Tuesday, February 10, 2009

10 Trillion Dollars! Or Thereabouts...

Interesting post about all the spending and back-stopping the government is doing - the numbers are huge!

Bloomberg News reported yesterday (Monday) that the tally of U.S. government spending could reach as much as $9.7 trillion - enough to pay off more than 90% of the nation’s home mortgages.

[snip]

$9.7 trillion would be enough to send a $1,430 check to every man, woman and child alive in the world, Bloomberg reported.

And what's the upshot after spending all this money? The banks are still in really bad shape:

Bank losses from the write-offs of bad loans and faulty derivatives add up to $1.5 trillion so far. Additionally, regulators are forcing banks to account for $5 trillion to $10 trillion worth of off-balance-sheet structured investment vehicles.

Given that banking rules require banks to keep assets on hand equal to 10% of those funds, banks will need as much as $1 trillion in the next year. Adding $1.5 trillion in losses means banks will need as much as $2.5 trillion in new capital to remain solvent under current rules.

“The banking system simply has no capital. All the money that’s been allocated so far has been like pouring water into a bucket with a hole in the bottom.” Satyajit Das, a credit expert from Johannesburg, South Africa, told MSNBC.

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