Monday, September 22, 2008

The real cost of a bailout

Government is really good at lying to get you to feel good about what they are doing.

Examples:
The Iraq war will at most cost $200-300 billion dollars
The prescription drug benefit program will only cost $500 billion over the next 10 years
This list could go on forever as politicians continuously lie about the costs of their legislation.

Let's say that on average, the real cost of legislation is usually between 2-3 times the original estimate (probably an underestimation). We have the following numbers:

Bear Stearns Bailout: $29 billion
AIG: $85 billion
Fannie & Freddie: $200 billion
FDIC covering bank failures: $15 billion
Banking Bailout: $700 billion

This puts us at $1.3 trillion before reality. At 2-3 times we are looking at between $2.6-3.9 trillion. Where does this money come from with a country that is already $10 trillion in debt with $50 trillion more in unfunded obligations? It's called a printing press and a credit program.

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