More than a few people have asked me how I came up with the the $8.5 trillion figure for the total cost of the bailouts. Below is a table, plus the Excel Spreadsheet it came from.

Note that this cost does not include the $5.2 trillion in Fannie/Freddie portfolios that the US taxpayer is now also explicitly responsible for.
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Download the Spreadsheet:  us-government-rescue-programs.xls

Category: Bailouts, Credit, Federal Reserve, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

35 Responses to “Calculating the Total Bailout Costs”

  1. richardrogers4 says:

    It still amazes me where all this money actually comes from…..

  2. John Borchers says:

    The balance is huge. Has the Fed ever lost money though on a venture like this?

    With futures up some 3% don’t be so quick to panic and cover. There are margin calls which should be coming in from the aweful day yesterday. I’m sticking to my game plan.

  3. mhm says:

    A voice of reason:

    The Swedish government has ruled out a takeover of the country’s beleaguered automaker Volvo Cars if its owner, US group Ford, decides to sell it, daily Dagens Nyheter reported on Tuesday.

    “We are not an emergency bank where companies can get money when things take a turn for the worse. That would just be a misappropriation of taxpayers’ money,” he told Dagens Nyheter.

    http://www.google.com/hostednews/afp/article/ALeqM5jlSz_d-DCbzADaQbcl69tQcOXnIg

  4. AlexInNC says:

    Thanks for consolidating this info, very helpful.

  5. Blif says:

    BR, Could you provide a third column showing which of this money is already up in smoke/on it’s way to being so, vs. which of the money is just temporarily being put at risk. Might be a good assignment for someone to create a chart or some kind of heatmap showing each entry in the spreadsheet with it’s associated risk of being money spent (wasted) vs money lent. Thanks! Enjoying the new site.

  6. ndonahoe says:

    For 10 trillion could the government not simply pay off every residential mortgage, or simply guarantee them. At the root this is still a housing/mortgage problem. Why do we need 30 plus programs to fix all these problems when cleaning up the actual mortgages would so much simpler.

  7. da_rubberbandman says:

    Wow!!!! And Club Fed isn’t overflowing, That amazing.

  8. John Borchers says:

    Minus 2-3% then cover.

  9. dead hobo says:

    Granted the ultimate expenditure will be high, but a lot of this cash is only for lending and collateral is provided. How much is actually being spend with little hope for full recovery? The numbers above are high, but it is a little disingenuous to imply the above amounts are the same as cash grants. What is likely to be the real nut?

  10. mitchn says:

    @ndonahoe
    > Why do we need 30 plus programs to fix all these problems when cleaning up the actual mortgages would so much simpler.

    securitization and 30:1 leverage

  11. The Curmudgeon says:

    For those that think the estimates don’t reflect what the actual costs might be, I ask: How many government spending (or, “investment” if you prefer) programs have come in under budget?

    If these investments are so good, how come the government is the only one willing to make them?

    We could easily just wipe all the residential mortgages off the balance sheet, but as Keynes remarked, “there is no such thing as an unfunded deficit.” Doing such a thing would transfer private capital losses into taxpayer-funded losses, which, come to think of it, fairly well sums up what these numbers represent.

  12. Tom K says:

    The bigger question is this: When will we see the inflationary impact? When will Uncle Sam’s credit card be declined?

    My guess is the chickens will come home to roost around 2011.

  13. CPJ13 says:

    I guess it’s ‘small potatoes’, but how about the bonds that Goldman just issued that are guaranteed by the FDIC – where would those fall?

  14. gli.liphon says:

    @ dead hobo -
    I understand your hope for optimism here, so even assuming some of these programs are not black holes that will never be repaid (GSE’s), what is an OK final cost for this? Here’s some numbers based on $8.4T as the grand total and how that compares with our $13.8T GDP (2007 IMF data):

    75% repaid = $2.1T 15.3%
    50% repaid = $4.2T 30.4%
    25% repaid = $6.3T 45.7%

    So any way you look at this even in a best case (75% repaid) scenario, its still really bad. Another good benchmark is the total tax revenue received, in 2007 that was $2.5T. In other words, given the best case scenario the government would have to use 84% of the tax revenue earned in 2007 to cover these expenditures.

  15. The Curmudgeon says:

    @Tom K…I’d say about the same. The only way this ginormous deficit will be funded is through monetization, i.e., inflation. The taxpayer will soon be tapped out of anything approximating real value that it can send to Washington to fund this.

    We”ll know monetization is under way when the only way anyone will take our dollars for their oil is at the point of a nuclear-tipped warhead. Or, when the government starts refusing tax payments in dollars.

    The gig is up. Everything’s done but the shouting.

  16. Stuart says:

    Ourboros quantified…and it’s not over yet.

  17. Stuart says:

    And all those calculations based on GDP such as debt to GDP are going materially higher as GDP is now shrinking and debt is exploding. Heard one analyst (don’t recall his name) on BNN (Canada) claim debt as a percentage of GDP in the US should shrink next year. Do these guys get it or are they simply programmed to stick to their talking points as even though it was pointed out that in a recession GDP shrinks and if debt is simultaneously increasing,..that could not be the case….he brushed it off and continued with his pre-selected talking points. I changed the channel.

  18. gfeirman says:

    It’s ridiculous. A new bailout everyday. Bailout Nation indeed.

    What ever happened to the ideal of the free market??? Geez.

  19. Winston Munn says:

    The “wealth effect” has been trumped by the “Holy shit, I’m broke effect”.

  20. constantnormal says:

    @ Winston Munn –

    – been there, done that. Not going back that route again (if at all possible).

