursday and Friday. It's champagne, ice cream, and pie all around Wall Street, Fleet Street, Frankfurt, and Beijing, if this sweetheart deal goes through.

Originally posted to rugbymom on Mon Sep 22, 2008 at 05:45 PM PDT.

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Comment Preferences

    •  MR. President have (0+ / 0-)

      pity on the working man

      Read to your kids..... "I am the slime oozin out From your tv set" F.Zappa

      by Tadly on Mon Sep 22, 2008 at 05:53:41 PM PDT

      [ Parent ]

    •  I'm not sure how, but can you reword (0+ / 0-)

      It's enough to fund Head Start for every preschool child in the US for five years.

      It sounds like preschool children in the US will be spending five years in preschool, and that's too long for anyone to be held back.

      Ferengi Rules of Acquisition: #34 "War is good for business...but only from a distance, the closer to the front lines, the less profitable it gets"-8.25, -6.21

      by Jacques on Mon Sep 22, 2008 at 06:58:35 PM PDT

      [ Parent ]

      •  Not coming up with a good rewording (0+ / 0-)

        Obviously what was intended was Head Start for every child -- which costs about $7000 per year per child, times 20 million children, times five to get to the full $700 billion.

        Kids can and do attend Head Start for several years, when it's available. But you're right, probably five years would be too long for any one child.

  •  The debt of Canada is about 457 billion (2+ / 0-)
    Recommended by:
    shock, kurt

    this one payout could retire our entire debt and we would have enough leftovers for free poutine for everyone.

    If your diary is shorter than a Jeff Foxworthy might be a comment.

    by ford prefect 2 on Mon Sep 22, 2008 at 05:50:21 PM PDT

  •  Well Done and Important to Understand! (0+ / 0-)



  •  I think it comes out to (1+ / 0-)
    Recommended by:

    two million eight hundred thousand homes valued at $250,000.

    That is a few homes.

    Being a POW is not an achievement, it is a misfortune. Perkinwarbeck

    by Aesop on Mon Sep 22, 2008 at 05:52:58 PM PDT

  •  Think about it this way... (1+ / 0-)
    Recommended by:

    with the interest alone from $700 billion dollars (say at 5%) , I could walk up to you and literally hand you $1000 every second, morning and night, for the rest of your life and still not even make a dent in the principle.

    Social advance depends as much upon the process through which it is secured as upon the result itself. --Jane Addams

    by shock on Mon Sep 22, 2008 at 05:55:03 PM PDT

  •  It wouldn't fit into a Supertanker (1+ / 0-)
    Recommended by:

    You can't imagine how much cash this is.... seriously.

    •  A stack of $100 bills... (0+ / 0-) least 475 miles high.  (This would reach well beyond the orbit of the international space station.)

      Social advance depends as much upon the process through which it is secured as upon the result itself. --Jane Addams

      by shock on Mon Sep 22, 2008 at 06:08:33 PM PDT

      [ Parent ]

    •  Talking about supertankers (1+ / 0-)
      Recommended by:

      $700 billion is about the total value of the oil consumption in the US for a year if the price remained at $100 per barrel.

    •  Oh, and I just did a calculation (0+ / 0-)

      The US government says a dollar bill has a mass of about 1 gram. And the largest supertankers can carry about 550,000 deadweight tonnes. This means that if the $700 billion were in one dollar bills, it would be about 150,000 tonnes too much for even the largest supertankers. To put this in perspective, a modern US nuclear supercarrier displaces less than 100,000 tonnes (and this much money could probably buy about 70 of them). And even if this money were in $100 bills, it would still weigh about as much as a USS Virginia class nuclear submarine (and it could buy about 350 of them).


    un F---ing believable

    Dudehisattva... <div style="color: #0000a0;">"Generosity, Ethics, Patience, Effort, Concentration, and Wisdom"&l

    by Dood Abides on Mon Sep 22, 2008 at 05:59:30 PM PDT

  •  Since you can conceptualize $1Million.... (1+ / 0-)
    Recommended by:

    ...try this for $730 Billion.
        If you started on the first day of the modern era, the first day of the first year A.D. and won a $1 Million lottery and you put it in a vault. Then the next day, you won another $1 Million. And the next. Every day of every year through Jesus' life you win $1 Million. And you keep winning a million a day, every day.
         Every day you win $1 Million and keep putting it that vault. Through the Roman Empire, the Middle Ages,the Moor invasion of Spain, the Normandy Invasion, Columbus, the founding of America, through the U S Civil War, the invention of electricity, the telephone, 2 World Wars up to the year 2000. One Million a day every day for 2,000 years. You have $730 Billion.

