$7.4 Trillion and counting

[OAG]

Wow, 50% of GDP for last year spent thus far in the "Bail-outs" of 2008. I doubt it is over yet. The speech today is rumored to have a price tag of $1 trillion to add to that so by night fall today we will either have spent or earmarked to spend $8.4 Trillion - So I guess the National Debt will touch $20 Trillion sometime real soon.

Bloomberg.com: Exclusive

[al_bundy]

all of the bailouts are loans most of which or all of which will be paid back. not like the government is giving free money. and the way t-bills are the government is making a nice profit as well

[OAG]

So the bigger the National Debt is the more money we make? Is this "voodoo" economics?

[. . . Yrs to Go]

Quote:

Originally Posted by OAG So the bigger the National Debt is the more money we make? Is this "voodoo" economics?

More like "Hedge Fund" economics.

But I agree with al . . . the story is needlessly alarmist, and somewhat disingenuous. A big portion of that $7.4T are US Dollar swaps with foreign governments designed to keep the financial system liquid. Another big chunk is the backing of A1/P1 Commercial Paper which has an exceedingly low default risk. While some of it (like the $30B of Bear Stearn's assets) is much higher risk and will result in losses, it is wrong to gin up fear that 50% of US GDP has been "Spent" so far.

[al_bundy]

government is selling t bills and paying very low rates to borrow money. 3.23% for 10 year notes and almost 0% for some shorter term debt and then lending this money buy buying stock in banks and finance companies that pay 5% - 12% depending on LIBOR and other factors. Citi is paying 8%. The terms are for a few years and then the principal has to be paid back which theoretically means that part of the national debt will be repaid in a short amount of time.

This is very different from the late 1980's early 1990's when the deficit was 6% of GDP and was used for government spending

[HFWR]

Seven trillion and one, seven trillion and two...

Dang, lost count! One, two, three...

[kowski]

Amusing, a government that can't stop overspending bailing out business, that can't stop over spending loaning to people, who can't stop over spending.