Galileo Galilei
03-28-2009, 05:59 PM
Too Big to SAVE?
Monday, March 2, 2009 16:26
Posted in category Bailout, Economy, Politics, Special Reports
We hear much about institutions being too big to fail, and so, the taxpayer is expected to bear any cost to save large financial companies. We think that the more relevant question to ask is whether these institutions are too big to save?
With the passage of the most recent bailout bill, the taxpayer is now on the hook for a total of $9.5 trillion, almost enough to pay off every mortgage in the county. To put it in perspective, $9.5 trillion is more than the COMBINED GDP of Italy, Spain, Canada, Brazil, Russia, India, and 167 more countries! It is bigger than world GDP minus the top five countries.
Citigroup and Bank of America alone have cost the taxpayer $500 billion in direct injections and asset guarantees. Half a trillion is more than the annual GDP of 161 out of 179 countries (90% of all nations).
Even when compared to the massive $13 trillion US economy, the tab comes close to 80% of GDP and, more importantly, 5 times the amount the government takes in each year in tax revenues.
Numbers such as 20-30 billion are thrown around as if they’re inconsequential but we must realize that when we bailout these massive institutions we are bailing out the equivalent of nations. Think about it - Can The United States afford to dish out 100% of GDP to 161 countries? It’s an absurd question, though it is exactly what we are doing.
So why are they doing this? Surely, the Government consults with some of the best economists in the world. Surely, they’ve been advised that saving DEPOSITS and not toxic banks is what’s important. Surely, they’ve been advised that cutting taxes to ZERO for 5 years would have been more beneficial, and more evenly distributed, for the economy than giving an equivalent amount to only a few financial firms. Surely, they must know that even $700 billion levered 10-to-1 as banks do, would have created $7 trillion in new money though this money is no where to be found in the system.
The failure of this economy is the failure of big business. Each major sector of our economy is dominated by a hand full of monster corporations who make it impossible to compete. Impossible for workers to challenge as their jobs are shipped overseas. Those jobs have been shipped out in droves, and while it was good for quarterly earnings reports, the results have been horrific on the national economy.
Should only a few big companies control our media, banks, food supply, oil supply, and other essential commodities? If allowed to continue, what would the world look like in 20-30 years? One gigantic corporation?
If the economy was left on its own, big business would collapse and the world would return to a more regional economic structure with an explosion of small businesses as the bariers to entry fell.
The power structure in the US is determined to hold onto control even if it means bankrupting the nation. They are very generous when it comes to our money.
http://www.chartingstocks.net/2009/03/too-big-to-save/
Monday, March 2, 2009 16:26
Posted in category Bailout, Economy, Politics, Special Reports
We hear much about institutions being too big to fail, and so, the taxpayer is expected to bear any cost to save large financial companies. We think that the more relevant question to ask is whether these institutions are too big to save?
With the passage of the most recent bailout bill, the taxpayer is now on the hook for a total of $9.5 trillion, almost enough to pay off every mortgage in the county. To put it in perspective, $9.5 trillion is more than the COMBINED GDP of Italy, Spain, Canada, Brazil, Russia, India, and 167 more countries! It is bigger than world GDP minus the top five countries.
Citigroup and Bank of America alone have cost the taxpayer $500 billion in direct injections and asset guarantees. Half a trillion is more than the annual GDP of 161 out of 179 countries (90% of all nations).
Even when compared to the massive $13 trillion US economy, the tab comes close to 80% of GDP and, more importantly, 5 times the amount the government takes in each year in tax revenues.
Numbers such as 20-30 billion are thrown around as if they’re inconsequential but we must realize that when we bailout these massive institutions we are bailing out the equivalent of nations. Think about it - Can The United States afford to dish out 100% of GDP to 161 countries? It’s an absurd question, though it is exactly what we are doing.
So why are they doing this? Surely, the Government consults with some of the best economists in the world. Surely, they’ve been advised that saving DEPOSITS and not toxic banks is what’s important. Surely, they’ve been advised that cutting taxes to ZERO for 5 years would have been more beneficial, and more evenly distributed, for the economy than giving an equivalent amount to only a few financial firms. Surely, they must know that even $700 billion levered 10-to-1 as banks do, would have created $7 trillion in new money though this money is no where to be found in the system.
The failure of this economy is the failure of big business. Each major sector of our economy is dominated by a hand full of monster corporations who make it impossible to compete. Impossible for workers to challenge as their jobs are shipped overseas. Those jobs have been shipped out in droves, and while it was good for quarterly earnings reports, the results have been horrific on the national economy.
Should only a few big companies control our media, banks, food supply, oil supply, and other essential commodities? If allowed to continue, what would the world look like in 20-30 years? One gigantic corporation?
If the economy was left on its own, big business would collapse and the world would return to a more regional economic structure with an explosion of small businesses as the bariers to entry fell.
The power structure in the US is determined to hold onto control even if it means bankrupting the nation. They are very generous when it comes to our money.
http://www.chartingstocks.net/2009/03/too-big-to-save/