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Source: Bianco Research

Category: Bailouts, Markets

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 “The Credit Crisis: The Largest Outlay In American History”

  1. wally says:

    And for this we got…?
    4,800 million-dollar plus banker bonus payments.
    Big banks staying in business to further game the system, including front-running every trade on Wall Street.
    The unprovable and irrelevant argument that ‘we’ prevented the worst depression ever, even though ‘we’ still go through the drill while ‘they’ do not have to.

    Personally, I don’t like the deal. I think it is a misuse of my money and I really don’t like that I had NO voice in the matter. I think that is a perversion of what I understood was supposed to be the ‘deal’ in this country.

  2. km4 says:


    The USA is hooked on a dysfunctional economic system that is totally dependent on increasing debt and faux GDP growth. 
It no longer provides the prosperity of the ‘American dream’ but the MSM and Obamanomics are doing their best to keep the ruse going.

  3. Bruce in Tn says:


    Actually the private sector saved us from government’s mistakes once again. Greenspan’s 1%…mistake. Chronic national deficit spending..mistake. Two wars…mistake. Repeal of banking rules and poor oversight…mistake. Laws to encourage home ownership for those who couldn’t afford it..mistake.

    If government is going to give itself various functions…at least be sure they do not do these functions to the detriment of the private sector..

  4. Jdamon33 says:

    I have to agree, this country has gone to hell and a handbasket and I’ve stuck to my game plan of saving money, a paid of mortgage, live within my means and what do I get for it? A stock market that has not done anything except syphon off money from the masses and transfer it to the wealthy for more than a decade, higher taxes on just about everything, less real services from our government, increased health care, insurance, food and just about everything else, no chance to make any money on fixed investments, no home appreciatation (just hope no deflation) and the list goes on and on. Now, with ObamaCare, I may not even have reasonable health care any longer. I can’t believe the damage that the baby boomer generation has done to this country with their selfish, idealistic ways.

    Great example of an aging baby boomer. We ask our parents if they can babysit for their three grandkids – three months from when we need them. They say, well we can’t commit to you because we don’t know what we are going to have planned three months from now???? Can you friggin believe it, you can’t make this stuff up. Baby boomers – the real culprits in the fall of America. Take that to the bank.

  5. franklin411 says:

    This assumes that every penny allocated to bailouts will not be repaid. Barry, you have posted that this assumption is stupid and false, so I don’t know why you chose not to include a similar disclaimer here.

  6. km4 says:

    I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan, but our own fiscal irresponsibility
    —David Walker, former comptroller of the United States

  7. triplec says:

    I could be wrong… But what I see are the people who made a good living on easy money before are now making great money on easier money after.. (bankers, realtors, mortgage brokers, fed contractors and welfare recipients) For the rest of us folks who stayed on the sidelines watching and believing in the saying “what comes around goes around”.. are just losing all the way around.. The government has made sure to bailout every non-thinking American. For those of us that got out of the market at this level are now faced with the responsibility to decide to go against logic and get back in counting on the corruption of the government to keep the market up.

  8. Onlooker from Troy says:


    Bingo. And they (those who wish us harm) may have used the most effective bit of judo on us ever seen in the history of mankind.

  9. Moss says:

    More like a cultural crisis than a credit crisis.

  10. ASE81 says:

    Fine, but what was the percentage of the prior spending vs. the respective GDPs of America in the time periods during which they were outlayed? For instance, today’s stimulus package is about 6 percent of GDP. Don’t you imagine that the Louisiana Purchase at $217 billion in 1803 represented far more of a substantial portion of America’s economy? The number is intruiging, but relatively worthless without factoring in the ratio of spending vs. the overall economy.

  11. Ned Baker says:

    I’m no expert, but this appears bogus for two reasons:

    1. As franklin411 said, this assumes none of the outlays will be repaid.

    2. Isn’t it true that the balance attribute to the Fed is essentially the amount by which they have expanded the monetary base to address (perhaps) the largest credit crunch in history? Can printing money really be considered a cost, especially while CPI is dropping?

  12. Moss says:


    It is not government per se. It is government policies.
    Also it would be the private sector ex the financial sector.

  13. willid3 says:

    i think the greatest threat to the US comes from wall street. so far they have cost us more money than any other endeavor we have ever tried, and we have gotten very little for our effort. and they don’t even recognize they have been saved. and that includes the last time we had to rescue the private sector after the GD. its to the point that the old saw about government being incapable of doing any thing can now be applied to the private sector. only their its written with bigger letters and in RED

  14. km4 says:

    former GAO Comptroller General David Walker said sometime last year:

    “If the federal government was a private corporation and the same report came out this morning, our stock would be dropping and some people would be talking about whether the company’s management directors needed a major shake-up”.

