United Liberty
CNBC: Crisis Has Now Cost More Than WWII (Inflation Adjusted)
Thu, 11/20/2008 - 1:29pm | posted by Austin Wilkes
The rate of spending by the Federal Government (and its surrogate/partner the FED) during the 2008 financial crisis has reached such unprecedented levels that it has now eclipsed the Second World War’s total inflation adjusted costs. CNBC, who has kept a running total, pegs the “total amount of money thrown at the situation” at $4.28 Trillion. With current total market capitalization of the S&P 500 now around $7 trillion (+/- a few hundred billion USD), CNBC’s total could theoretically pass the combined market capitalization of all the nation’s top 500 companies if trajectory of both do not significantly change within the next few months.
Try $4.28 trillion dollars. That’s $4,284,500,000,000 and more than what was spent on WW II, if adjusted for inflation, based on our computations from a variety of estimates and sources*.
Not only is it a astronomical amount of money, its’ a complicated cocktail of budgeted dollars, actual spending, guarantees, loans, swaps and other market mechanisms by the Federal Reserve, the Treasury and other offices of government taken over roughly the last year, based on government data and news releases. Strictly speaking, not every cent is a direct result of what’s called the financial crisis, but it is arguably related to it.
Some 68-percent of the sum falls under the Federal Reserve’s umbrella, while another 16 percent is the under the Troubled Asset Relief Program, TARP, as defined under the Emergency Economic Stabilization Act, signed into law in early October. (The TARP alone is bigger than virtually any other US government endeavor dating back to the Louisiana Purchase. See slideshow.)
As CNBC pointed out- The TARP Bailout only accounts for 16% of the funds allocated or loaned by the FED or the Treasury. While most of the expenditures of the FED and Treasury are in the form of loans, asset purchases, and direct investment that can be recouped, I believe much will never be recouped, at least in real terms.
Below is a CNBC Table simplying the maze of government efforts-
| Government Entity | Sum in Billions of Dollars |
| Federal Reserve | |
| (TAF) Term Auction Facility | 900 |
| Discount Window Lending | |
| Commercial Banks | 99.2 |
| Investment Banks | 56.7 |
| Loans to buy ABCP | 76.5 |
| AIG | 112.5 |
| Bear Stearns | 29.5 |
| (TSLF) Term Securities Lending Facility | 225 |
| Swap Lines | 613 |
| (MMIFF) Money Market Investor Funding Facility | 540 |
| Commercial Paper Funding Facility | 257 |
| (TARP) Treasury Asset Relief Program | 700 |
| Other: | |
| Automakers | 25 |
| (FHA) Federal Housing Administration | 300 |
| Fannie Mae/Freddie Mac | 350 |
Total | 4284.5 |
We’ve killed what made us a great nation. Capitalism fails, when you loose the ability to fail.
“In this free nation we do not choose to be ruled, we elect to be governed.”
— Barry Goldwater
Financial crisis is a natural occurrence in a certain area. Today the world is facing this kind of problem but the government is trying to solve it. The Federal Reserve announced that it was ready to make purchase of Treasury Securities, in order to free up cash that could be injected or lent to help stimulate credit lending. Like an online payday loan to the rescue, the announcement helped to boost stock markets a bit – a good first step. Treasury securities, i.e. government bonds, are among the safest of investments.
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