  21. constantnormal says:

    Personally, I find the Swedish government’s statement that it is “not an emergency bank where companies can get money when things take a turn for the worse.” to be so incredibly of irony, coming from one of the most openly socialist states on the planet, when contrasted against the free-and-easy “bailout nation” center of free-market capitalism, the Land of the Fee and Home of the Knave, yes, the (flourish of trumpets) USofA !!!!

    Welcome to the Bizzaro World.

  22. montysano says:

    Forgive me if I’ve missed it, but has there been any talk of:

    - rolling back the permission of 30:1 leveraging?

    - amending the Commodity Futures Modernization Act to gain some regulation/oversight of the swap market?

    And again, correct me if I’m wrong: all of this bailout activity does nothing to help unwind the reported $60T swaps market?

  23. ali saygin says:

    Barry

    I can’t believe it will happen. Soon dollar is gonna crash like nigeria and all these will be looking like peanuts. Inflation, superenflation at best, but we can probably see massive scale of land sales/leases to private companies for cash to pay all these.

    Nevertheless, I really can’t understand any numbers since there is no column indicating how many bigmac’s we can buy for each person in USA. The billion is a very tough unit to visualize.

  24. Hulkster says:

    This is pretty poor editorializing to call these investments ‘bailout costs’. The net cost or subsidy is what matters – money being used for asset purchases or equity injections is not being given away without valuable rights being received in return. If the Fed wanted to buy $10 trillion of assets at a 1% discount, that is a lot better than $1 trillion at a 15% discount. And yet by Barry’s analysis the bailout costs are 10x in the first scenario vs. the second?

  25. constantnormal says:

    Can everyone taste the irony …

    … with the Swedish government — one of the most socialist nations on the planet — saying “We are not an emergency bank where companies can get money when things take a turn for the worse.” (see mhm’s post above), while here in the fortress of free-market capitalism …

  26. Winston Munn says:

    I am having trouble finding inflation risks in today’s headlines:

    General Motors November sales down 41 percent- Reuters
    Ford, Toyota, Honda US sales drop more than 30 pct-AP
    $25B Is ‘Chump Change’: Ford Lifts Sprits But ‘Big 3′ Need $100B Bailout-
    Oil retreats below $49 as brief rally fades- Reuters
    GE to trim finance arm, plans job cuts- Reuters
    Fed extends key credit programs through April 30- AP
    Gas price declines for 76th consecutive day- CNNMoney.com
    Newspapers Prepare to Make Savage Cost Cuts- Silicon Alley Insider

    The fight is to prevent deflation – the weapon of choice is inflation. Didn’t work for Japan. Won’t work here, either.

  27. R. Timm says:

    I put together a similar spreadsheet and posted with my estimates of losses earlier. I came up with $412B in actual cost to the taxpayer. I could easily be off by 50-100%. Feel free to download the file and play with the loss rates yourself. http://www.uploading.com/files/1M77YY89/bailout.xls.html

  28. Simon says:

    Spread Sheets …Old as the hill but still the best there is.

  29. Tom K says:

    @Winston Munn >”I am having trouble finding inflation risks in today’s headlines”

    “In the economic sphere an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.”

    Frédéric Bastiat – What Is Seen and What Is Not Seen – 1848

  30. lawofthebadpremise says:

    Please, lets not be “innumerate”. You are equating cash and/or notional guarantees with “cost”. I am skeptical of most of these programs but lets at least agree as to their size. The “cost” will be the “losses” the government takes on, net. Or if we want to use modern “mark to market” accounting we can say the current “cost” is the difference between what the market would charge/pay and what the government is charging/paying for these lending and insurance programs. Readers look to “Big Picture” to get an accurate view, not to read bad headlines we can get from Newsweek. You guys are better than this.

  31. gmelli says:

    Thanks. It’s great to see someone take a stab at a spreadsheet model.

    One question that coma to mind for me is how this number ($8.5B + $5.2B) compares to the overall domestic mortgage debt. The number that I found on the Web is ~$10B [1,2]. Ouch! 8.5B+5.2B is a relatively huge number! Hmmm, too large given that housing mortagages have been directly implicated in the bailouts. … Regardless, the US clearly has to get its house in order… Or else?? :-/

    [1] http://mwhodges.home.att.net/nat-debt/debt-nat-a.htm
    [2] http://www.epinet.org/Issuebriefs/203/ib203.pdf

  32. capriccio says:

    Thank you, lawofthebadpremise.

    It is highly unlikely that the realized losses stemming from these packages will ever approach that sum of $8.5T. You forget the very privileged position that the government is in. In being able to print money and guarantee what it will, it can:

    1. guarantee bad banks’ bad credit derivatives portfolio while at the same time guarantee the credit products from which they’re derived. You can be fairly certain that C or BofA has a few MBSes derived from Fannie loans.
    2. forestall the foreclosure process nationwide by pressuring state authorities while it busily goes along handing out cheap loans unconditionally to effectively prohibit insolvency for a key number of companies, presumably those very companies which the USG has hand picked to stay solvent–those very companies which the USG has likely backed in one way or another.

    The USG is the ultimate asset manager in that, for the time being, it can maintain infallible hedging strategies.

    Things to worry about: money supply expansion, intermediate and long term inflation, our very own USG’s credit rating once this madness has come to pass.

  33. arogersb says:

    Hello Barry,
    Where did you get the data for this spreadsheet? I’d like to build an updated one. It’s been very hard to find that information.
    Best,
    Alejandro

  34. [...] other things, but getting to the bottom line, the number adds up to around $8.5 trillion (Source: The Big Picture). Barry has a great spreadsheet with all the recent government actions and the cost for each one of [...]