    “The federal government’s total liabilities,” Walker explained, “translates into a de facto mortgage of about $455,000 for every American household and there’s no house to back that mortgage. In other words, our government has made a whole lot of promises that, in the long run, it cannot possibly keep without huge tax increases.”


    Now with the $12 Trillion bail out it’s probably $650,000 for every American household

    Yet politicians on both sides keep kicking the can down the road.

    Like I said above USA is hooked on a dysfunctional economic system totally dependent on increasing debt and faux GDP growth and the MSM and Obamanomics are doing their best to keep the ruse going.

  15. impermanence says:

    This is simply the end game of the ‘something for nothing’ culture, brought to you courtesy of the American professional class who now witness the results of the greatest sell-out of all time.

  16. km4 says:

    kunstler can be ‘out there’ at times but I think he’s depicted sobering reality with this pot.

    Hunky Dory
    August 3, 2009


    Those in the broad bottom 95 percent were content as long as there was a chance that they, too, could become members of the top 5 percent — by dint of car-dealing, or house-building, or mortgage-selling, or some other venture enabled by easy credit and a smile. Those days and those ways are now gone. The bottom 95 percent are now left with de-laminating houses they can’t make payments on, no prospects for gainful work, re-po men hiding in the bushes to snatch the PT Cruiser, cut-off cable service, Kraft mac-and-cheese (if they’re lucky), and Larry Summers telling them their troubles are over. (If I were Larry, I’d start thinking about a move to some place like the Canary Islands.)

Too many disastrous things are lined up in the months ahead to insure that we’re entering a new phase of history:

    The Long Emergency.
Government at every level is worse than broke.
Our currency, the US dollar, is hemorrhaging legitimacy.

    Inability to service old debt at all levels or incur new debt.

    Bad (toxic) debt lurking off balance sheets everywhere.

    The housing bubble fiasco is far from over.

Commercial real estate fiasco just getting started.

    Unemployment rising implacably.

    So-called “consumers” unable to consume consumables.

Crucial energy import supply lines fragile.

    Food supply subject to energy problems and climate abnormalities.

    A world full of other societies who would enjoy watching us fail and suffer.

    Here, in the dog days of summer, it seems to me that the situation in the USA is so fundamentally bad, so unpromising, so booby-trapped for failure, that I wonder if there has ever been a society so badly deluded as ours. We’re prisoners of our wishes, living in a strange dream-time, oblivious to the forces gathering at the margins of our vision, lost in a wilderness of our own making.

  17. km4 says:

    pot should be post;)

  18. hr says:

    Ah, for the days when a NEW fighter plane cost $50k in WW2.


  19. DeDude says:

    You are still comparing apples to oranges. WW2 was an actual expense as in money spend. Most of what you site above is loans and loan guarantees. They will only become an expense if the entity given the loans actually defaults and government has a 0% recovery from the collateral. If everyone of them were to do that we are in an armageddon where nobody gives a rats a$$ about whether the government owes 5 trillion or 500 trillion

  20. deanscamaro says:

    Totally agree. The really frustrating thing is it started with Dubya crying “TOO BIG TO FAIL” and continued with Obama. It says that we are being gamed by both parties. Maybe you don’t remember when they used to say, “You need to vote. Your vote makes a difference.” What a lie. We don’t have anything to do with the way the government operates. It is and has always been controlled by big money. The only difference is that the stakes have gotten bigger for the snakes, both politicians and CEO’s.

  21. call me ahab says:


    good points-

    good to know that the people who were making “uber” large have been protected and saved- so they can go on to new riches-

    Wall Streeters wetting themselves over the stock market- while the rest of the country is shell shocked-

    Obama- what is he exactly- but a continuation of W with the moneyed powers having their way with him-

    now the health insurers have rolled him- he is such an easy mark

  22. km4 says:

    Gee whiz Buffett’s firm returns to profit…I wonder why?

    Because Warren Buffet A Big, Fat Hypocrite?,-Fat-Hypocrite.html

    A good chunk of [Warren Buffett's] fortune is dependent on taxpayer largess. Were it not for government bailouts, for which Buffett lobbied hard, many of his company’s stock holdings would have been wiped out.

    Berkshire Hathaway, in which Buffett owns 27 percent, according to a recent proxy filing, has more than $26 billion invested in eight financial companies that have received bailout money. The TARP at one point had nearly $100 billion invested in these companies and, according to new data released by Thomson Reuters, FDIC backs more than $130 billion of their debt.

