What $700 Billion Bailout? It’s Just $3,324 a Head!

Let’s do a reality check on the spending spree the U.S. Treasury is currently on:

• Troubled Asset Relief Program: $700 billion
• Fannie Mae (FNM) and Freddie Mac (FRE): $200 billion (est.)
• AIG (AIG): $85 billion
• Bear Stearns: $29 billion
• Current running total: $1,014 billion
• Current U.S. population: 305 million
• “Cost” per citizen: $3,324 (the equivalent of one dirty long weekend at the Wynn in Las Vegas)
• 10 year U.S. bond: 3.80%
• Annual carrying cost per citizen: $126.31
• Annual principal and interest payments over 10 years: $405.75

Congress is putting the Fed Chairman and the Treasury Secretary through their paces, but at the end of the day, the politicians know that this proposal needs to be passed in some way, shape or form. There may be warrants or CEO salary caps, but it is going to happen. U.S. Voters need to see their representatives wringing their hands over the “Wall Street Fat Cat bailout” concept, but that is more about the election on November 4th than anything else.

For all of the mayhem of the past 18 months, individual Americans are being asked to give up a long weekend in Vegas to save their financial system. That’s bad for the retailers at the Fashion Show Mall on Las Vegas Blvd. South, but it is definitely good for the rest of us.

Comments

[Diane Ritter:]

Alas, your premise is flawed. We are being asked to give up a long weekend, not save our financial system, but to bail out a lot of rich, politically connection wall street bankers and brokers.

The best way to save our financial system is to do to these wall street banks what the FDIC did to Washington Mutual. Fire the managers who caused the problem, let the equity holders and debt holders take the hit they deserve, and sell the assets to companies run by more prudent and capable managers. They last thing in the world we should do is to inject capital into these companies, and allow them to continue to be run by the fools and villians who caused the mess in place.

2008 Sep 26 07:43 AM

[GWC:]

you assume EVERY citizen can afford a long weekend in Vegas. Divide it by US household and it comes to about $7500. A fair amount of money to the average citizen.

2008 Sep 26 08:49 AM

[hankr:]

(a) GWC has it right; divvying-up the bill with infants and octagenarians doesn't make sense. And the average household can't afford $7500 obligation tacked-on to their already staggering debt load. More likely, this represents $15-20K in obligations for those of us who were thrifty through all of this mess.
(b) consequently, the mood in the country over this plan is positively corrosive. Unless ALL bonuses are stripped from the plan (e.g. the ~$2B set-aside for Lehman's NYC personnel) the populace is going to go nuts, at least in a political sense.
(c) just as we in the oil & gas business have had to live with the perception that the television show DALLAS was realistic, now NYC is going to have to fight the BONFIRE OF THE VANITIES.

2008 Sep 26 09:22 AM

[freeAgent:]

You miss the fact that a lot of these Americans are not net earners. You're also talking about a plan that will devalue the currency, placing even further strain on those trying to pay it off. Finally, you're sending a message that says you're allowed to keep your free market gains but we'll socialize your free market losses as long as you're "too big to fail". It sets a dangerous precedent and fundamentally changes our economic system. Have you visited the website buymyshitpile.com yet? What's the justification for this bailout over any other? We could simply turn that bailout money into equity payments on mortgages about to default. I'm against doing that as well, but wouldn't it have a similar type of bailout effect?

2008 Sep 26 10:51 AM

[User 30121:]

Hey Mark, since you apparently don't get it, to suggest "every citizen kick in $3400 to basically DONATE more money to the inept Democrats who created this mess by pressuring the banks/mortgage companies to give home loans to those "needy" of it who had little, if any, method of paying off the loan, is ludicrious.

2008 Sep 26 02:08 PM

[tnamn:]

Mark,
You are so out of touch with the working class. I could put $7,000 to a pretty good use. Unlike you, we don't run to Vegas. We pay these things called bills & feed our families.

2008 Oct 03 01:03 PM