Total Cost of Stimulating Economy: $9.7 Trillion [porkulus]

NewsMax ^ | Feb 10, 2009 | By: Jim Meyers

[Jim Robinson]

The federal stimulus package would raise the government’s commitment to solving the economic crisis to an astronomical $9.7 trillion — enough to pay off more than 90 percent of the nation’s home mortgages.

The commitment is composed of about $1 billion in stimulus packages, about $3 trillion in lending and spending, and $5.7 trillion in agreements to provide aid, the New York Post reported.

The House has approved an $819 billion stimulus plan, which needs to be reconciled with the Senate’s package of at least $780 billion.

The total value of home mortgages in the United States is calculated at $10.5 trillion by the Federal Reserve.

[wolfcreek]

See post #20

[Thermalseeker]

Obama’s presidency is the culmination the Communist plot to take over this country and bring her to her knees.

Sure looks that way. I'm still trying to figure out if Newsweak and their cover this week which boldly states "We are all Socialists now" was intended to sound the alarm or if they are praising the efforts of Obamalamadingdong and the Socialist Democrats. I haven't read the article. I won't ever buy that rag ever...

[Red in Blue PA]

$9.7 Trillion and the stock market is about where it was in Sept and headed lower!

In DC, that’s a job well done I guess.

[RSmithOpt]

Let’s see, that’s a fairly accurate price tag (subtotal) for open borders, illegal alien upkeep, a huge artificial credit / housing expansion, interest on the $11.5 trillion national debt (before Porkulus is signed into law), the US’s part of the ‘AAA’ toxic asset / hedge fund / derivatives Ponzi scheme, and unbelievable ignorance upon the part of our electorate (sheeple) and The Whores on The Hill.

[wolfcreek]

I’m going with Happy as Chit.

[ding_dong_daddy_from_dumas]

My theory is that it’s more about bailing out investors, a great many of whom are foreign, rather than helping the USA.

[Mad_Tom_Rackham]

We’re in the process of being enslaved.

[Mad_Tom_Rackham]

$9.7 Trillion and the stock market is about where it was in Sept and headed lower! In DC, that’s a job well done I guess.

"Vell, vee could be doink better, but ver're just gettingk schtarted."

[Deo volente]

I keep hearing Billions needed, then Trillions, then more Trillions. There is no way there is actual dollar value to back up all this “money” being thrown around and promised.

Pretty soon we're going to be hearing about Quadrillions if we keep this up.
Figure a loaf of bread to cost a couple thousand dollars.
Buy and store (in a safe place) canned goods, water, dried foods and other goods, and lots of ammo. It's going to get pretty dicey out there.

[PsyOp]

Id like to understand what you are talking about, but i have no idea what you mean by ABS (anti-lock brakes?), CDOs or PPT.

[palmer]

what happened was the investment banks bundled the mortgages into securities (asset-backed securities). The asset was theoretically the real estate but often was nothing except part of the income stream from the mortgage bundle. These were sold to large investors who borrowed from banks for leverage, essentially buying them on margin in the hopes of selling them later.

Lots of people knew that later might be bad (real estate couldn't rise forever) and bought Collateral Debt Obligations against those ABS where they traded various credit risks of the underlying securities and their income streams. Upper tranche buyers assumed that their income streams would remain solid even in a major recession. At least that's what the models said. So trading those CDO's as securities themselves would have an orderly market with somewhat predictable prices (mainly based on fluctuations in interest rates.

There are other derivatives such as Credit Default Swap where a deep pockets player (e.g. AIG) would collect payments in exchange for insurance on some CDO. But if lots of CDO's lose lots of value that insurance company could be in trouble as AIG was last summer.

What is almost never mentioned by the Paulson-Geithner types is that the CDO's and CDS securities are what is hard to value or downright worthless. These are what is dragging banks down (so-called toxic assets). Not the mortgages. There were only a relatively small number of defaults and the original 700 billion TARP money could have easily paid them all off. Probably 100-200 billion would have been enough to get everyone above water with their interest rate bought down to affordability.

But as I said mortgages were not the issue, derivatives were, which in many cases had nothing to do with mortgages (e.g. a CDS which made money when Lehman folded and defaulted on its bonds). There are literally 100's of trillions in derivatives that presents an overwhelming systemic risk, so TARP was conceived to lower that risk. They quickly realized that buying the worst 700B out of more than 700T was not going to accomplish much, so they used the money to replace lost equity in banks.

That was a losing idea since, for example, the TARP people put 25B into Citi in October which they could have bought outright then for 20B. Then another 25B in December, plus guarantees (default insurance) on 800B of securities that Citi held. After all that, Citi was worth less than 20B in January. Now that banks like Citi are effectively nationalized (govt meddlers calling the shots), nobody else is going to invest in them (unless paid side channel to do so - see PPT below).

Bottom line is that toxic securities far outweigh any ability to buy them at the present. The other thing I mentioned was the Plunge Protection Team set up to prevent large collapses in the market. The problem with doing that is like putting out all the small fires which sets you up for one big huge fire later. Just like in Australia, that fire is now. But our PPT is still out there, even putting out small back fires that would help contain the main fire (e.g. suppressing gold prices) because that's all they know.

[PsyOp]

Thanks for the explanation. That clarifies a lot for me. Could you elaborate on what you said about gold prices. It is my belief that we will be seeing huge inflationary pressures over the next several years which should push gold and silver prices much higher than they are now.

In fact, they should have already gone much higher, but have been suppressed I understand because of dumping of large gold and silver assets even while there are shortages of small denomination gold and silver in the form of coins and trade rounds. (I collect and invest in both).

Am I wrong? What is your opinion?

[palmer]

Dumping is understandable because a great deal of the inflationary speculation last spring was in precious metals and commodities. The inflation versus deflation debate is a bit of a red herring, there is really both with the psychology mixed together in different phases.

Gold has two strikes against it right now, (1) speculators are involved (dumping it wholesale last fall in the credit squeeze) and (2) it is fundamentally worthless.

Gold also has two things going for it, (1) speculators want to buy it and the govt wants to give them cheap credit to do that and (2) it's the only thing that can hold value in a deflation (when nobody wants commodities) and inflation (when paper money is worthless)

So you need to buy and hold for value, but buy and sell for speculation. If you have enough rounds and coins for value, then try an ETF or some mining shares, but remember to buy those as they drop and sell as they rise.

[palmer]

I should add that I would consider the PPT to be speculators, but with a different motive and time horizon. They mainly want to capture profits when it helps them dampen out a speculative bubble. They probably buy the stuff back when the market is quiet, and have other funding sources to sell short when they need to.

[PsyOp]

Thanks!