The House passes the Senate's healthcare reform bill 219-212.
Click to Print
Include Comments
$9.7 trillion? Really?
A segment I love on Saturday Night Live’s “Weekend Update” is “Really?!?” where the news anchors revisit a story from the week and just respond: “Really?”
Not to ruin your Monday morning, but here’s one report from Bloomberg that didn’t help my morning any:
The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.
$9.7 trillion?
Now if you read on, you’ll find that a good portion of those trillions is in the form of loans or guarantees, through agencies like the FDIC. So maybe that money won’t disappear into the vortex of government spending.
The pledges, amounting to almost two-thirds of the value of everything produced in the U.S. last year, are intended to rescue the financial system after the credit markets seized up about 18 months ago. The promises are composed of about $1 trillion in stimulus packages, around $3 trillion in lending and spending and $5.7 trillion in agreements to provide aid.
Covering the haggling in Congress over the last couple weeks, I’ve grown numb to the actual figures on the stimulus. Now that I look at the numbers in aggregate – I hardly know what to say, other than, “Really?”
back to top45 Comments to “$9.7 trillion? Really?”
There ain’t no such thing as $9,700,000,000,000.
I saw on Drudge that Gov. Mark Sanford (R-SC) said we are moving into a “savior” economy. So I had to look at it. He’s right. Rather than businesses making and selling what people want, they are lobbying the government to bail them, that is “save” them from bad business decisions.
Granted, most of these bad decisions were imposed by government (CAFE standards for autos, “Fair Housing” for banks, etc.), but a bad business decision has consequences.
This financial crisis is government imposed. Just as Smoot-Hawley mad a bad situation worse, and prolonged a depression, so is the response to this situation going to cause more trouble.
The government is not working an economic solution to this problem, but a political one. This looks bad.
Report comment to moderator
When I read a post by someone like Chas, my positive attitude becomes quite tempered. He brings me back to earth. (Guess no new recliner for me this year.)
Report comment to moderator
The question is; who gets to choose the winners and losers in today’s economy?
Democrats think that politicians and elites should get to choose winners and losers.
Republicans think that consumers should.
Either way, there will be winners and losers.
Report comment to moderator
Maybe I’m just seeing this in far too simplistic a manner. But how about using the money to (1) pay off those 90% of the mortgages, or (2) pay off 90% of each mortgage (and I realize that those are not the same thing).
Didn’t bad mortgages get us into this mess? Sure, this rewards the clowns that paid $250K for a $100K house, and very much bails out the $50K/year gardener who bought a $250K house. It hurts the homeowner who just paid off his mortgage last month. It’s not “fair”.
So what? There’s no “fair” way to stop this mess. Buying out most of the mortgages will keep people in their houses, and free up a lot of money every month for other things (like buying furniture for the house you’re now able to stay in).
There are a lot of implications to this, and it doesn’t address the enormous debt that this throws into the future. But if they’re going to spend almost ten trillion dollars anyway, why not put it to a more appropriate use?
Report comment to moderator
How about we pay off the house and me and that clown swap houses?
Report comment to moderator
Where is the money coming from? Are we just printing it? Won’t that cause hyper-inflation?
Report comment to moderator
KBells #5, that’s one of the big questions that I don’t know the answer to. How much is a house worth? If (for the sake of argument) every mortgage is paid off completely, what is a house worth? Nobody would want to take out a new mortgage for anything. The guy who has paid for thirty years will think his house is worth lots more than his neighbor who just bought a year ago, and has paid only a single year on it.
And personally, I’d steer clear of clown houses. If they’re anything like clown cars, there’s probably seven thousand people living there.
Xion #6, good questions. I was working on the assumption that the money is going to be spent, so what’s the best way to spend it. Your questions should be answered first.
Report comment to moderator
Reminds me of the person that suggested we just raise the minimum wage to $50 an hour and then all will be well.
Report comment to moderator
Watching Obama’s town hall meeting in Elkart, IN. It’s like a game show.