    He even traded the bailout, seeking morally hazardous profits in preferred stock and warrants of Goldman and GE because he had “confidence in Congress to do the right thing” — to rescue shareholders in too-big-to-fail financials from the losses that were rightfully theirs to absorb.

  23. Pat G. says:

    In the end, I hope there is a final tally on how much of our money went to corporate America and how much of our money went to us during this “credit crisis”.

    @ Jdamon33 Says: “Baby boomers – the real culprits in the fall of America.”

    While you were still a glimmer in your father’s eye, I was off fighting an unpopular war in a foreign country. Much like those in the Mideast today. While I was working and paying into Social Security, instead of my money going into a retirement fund it was being used to build the the schools that you would attend someday and build the bridges that you would cross. Much like those paying into the system today. I’m a baby-boomer who owns their home, has their own income, resources and no debt. And I know several who are just like me. Obviously you are upset but so are we. You’ve been screwed and so have we. Focus on the problem; the USG not us. United we stand, divided we fall. This is not a generational difference, it’s been going on for some time now.

  24. Thor says:

    PatG – Unfortunately it’s the children and the grandchildren of the boomers who are going to write their history – I don’t think they will be referred to as kindly as The Greatest Generation. Right or wrong, this is just the way it works.

  25. JustinTheSkeptic says:

    Everything is such a disconnect. It is like rocket scientist trying to make breakfast, they disprerse without even a scramble. The bomb comes only when the private sector has had enough, (the monied people buying bonds, etc.) and since the public sector keeps placating them with stimulus and montary chicanary…party on Garth!

  26. Pat G. says:

    @ Thor

    The point is that this blame game between generations is exactly what the politicians want as it takes the heat off of them. Between 2005 and 2007 when housing prices were going through the stratosphere and refinancings to fuel consumption were a daily occurence adults who were 21 and consequently born in 1984 came 20 years after the last official year of the baby boom generation. Now, I’m not saying that baby boomers didn’t take part in the 2005-2007 fiasco but to infer that it was ALL our fault is simply wrong.

  27. Pat G. says:

    I wanted to add, adults born in 1984 could have had children by 2005 or even sooner. The greatest bailouts this country has ever known occured after that. So they have added to their children’s woes and those of their grandchildren too. Don’t blame it all on us (baby boomers). I’m willing to allow our generation to take some of the blame but not ALL of it.

  28. nc says:

    The strange conclusion implied by this chart is that, at least in terms of costs, an unregulated financial industry is far more of a threat to this country than terrorists, communists or nazis could ever hope to be. Perhaps we should have a new Global War on Investment Banking?

    In response to Franklin411:
    Yes, some of the bailout money will be paid back; but also, some of the money spent on war and space programs finds its way back, through taxes, for example, right? And I’m sure the Louisiana purchase must have paid for itself many times over by now. So the comparisons are not exact, but it’s still useful.

    @ Ned Baker:
    Expanding the monetary base IS a cost, one that is paid by all holders of dollars who will eventually see a decrease in purchasing power.

    re spending as a % of GDP, good point, however, it is not so easy to use GDP as a constant measure over history.

    This topic of cost comparisons was discussed in an earlier Big Picture post from June that some of you may be interested in revisiting for the great comments:

  29. Thor says:

    PatG – I agree – I’m 38 and I don’t think my generation is all that special. The original latchkey kids who became Slackers and now, for the most part, just don’t care anymore. I’m used to be surprised at people older or younger than myself who seem shocked by the scandals in government, or who are just now realizing what a scan wall street and congress turned out to be – people my own age I think, have always thought that that game has been rigged.

  30. Thor says:

    wait – I’m only 37. Ugh, I knew the day would come when I’d start forgetting how old I was, I just didn’t expect it so SOON :-(

  31. km4 says:

    The American economy summed up best here

    Dear Mr. Fantasy ( Traffic )

  32. alfred e says:

    @ Pat G: agree. Good comments. I too am a “Boomer”. But one that was fortunate enough to enjoy the brief MERITOCRACY phase of our recovery from the GD and WWII. Short lived. At least that was my perception. Today, I’d be dog meat.

    Back to normal. SNAFU. FUBAR.

    Funny how that works.

  33. pmorrisonfl says:

    PatG I agree you/we (born in 62) Boomers can take credit for funding bridges and schools. But you overlook the fact that USG and most of the rest of US corporate leadership are Boomers. If USG is the problem, you cannot avoid blaming the Boomers who run it (yes, there are leftovers from previous generations, but the Boomers continue to set the agenda, as they always have in the life stage they were in).

  34. Sackerson says:

    Is the final bubble, the “full faith and credit” of sovereign governments?