Bale Faster!! Here Comes Another Wave!


You remember a few weeks ago when I elaborated on the bailouts and told you that the second shoe hadn’t dropped.  I said the real situation was a lot worse than what we were being told.  I think I even used the number of $23 Trillion!  Well golly gee, guess what the Feds had to say today?

“A series of bailouts, bank rescues and other economic lifelines could end up costing the federal government as much as $23 trillion, the U.S. government’s watchdog over the effort says – a staggering amount that is nearly double the nation’s entire economic output for a year. “

“For the government to be on the hook for the total amount, worst-case scenarios would have to come to pass in a variety of federal programs, which is unlikely, says Neil Barofsky, the special inspector general for the government’s financial bailout programs.

In his prepared remarks, Barofsky writes: “Since the onset of the financial crisis in 2007, the Federal Government, through many agencies, has implemented dozens of programs that are broadly designed to support the economy and financial system. The total potential Federal Government support could reach up to $23.7 trillion.”

The Federal Reserve has increased its balance sheet from $900 billion to more than $2 trillion, and Barofsky estimated that the total amount of support to the economy by the fed is at least $6.8 trillion, because it is exposed to significant losses if many of the assets guaranteed by the Fed deteriorate in value.

Hey we ought to try that.  Let’s all look at our household or small business balance sheet.  Hmmm, I only have $10,000 in cash, let’s go down in the basement and print up another, oh let’s say $25,000!  Ah, that’s better, now we have $35,000 to play with!

Politico.Com did a great job of trying to put this number in perspective.  In fact, $23 trillion is more than the total cost of all the wars the United States has ever fought, put together. World War II, for example, cost $4.1 trillion in 2008 dollars, according to the Congressional Research Service.

Even the Moon landings and the New Deal didn’t come close to $23 trillion: the Moon shot in 1969 cost an estimated $237 billion in current dollars, and the entire Depression-era Roosevelt relief program came in at $500 billion, according to Jim Bianco of Bianco Research.

Oh we are sooooo screwed.  Now you know I may be a nut job, but more like an autistic savant than a microcephalic moron.  So what does the market do in response to this information?  It climbs over 8,800 today on the cusp of this great news.  I want to drink some of this kool-aid.  It must be smokin’.

Everything that is real numbers, facts, and measured outcomes says we are about to crash into a brick wall at 100 miles an hour.  For me these last few weeks have been like a scene in a Sam Peckinpah movie where everything switches to slow motion just before someone dies!

I think there are a number of people out there like me who have seen this coming for some time.  If you have, like me, prepared your financial house for the storm.  I eliminated all of my debt.  I paid off and cancelled all my credit cards, keeping only one for travel and car reservations.  For the last twenty months, even though I travel a lot in business (250,000 miles so far this year), I have faithfully paid off my credit card in full every month.  My reward for being the good squirrel?  I was informed today that my credit card limit was being lowered by 50%!!  The reason?  I have too few PAID UP accounts.  In other words the good banksters aren’t making any money off of me and now they are going to punish me for my prudent behavior.  As George Ure says over at Urbansurvival.com, Quick give me a pair of vice grips so I can pinch myself!  This can’t be real!

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Author: redhawk500

International business consultant, author, blogger, and student of life. After 35 years in business, trying to wake the world to a new reality. One of prosperity, abundance, and most importantly equal opportunity. it's time to redistribute wealth and power.

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