Obama came through the cheering audience like Bob Barker in The Price is Right. Then after the obligatory 5 minutes of Bush bashing, Obama starts going through the list of prizes the contestants could win if Congress would just step up and approve the prize money.
His speech sounds like a sermon listing all the benefits of being a true believer if the people would just let him save them. You can be SAVED today people if you will only believe in Washington!
Report comment to moderator
XION,
Yes, the money is being created out of thin air. Granted, the Federal reserve, the treasury and congress must work in a coordinate way to get it done, but that is exactly what happens. It is well explained in Murray Rothbard’s book, the mystery of banking (which can be downloaded for free from the Mises institute).
The problem with all this is that we will have to pay for this whole thing not once but twice. Think about this – printing paper money does not any create real capital at all. All this created money will simply bid up prices for all goods and services. So first citizens pay for the projects by being deprived of property through paying higher prices (just as buyers in 2001-2005 bid up home prices artificially high). In other words, the *real* capital for these projects must ultimately be taken from citizens in the present for it is impossible to borrow real goods and services from the future. Later on, we’ll pay for it all over again plus the interest. This will happen in either two forms (a) For non-loans the younger generations will be taxed to pay for the deficit and (b) For loans, consumers will pay interest on the loans through the products they buy – for businesses that borrow must pass the cost of the loan onto the consumer.
Thus, we have the bitter consequences of allowing the government to establish a fiat currency. The Keynsian philosophy all are politicians following (DEMS & REPS alike) follow does not regard to inflation as a concern. Those who are socialists sees it as an easy way to attain government control over the means of production.
Peter
Report comment to moderator
NJL, I’m sorry about being a downer for you. But, did I say anything wrong?
Deep Stuff: The minimum wage will probably be $50.00 in your life time. I remember when it was $0.50. A lot of people were poor then, but those making minimum wage were no worse off than the minimum wage earners now. PVW is correct. No real capital or assets are created here. But power is being created, in a big way. $9.7trillion can buy lots of influence.
I’m reading the biography of FDR. Just finished the part about the debate about the gold standard, and the farm income. They destroyed crops and killed hogs to raise farm prices, while people were hungry in other places.
Report comment to moderator
We voted for fiscal irresponsibility in the extreme and we are getting it.
Report comment to moderator
“So maybe that money won’t disappear into the vortex of government spending.”
That’s a pretty
expletivebig maybe!If I were a betting man, and given the track record of government, I wouldn’t bet that it wouldn’t disappear.
Please note that the majority of recipients are NOT being revealed. So much for transparency, and money not disappearing.
Report comment to moderator
Being one of the ones that got myself in financial trouble over the past couple of years, I think I ought to weigh in on this subject. Yes, I am living in a $135,000 house that is now only worth at the most $121,000. Yes I did get myself into some debt, but I managed to get it paid. I DO NOT think it is up to the government to bail me out. Who do these people think it is going to cost in the long run. You and me that’s who. Don’t ever feel sorry for big business. They figure out how the work the system. What is this that I am now hearing about the banking industry still getting their bonuses????? I got into trouble all by myself (well not really, I trusted someone else) but it ultimately falls to me to get myself out.
Report comment to moderator
I thought that the “CHANGE” that Obama stood for was a change for the better? How is 10 Trillion dollars worth of debt “better”?
How much is a trillion anyway?
Someone put it this way…
If you were to start at 00 AD and begin losing a million dollars a day, you still wouldn’t have lost a trillion dollars by today.
We will have gone through nearly ten times that amount in less than two years.
Report comment to moderator
Xion I saw some of that tall hall meeting. He actually mentioned his desire to help with foreclosures and mortgages…the problem though is this bill doesnt do any of that and Obama wants us to believe that the other 2 legs of his stool will be addressed later.
Of course..thats what I heard during the last stimulus bill too.
Report comment to moderator
Republicans arent much better though right now. The majority are just holding out for another piece of the pie, like last time. Very few are saying no, because the priorities are not being addressed.
Report comment to moderator
How come no one is talking about the actual root problem, i.e. Fannie Mae lending to people who couldn’t pay and cooking the books worse than Enron? Enron was kid’s play compared to Fannie Mae and not one word about it anywhere. Perhaps it because most congressmen were on the dole.
