Financial Rescue Nears GDP as Pledges Top $12.8 Trillion

[ThoughtCriminal]

March 31 (Bloomberg) -- The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.

New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008.

President Barack Obama and Treasury Secretary Timothy Geithner met with the chief executives of the nation’s 12 biggest banks on March 27 at the White House to enlist their support to thaw a 20-month freeze in bank lending.

“The president and Treasury Secretary Geithner have said they will do what it takes,” Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said after the meeting. “If it is enough, that will be great. If it is not enough, they will have to do more.”

Commitments include a $500 billion line of credit to the FDIC from the government’s coffers that will enable the agency to guarantee as much as $2 trillion worth of debt for participants in the Term Asset-Backed Lending Facility and the Public-Private Investment Program. FDIC Chairman Sheila Bair warned that the insurance fund to protect customer deposits at U.S. banks could dry up because of bank failures.

‘Within an Eyelash’

The combined commitment has increased by 73 percent since November, when Bloomberg first estimated the funding, loans and guarantees at $7.4 trillion.

“The comparison to GDP serves the useful purpose of underscoring how extraordinary the efforts have been to stabilize the credit markets,” said Dana Johnson, chief economist for Comerica Bank in Dallas.

“Everything the Fed, the FDIC and the Treasury do doesn’t always work out right but back in October we came within an eyelash of having a truly horrible collapse of our financial system, said Johnson, a former Fed senior economist. “They used their creativity to help the worst-case scenario from unfolding and I’m awfully glad they did it.”

Federal Reserve officials project the economy will keep shrinking until at least mid-year, which would mark the longest U.S. recession since the Great Depression.

The following table details how the Fed and the government have committed the money on behalf of American taxpayers over the past 20 months, according to data compiled by Bloomberg.



================================================== =========
--- Amounts (Billions)---
Limit (First Number) Current (Second Number)
================================================== =========
Total $12,798.14 $4,169.71
-----------------------------------------------------------
Federal Reserve Total $7,765.64 $1,678.71
Primary Credit Discount $110.74 $61.31
Secondary Credit $0.19 $1.00
Primary dealer and others $147.00 $20.18
ABCP Liquidity $152.11 $6.85
AIG Credit $60.00 $43.19
Net Portfolio CP Funding $1,800.00 $241.31
Maiden Lane (Bear Stearns) $29.50 $28.82
Maiden Lane II (AIG) $22.50 $18.54
Maiden Lane III (AIG) $30.00 $24.04
Term Securities Lending $250.00 $88.55
Term Auction Facility $900.00 $468.59
Securities lending overnight $10.00 $4.41
Term Asset-Backed Loan Facility $900.00 $4.71
Currency Swaps/Other Assets $606.00 $377.87
MMIFF $540.00 $0.00
GSE Debt Purchases $600.00 $50.39
GSE Mortgage-Backed Securities $1,000.00 $236.16
Citigroup Bailout Fed Portion $220.40 $0.00
Bank of America Bailout $87.20 $0.00
Commitment to Buy Treasuries $300.00 $7.50
-----------------------------------------------------------
FDIC Total $2,038.50 $357.50
Public-Private Investment* $500.00 0.00
FDIC Liquidity Guarantees $1,400.00 $316.50
GE $126.00 $41.00
Citigroup Bailout FDIC $10.00 $0.00
Bank of America Bailout FDIC $2.50 $0.00
-----------------------------------------------------------
Treasury Total $2,694.00 $1,833.50
TARP $700.00 $599.50
Tax Break for Banks $29.00 $29.00
Stimulus Package (Bush) $168.00 $168.00
Stimulus II (Obama) $787.00 $787.00
Treasury Exchange Stabilization $50.00 $50.00
Student Loan Purchases $60.00 $0.00
Support for Fannie/Freddie $400.00 $200.00
Line of Credit for FDIC* $500.00 $0.00
-----------------------------------------------------------
HUD Total $300.00 $300.00
Hope for Homeowners FHA $300.00 $300.00
-----------------------------------------------------------
he FDIC’s commitment to guarantee lending under the
Legacy Loan Program and the Legacy Asset Program includes a $500
billion line of credit from the U.S. Treasury.

(sorry, the above graph didn't transfer very well, check it out on the origingal site - link is at the top of this page)

[Yellowfin]

Am I understanding this right? The Fed has spent EVERY DIME WE MADE?