  •  In theory we are only exchanging currency... (1+ / 0-)
    Recommended by:

    We will have a collection of mortgages, that right now are worth almost nothing.   It's like in 2000 when Intel stock dropped to $5.00.  It was never worth $50 at the top of the bubble, but it has intrinsic value, now around 16, I guess. (numbers are for illustration only)

    It all depends on whether we (taxpeyer/goverment) plays hard ball, and buys at 5, or whether we are suckers and pay 40.

    Paulson wanted it to be his choice, whether his buddies the CEO get the loot or the taxpayers.

    Read this diary, it describes how Dodd is trying to get the taxpayers to actually win on this deal, but is being thwarted.

    •  Collection of derivatives, not mortgages (1+ / 0-)
      Recommended by:

      One reason no one knows what the heck all that paper is worth is that it isn't the mortgages themselves. It's pools of mortgages that have been sliced and diced, and priced by computer simulations that no one tested in the real world. Now it's pretty clear that the computer simulations were AFU. It's hard enough to figure out what percentage of a given pool of mortgages will default, which might enable you to put a discounted price on the pool. But the slicing-and-dicing adds another layer (or ten) of uncertainty and speculation. They're clearly worth more than zero -- some of us are, foolishly perhaps, still making mortgage payments even on subprime or alt-As -- but no one has any way to calculate how much more.

      The same is true, or soon will be, of sliced-and-diced pools of student loans, car loans, credit card debt, and probably a lot more.

      •  Yes, you are right... (1+ / 0-)
        Recommended by:

        and the people who know best the details of these securities will sell the very worst to US.  

        Paulson's proposal, and both Dem proposals still say the first priority is saving companies, and the second is protecting the taxpayer (and thus, the American Dollar)

        We need a tough negotiator here, certainly not Paulson. Actually, we could bid out the contract, and get someone to work on a couple of basis points of the ultimate profit.

        And a good trader could make a fortune.

        •  If that's true, where's the private sector? (1+ / 0-)
          Recommended by:

          Why aren't they rushing in? Seems like there should be some bottom-fisher doing exactly what you're proposing, just like the third-rate debt collector outfits that buy up bundles of old debts at pennies on the dollar, and then try to collect double what they paid.

          The fact that no one is lining up to do this signals to me that anyone who knows the details knows how worthless the paper is.

          •  Most people are so overextended... (0+ / 0-)

            that all it will take is a trigger, a cascading loss of jobs, payments on all debts, and further failure of companies and loss of jobs.

            This is a house of cards.  And what no one is saying, not McCain, not Obama, not the change will not come with this 700B.  It will only keep the system alive for a while longer.

            Perhaps the only cure is a depression, a decline in productivity, wealth....and most importantly...expectatons.

            And old car, an old house, a smaller TV will be O.K. And some people work and other's don't

            This is major, and our political system isn't capable of other than trying to get elected.

            Sadly, our man Obama, has no more taste, or concept, or suicidal instincts to do this than does the opposition.

            I hate when I'm so lucid.

  •  Actually about 100 Chads, (0+ / 0-)

    The GDP of Chad is about $7 billion. I had some memorable experiences in NDjamena but it is poor, poor, poor.  So, yes, you could buy 100 Chads with this amount of money.  

    "There is more stupidity than hydrogen in the universe, and it has a longer shelf life." Frank Zappa

    by zootfloggin on Mon Sep 22, 2008 at 06:30:49 PM PDT

  •  You could buy 25 National Institutes of Health (0+ / 0-)

    that would find the cure for bromatosis pretty quickly, wouldn't it?

    "There is more stupidity than hydrogen in the universe, and it has a longer shelf life." Frank Zappa

    by zootfloggin on Mon Sep 22, 2008 at 06:38:20 PM PDT

  •  It's everything but Treausry, Defense and (0+ / 0-)


    If we eliminated every Federal Department and program except those three above, it would come to just over $700 billion.

    Some folks prefer a map and finding their own route. Others need someone to tell them where to go.

    by sxwarren on Mon Sep 22, 2008 at 06:51:48 PM PDT

  •  enough to wind power every home in US... (0+ / 0-)

    The war the stimulus checks and the bailout add up to over $1 Trillion

    Consider this:

    $725,000,000 (725 billion) will build 60 large wind turbine units which will supply electricity for 120,000 homes.
    1,000,000,000,000 (one trillion)divide by 725,000,000 is roughly 1400 which times 120,000 equals 168,000,000 homes.  According to the recent census there are around 120,000,000 households in the USA.  

    Therefore in all this f*cking up our idiotic warmongering right wing leaders could have instead wind electrified the nation.

    Republican't Leadership is a dangerous combination of cut-backs and incompetence.

    by casamurphy on Mon Sep 22, 2008 at 07:28:53 PM PDT

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