Report comment to moderator
Xion: The essential fact is that the modern economy runs on credit. Without it, NOTHING happens.
Without getting into the blame game, credit dried up. This crashed the prices, not just of real estate, but of just about all basic commodities (foods, metals, etc), which are running around 35% lower than they were a year or so ago. Thus, for a while at least, inflation should not be a problem.
Eventually, yes, but not for a while. Deflation, driven by lessened demand and confidence is the greater, potentially catastrophic threat to the economy as a whole.
The twin objectives of government intervention are 1)to get the credit markets going again (the bailout packages), and 2)to get job, cash, and credit starved and fearful consumers spending again (the stimulus plan).
As most economists know, depressions and recessions are among the best things that ever happen to the wealthiest people in any economy. While they may take small hits, it’s the folks living from paycheck to paycheck who are devastated.
Cash becomes King and assets with relative long-term enduring value may be purchased cheaply, with no competition from underfunded plebes who are dependent on banks, two earned incomes.
Most of the modern day robber barons (like the 25 hedge fund managers who were paid in one year as much as 75,000 NYC public school teachers were paid in three years) are doing very well just now. I was watching a news item on the “devastation” of the “luxury” shops in NYC, such as Tiffany and there was one glaring exception; Brioni’s which sells suits for $40,000 and up and reported brisk sales. And, of course, while Tiffany is unlikely to disclose it, it’s a good bet that while their upper middle class business is way off, the market for the stuff that makes them Tiffany’s is probably not too bad.
So it is not too surprising that the Republicans are quite willing to stand by, do nothing, and watch the economy go over the cliff completely. Their true, foundational constitutents have their bundles of cash, just waiting for everybody else to get deperate enough to sell everything for nothing. What a great opportunity!
Report comment to moderator
Baloney.
A stimulus bill is about the theory that government spending when the private sectors fears to will stimulate the economy. That seems an empirical question to me, so I’m willing to try it and see. Certainly Bush’s “just cut taxes and it will all be OK” theory looks like a real bust.
Picking winners and losers is a bail-out bill. And Republicans backed Bush’s bailout by very wide margins. They didn’t let the market decide that greedy and ultimately inefficient bankers must be flushed from the system. Instead, they allowed profits to be privatized and losses to be socialized and gave those guys hundreds of billions so they could give themselves weekend retreats and millions upon millions in bonuses and buy $2000/hr hookers (seriously, they did).
In at least one case (the Cleveland Bank, I believe it was), the Republican administration very specifically picked winners and losers. A troubled bank that received bailout money used it to buy out the entirely solvent and crisis-free Cleveland Bank. When questioned about it by Ohio’s representative, Hank Paulson basically said that as the unaccountable Finance Czar, he was not going to answer questions about the distribution of funds.
Report comment to moderator
#16 Thorn
I saw the town meeting too (most of it anyway). I thought he indicated that the mortgages are being addressed with the rest of the TARP. That’s what I heard anyway. But it’s too bad they didn’t do that sooner. It was a bit of a sucker play to give Paulson all that discretion with so much money. I think that’s why Obama is emphasizing accountability and oversight right now. Maybe the rest of it will be spent with more foresight.
Report comment to moderator
Steveaubrey — “So what? There’s no “fair” way to stop this mess.”
There was. We should have let them fail and go bankrupt—not give them a free pass to move their shoe to “GO” to receive $200,(add zeros here until you run out) from everyone, for generations to come.
If their business was actually viable, but mismanaged, someone else would step up and figure out how to make it work. If not, the market would find a substitute for whatever they produced. The ignorant notion that the government can, or should, or has to, save every tenuous business is shear folly. Now, all we can do is try to keep the train on the tracks—against the fools who think they can make it fly.
If they had to get out of the game, maybe enough of them would actually get mad about how the government caused them to lose everything with never ending, ignorant, politically expedient regulations and law. Maybe then they’d also consider actually changing the situation in Washington.