[PisnNapalm]

===========================================================
                                  --- Amounts (Billions)---
                                   Limit          Current
===========================================================
Total                            $12,798.14     $4,169.71
-----------------------------------------------------------
 Federal Reserve Total            $7,765.64     $1,678.71
  Primary Credit Discount           $110.74        $61.31
  Secondary Credit                    $0.19         $1.00
  Primary dealer and others         $147.00        $20.18
  ABCP Liquidity                    $152.11         $6.85
  AIG Credit                         $60.00        $43.19
  Net Portfolio CP Funding        $1,800.00       $241.31
  Maiden Lane (Bear Stearns)         $29.50        $28.82
  Maiden Lane II  (AIG)              $22.50        $18.54
  Maiden Lane III (AIG)              $30.00        $24.04
  Term Securities Lending           $250.00        $88.55
  Term Auction Facility             $900.00       $468.59
  Securities lending overnight       $10.00         $4.41
  Term Asset-Backed Loan Facility   $900.00         $4.71
  Currency Swaps/Other Assets       $606.00       $377.87
  MMIFF                             $540.00         $0.00
  GSE Debt Purchases                $600.00        $50.39
  GSE Mortgage-Backed Securities  $1,000.00       $236.16
  Citigroup Bailout Fed Portion     $220.40         $0.00
  Bank of America Bailout            $87.20         $0.00
  Commitment to Buy Treasuries      $300.00         $7.50
-----------------------------------------------------------
  FDIC Total                      $2,038.50       $357.50
   Public-Private Investment*       $500.00          0.00
   FDIC Liquidity Guarantees      $1,400.00       $316.50
   GE                               $126.00        $41.00
   Citigroup Bailout FDIC            $10.00         $0.00
   Bank of America Bailout FDIC       $2.50         $0.00
-----------------------------------------------------------
 Treasury Total                   $2,694.00     $1,833.50
  TARP                              $700.00       $599.50
  Tax Break for Banks                $29.00        $29.00
  Stimulus Package (Bush)           $168.00       $168.00
  Stimulus II (Obama)               $787.00       $787.00
  Treasury Exchange Stabilization    $50.00        $50.00
  Student Loan Purchases             $60.00         $0.00
  Support for Fannie/Freddie        $400.00       $200.00
  Line of Credit for FDIC*          $500.00         $0.00
-----------------------------------------------------------
HUD Total                           $300.00       $300.00
  Hope for Homeowners FHA           $300.00       $300.00
-----------------------------------------------------------
he FDIC’s commitment to guarantee lending under the
Legacy Loan Program and the Legacy Asset Program includes a $500
billion line of credit from the U.S. Treasury.

[FNG19]

Am I understanding this right? The Fed has spent EVERY DIME WE MADE?

Not exactly. GDP measures the productive output of an economy after the fact. In other words, it's a measure of what has already happened, not what could theoretically have (or will) happen. In a figurative way, it's the W2 for the a given country's economy. In 2008, the US GDP was approximately $14.5T, so the article is indicating that the government has committed almost an entire year's worth of economic value to the bailouts/etc. Insofar as money spent for one thing can't be spent on something else, an equivalent of 2008's GDP was allocated to this crisis, so it's as if 2008 never happened.

Put another way: If you had $100,000 in the bank and used that $100,000 to pay down medical bills due to a medical emergency, it's as if you didn't spend 20 years saving it. All that work was wiped out in a single moment, so there was all sacrifice and no gain (barring restoring your health, of course!). In this case, it's a year's worth of effort for 300 million people.

Kinda pisses you off, doesn't it?

(PS: Yes, I know I've taken some liberties here, but I believe the point was made. I'll be happy to correct any egregious errors in the analogies.)

[Morel42]

Well, you have to remember... When the entire system is about to impload you really don't care about 10 years from now. You just try to keep it alive until you can hopefully solve things later.

Sorta like running out of gas in the middle of Deliverance and all you have is gas cleaner in your trunk. You're damn right you'll put that in and run that car on something that will blow the injectors out.. Because you have an ass to save and you can fix the car later.

[Guns4Fun]

Well, you have to remember... When the entire system is about to impload you really don't care about 10 years from now. You just try to keep it alive until you can hopefully solve things later.

Sorta like running out of gas in the middle of Deliverance and all you have is gas cleaner in your trunk. You're damn right you'll put that in and run that car on something that will blow the injectors out.. Because you have an ass to save and you can fix the car later.

We can always count on you to show the shiny side to things.

Trouble is--if these freekin politicians would stop screwing with the here and now, we'd be in a lot better shape.

If it wasn't for the politicians and greed for the here and now--that loosened up standerads---fannie / freddie we wouldn't be in the pickle we are now.

As it stands now, every American family is on the hook for 116k of debt for these dumb political decisions. Not to mention the fascist road we are on.

Who was it that said those who give up liberty and freedom for security deserve neither?

These stupid politicians are screwing up the country for generations to come.

[Morel42]

We can always count on you to show the shiny side to things.

Trouble is--if these freekin politicians would stop screwing with the here and now, we'd be in a lot better shape.

If it wasn't for the politicians and greed for the here and now--that loosened up standerads---fannie / freddie we wouldn't be in the pickle we are now.

As it stands now, every American family is on the hook for 116k of debt for these dumb political decisions. Not to mention the fascist road we are on.

Who was it that said those who give up liberty and freedom for security deserve neither?

These stupid politicians are screwing up the country for generations to come.

Ya I try.. We're screwed no doubt about it..

I just try to make sure I have strawberry ice cream while the world burns..