Seeing I seem to be talking out of both sides of my mouth today. I give you some sobering news.
Want to know how much the bailouts are totally up to be? 700 Billion? That’s an old number now. Very old.
Try 8.5 Trillion. 8.5 flipping TRILLION BUCKS! …and for what? So some Wall Street Investment banks would not go out of business!
The L.A. Times has the story: (Thanks to Reason Hit & Run)
Indeed, analysts warn that the nation’s next financial crisis could come from the staggering cost of battling the current one.
Just last week, new initiatives added $600 billion to lower mortgage rates, $200 billion to stimulate consumer loans and nearly $300 billion to steady Citigroup, the banking conglomerate. That pushed the potential long-term cost of the government’s varied economic rescue initiatives, including direct loans and loan guarantees, to an estimated total of $8.5 trillion — half of the entire economic output of the U.S. this year.
Nor has the cash register stopped ringing. President-elect Barack Obama and congressional Democrats are expected to enact a stimulus package of $500 billion to $700 billion soon after he takes office in January.
The spending already has had a dramatic effect on the federal budget deficit, which soared to a record $455 billion last year and began the 2009 fiscal year with an amazing $237-billion deficit for October alone. Analysts say next year’s budget deficit could easily bust the $1-trillion barrier.
[…]
But even deficit hawks such as Walker acknowledge that the immediate crisis is priority No. 1. Just as with World War II, the government can worry about paying the bills once the enemy is defeated.
“You just throw everything you have at the problem to try to fix it as quickly as you can,” said David Stowell, a finance professor at Northwestern University’s Kellogg School of Management. “We’re mortgaging our future to a certain extent, but we’re trying to do things that give us a future.”
Washington could wind up spending substantially less than the sum of the commitments. Though the total estimated cost of the government’s efforts adds up to $8.5 trillion, only about $3.2 trillion has been tapped, according to an analysis by Bloomberg.
And not all the money committed is direct spending. About $5.5 trillion in loan guarantees and other financial backing by the Federal Reserve is included in the total.
“The only way those commitments would become obligations would be if the economy completely collapsed, in which case it’s a whole new ballgame anyway,” said John Steele Gordon, a business and economic historian.
Here’s why this even remotely bothers me. Because I, and everyone that reads this Blog; Your and My (if I ever have any) Children, their Children and their Children’s Children will be paying for this damn tab. Because our Government decided to prop up some banks that fund our stock market. All so Clinton could float some loans to high risk customers.
Now for the problem, that’s related to this.
It is official, we’re in a Recession!
CNN Reports: (H/T Meme)
The National Bureau of Economic Research said Monday that the U.S. has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy .
The NBER is a private group of leading economists charged with dating the start and end of economic downturns. It typically takes a long time after the start of a recession to declare its start because of the need to look at final readings of various economic measures.
The NBER said that the deterioration in the labor market throughout 2008 was one key reason why it decided to state that the recession began last year.
Employers have trimmed payrolls by 1.2 million jobs in the first 10 months of this year. On Friday, economists are predicting the government will report a loss of another 325,000 jobs for November.
The NBER also looks at real personal income, industrial production as well as wholesale and retail sales. All those measures reached a peak between November 2007 and June 2008, the NBER said.
In addition, the NBER also considers the gross domestic product, which is the reading most typically associated with a recession in the general public.
Many people erroneously believe that a recession is defined by two consecutive quarters of economic activity declining. That has yet to take place during this recession.
So, the Government throwing all this money and bailing out everyone under the sun, except many the industries that need it, like the Auto sector, was a good thing to do, right?
Uh. No.
The financial market and credit crisis worsened during this summer, prompting Congress, the Treasury Department and the Fed to pump trillions of dollars into the economy through a variety of programs, including a $700 billion bailout of banks and Wall Street firms and hundreds of billions of lending by the Fed to major companies and lenders.
But Lakshman Achuthan, managing director of Economic Cycle Research Institute, said that at this point, the only solution for the recession is time.
“All the hand waving and real cash that policymakers are throwing at the problem won’t change the fact we’re stuck in this nasty recession,” he said. “The ultimate cure of a recession is letting it run its course.”
Achuthan’s research firm tracks weekly leading economic indicators that are supposed to signal a change in direction for the economy four or five months ahead of time. Those indicators are continuing to fall at a record pace.
Still, he said he’s not worried about the current recession turning into a depression, as many Americans fear.
“Even with indicators in a tailspin, this still is only a very severe recession,” he said. “There’s lots of gloom, but we don’t see doom.”
Of course, he did not use the word “Depression“, because he did not want to trigger a massive panic on wall street. But the truth and the reality is, that we are on a slippery slope to a depression. The difference between the two is this; The Depression of the late 1920’s and early 1930’s was caused by foolish investors, who basically “Bet The Farm” on a Wall Street bubble, and when that Bubble burst, those people lost it all. This time the depression or recession was caused by a Liberal President who forced an agenda, of giving loans to high risk recipients. When those recipients defaulted, because of a downturn in the economy, those loans went into default. When this happened, our Liberal Congress basically start plugging the holes in the sinking boat, or in this case, began pouring water into the bucket, but the bucket is full of holes; it works for a second, but the water does eventually run out.
The differences are night and day. There are no easy solutions, I wish that there was an easy solution, but most of it goes over my head. How this situation affects me is this; Jobs here in Michigan are scarce. This only compunds that sitution. A full scale depression only makes the prospects of getting another job even worse. It is not a pretty picture, but it is one that is very well rooted in reality.