IMO, we shouldn’t have even spent the money we have so far because all that was necessary was a regulation change to allow these market instruments or “baskets” of mortgages containing the bad loans—the so called “toxic assets”—to be disassembled, the bad loans identified, and then sold individually, or as baskets, for what they are actually worth. Then, change the HOEPA law that allowed these bad loans to come into existence because the government shouldn’t be guaranteeing everyone home ownership in the first place.
As I understand it, these baskets weren’t full of all toxic loans—some were actually viable and performing. And, not all the “toxic” loans were beyond saving. With restructuring, some could have been saved. The market would establish a price for these toxic loans, or the properties behind them, and they would be put back on the market.
Would some owners temporarily lose their home or properties? You bet, but then they shouldn’t have owned them in the first place and would have simply returned to the rental market where they belonged until they could afford to buy.
Would the housing market take a hit? You bet. But which is worse? Allowing the housing market to suffer a setback that it will recover from or chucking the entire economy into the toilet for several years as we’ve done?
The last thing we should do now is think that the only way to “fix” the problem is to insert the government in every boardroom as an owner—after paying twice the value for the stock it holds—and handing your great grandchildren the bill.
And certainly not to hand the Democrats a blank check, or agree to pay for every ignorant wish they’ve had for the last 20 years thinking it will change anything for the better.
Report comment to moderator
The usual suspect — “Without getting into the blame game . . .”
Of course not, someone will look bad and we can’t have that—can we?
Blame would identify who caused the problem and how they did it. If they aren’t identified, we won’t know enough to see them and their failed ideas coming next time.
Report comment to moderator
We have to stay out of the “blame game” when those to blame for this mess are Chris Dodd and Barney Frank.
We have to stay out of the blame game when the culprit is Jamie Gorelik. (Wall between FBI-CIA)
When the blame is to George Bush, go to it.
Report comment to moderator
The “Do Nothing” Party (Republicans) wants to stand by and let the country crash and burn. But the majority of Americans still think this is a country worth saving and they’re willing to try extraordinary measures to do it. While the Republican crowd stands on the sidelines chanting “Burn, baby, burn!”, President Obama and the Democratic led congress are trying to do what they can to save this nation. Ignore the Republicans.
Report comment to moderator
So you are classifying my father as an ignorant clown because he had a house that was paid for but my stepbrother was coming back to the property from prison and he didn’t want to live there so instead of divorcing my stepmother he moved out and bought another house that he could well afford on his income. The only problem is that he was inconsiderate enough to die before the market came back. Now I am the one paying for it. But hey! I have a roof over my head. I manage to pay for it. Sure it isn’t worth what is owed on the mortgage right now but it is what was available at the time and in a price range he thought he could afford.
Don’t blame the common people for running up the prices on homes. Blame the investors and blame the natural disasters that happened. After Katrina the cost of construction went up to $150 per square foot. Now the cost of new construction is below $100 a square foot. Hard to sell a 4 year old house that cost $300,000 when they can buy new for $200,000. Them’s the breaks.
Report comment to moderator
Xion,
We are not printing money. We are borrowing it. We won’t print it until teh loans come due and we end up printing twice as much as we borrowed over 30 years with interest included.
That is when hyper inflation will be king instead of the UDS dollar.
No offense to Chas, but I think the WSJ today lays the blame for this financial mess at the feet those that deserve the blame – The federal government, especially our elected officials, along with the bureaucracy. Yes Bush was mentioned but presidents have such little power and depend on others for what little power they have – he was not the evil satan.
Real power is held by congress and the bureaucracy and they were elvil satans.
Report comment to moderator
Of course the Wall Street Journal is going to blame the government. It is desperately trying to divert the Americans people’s focus and attention off of the greed and corruption on Wall Street. It’s actions are self-serving.
Report comment to moderator
“Maybe the rest of it will be spent with more foresight.”
haha you said foresight. Silly DJ, we know politicians did it on purpose, just like they are again
Report comment to moderator
“The “Do Nothing” Party (Republicans) wants to stand by and let the country crash and burn. But the majority of Americans still think this is a country worth saving and they’re willing to try extraordinary measures to do it. While the Republican crowd stands on the sidelines chanting “Burn, baby, burn!”, President Obama and the Democratic led congress are trying to do what they can to save this nation. Ignore the Republicans.”
Okay so the same Republicans that are blamed for getting us here via their spending and other mismanagement practices, are now being blamed for wanting to do completely nothing. Meanwhile, Obama and the Dems want to try the same previous Republican approach times 3.
How about we ignore both of them, and pay attention to the few and proud on both sides who want to do the RIGHT something and not just anything or nothing?
This bailout bill is like throwing water on a grease fire. Good luck
Its not that conservatives dont want to do anything about it, they just dont wanna pour water on it. Find me some baking soda please!!
Report comment to moderator
“Of course the Wall Street Journal is going to blame the government. It is desperately trying to divert the Americans people’s focus and attention off of the greed and corruption on Wall Street. It’s actions are self-serving.”
Thank you for admitting that the media has an agenda that is self serving.
Report comment to moderator
The WSJ exists first and foremost to defend the interests of Wall Street, no matter how corrupt or evil it is. The Republican Party also defends Wall Street because that is where their bread is buttered. Both institutions (WSJ and the Republican Party) have lost their moral compass in the process. Wall Street has never had one to lose I’m afraid.
Report comment to moderator
“The WSJ exists first and foremost to defend the interests of Wall Street, no matter how corrupt or evil it is.”
This application of evil personality—”evil” since you disagree—to a completely dissociate entity such as Wall Street that is made up of freely acting individuals from all over the world promoting and perpetuating their own personal interests is, at best, delusional. Much like fearing the notion of the “vast right-wing conspiracy”.
I suppose you think the “evil” right is the only party represented on Wall Street, right?
Report comment to moderator
“Democrats think that politicians and elites should get to choose winners and losers. Republicans think that consumers should.”
This is true but perhaps it is even more accurate to say…
Leftists think that politicians and elites should get to choose winners and losers. Free market thinkers on the Right think that consumers should.
Report comment to moderator
Kim,
Since I’m the only one that has used the term “ignorant”, should I presume you’re addressing me?
Report comment to moderator
#33,
It’s evidence for the existence of alternate universes.
Report comment to moderator
When the free marketers on the right refer to “consumer” they’re referring to the wealthy in this country. They do whatever is in the best financial interest of the wealthy, not the middle class, the working people, or poor people of this nation. As long as they continue to get wealthy, even at the expense of the rest of us, that’s all they care about. They don’t give a rat’s behind about the other 95% of Americans.
Report comment to moderator
Chas, you didn’t say anything wrong at all! You essentially fulfilled my father’s role of putting me on the right path. At least you didn’t say “And I bet you still believe in Santa Claus, too.”
I don’t know about $50, Chas! I only have a few years to go until retirement — at least, I did until my retirement savings got wiped out. I’ll need a minimum wage job to keep afloat in my golden years.
Report comment to moderator
(Re: #18) Xion “How come no one is talking about the actual root problem, i.e. Fannie Mae?”
The problem is absolutely not, as so often repeated, that unscroupulous lenders loaned money to those who could not pay back, or “greed” on wall street. The root of the problem is that our monetary system is based upon a fiat currency. This has allowed both the government and the banking system essentially unrestricted access to the creation of money. When the powers that be can simply create money to loan out, what loss is it to them if someone can pay it back? It’s not as if the lender hand to incur a cost in order to enslave the borrower! Further, whenever trouble arises, the member and non-member banks well know that the gov’t and fed will be right there to bail them out. The banks have a long history of being granted favors in hard times by western governments since the 1700’s and it has now (how unexpectly!) happened once again with the $700m bailout.
(Re: #19) Arcadia,
“The essential fact is that the modern economy runs on credit. Without it, NOTHING happens.”
I apologize in advance if I’m reading too much into this statement — but I disagree for this reason: It is far from obvious that a modern economy requires credit expansion. As I mentioned in a prior post (#10) real capital does not consist of paper with green ink. Real capital is the actual means of production, which can be transferred from one owner to another through buying and selling. The real capital available to an economy does not any require credit, for real capital exists with or without any paper money. The only thing that paper money is capable of accomplishing is allowing its creators to dictate the use of those real resources which are the means of production (towards centralized economic planning), rather than private citizens/individuals (free market).
“Deflation [is a] potentially catastrophic threat to the economy”.
For what reasons do you think the above is true?
“The twin objectives of government intervention are…”
Rather, the objective of government officials is to gain control of wealth and buy votes by touting the alleged benefits to the recipients of the redistribution of wealth. This is not a legitimate function of government.
(Re: #20) “A stimulus bill is about the theory that government spending when the private sectors fears to will stimulate the economy.” – Actually this theory has been tried before, and not with results that would warrent doing so again: Japan in the 90’s and Hoover/FDR in the 30’s. However, history is complex and there will never be agreement on its interpretation. The only practical means of settling differing economic views is to apply deductive reasoning.
(Re: #25) The government “doing nothing” is the right approach. Unfortunately the republicans are certainly not in favor of doing nothing. Realize that the government doing nothing doesn’t mean nothing is being done, it rather means that the private sector is no longer suffering from the interventions of a government misdirecting the scare resources of the economy.
(Re: #27) It stretches my credulity beyond the breaking point to think that we are not printing money but borrowing it. Would you mind identifying who had and was able to loan the money to the gov’t throughout the massive spending bills of the few months?
Report comment to moderator
RonD #22 – I am in agreement with you on what we could/should have done to stop the mess. The point I was trying to make was that if we’re going to be spending the money anyway, let’s put it directly into people’s pockets. I do fear a $10 trillion check written on my future.
Kim #26, I meant no offense. It sounds like your father was doing the right thing in a rough situation. I was thinking of the house flippers and those who participate in the willing suspension of disbelief. “Sure, it’s overpriced, but it will appreciate 20% in a year, and I’ll sell it for a big profit!” I’m right along-side you in living in a house that’s not worth the mortgage.
Report comment to moderator
9. Xion – Didn’t see the town hall meeting in Elkhart, but you neatly summed up how I felt about Monday evening’s news conference performance by BO.
m.a
Report comment to moderator
#27 Llama We are not printing money. We are borrowing it.
#39 PVW says, (Re: #27) It stretches my credulity beyond the breaking point to think that we are not printing money but borrowing it. Would you mind identifying who had and was able to loan the money to the gov’t throughout the massive spending bills of the few months?
You both are right actually. The only government in the world with enough money to lend is China. So we will start by borrowing some Yens. I wonder if China knows this yet? The problem is that China’s economy is also teetering on collapse. When it does, where will the money come from then?
America will print it. This will cause hyper-inflation and send interest rates through the roof.
Report comment to moderator
The Senate just passed the largest socialist pork barrel spending bill in American history.
The good news is no more lunch time LIES from Obama. He says there are no earmarks. LIES! He says this is the worst financial crisis since the Great Depression. LIES! LIES! He calls this a stimulus package. LIES! LIES! LIES!
One thing Obama never mentioned is how high taxes will go for the 50% who actually pay taxes. Taxes will go so high that the percentage of taxpayers will decrease as more and more people won’t be able to pay.
In the end, fewer people will be working and fewer people will own homes due to high taxes and interest rates.
Report comment to moderator
XION,
I’ve never really understood fully how the china borrowing process works, could you please help me out with a little more explanation? If the Chinese government sends yen to the US government, then my questions are: How did the Chinese gov’t get the yen (i.e. mostly by taxation or printing?) What would the US government do with yen anyway? would it only be able to buy Chinese goods (us citizens would not accept payment in yen)? or somehow try to workout a currency exchange to dollars? but then who would the exchange be carried out with?
Thanks
PVW
Report comment to moderator
“LIES! LIES! LIES!” is all the Republicans have got. Ignore them.
Report comment to moderator
back to topJoin The Conversation
You need to be a registered user of WORLDonTheWeb.com to "join the conversation."
If you are not a member yet, what are you waiting for? Register / Login Now!