The ABC claims that the US financial crisis could cost $500 billion to $1 trilion. I don’t want to trivialise the amount, but it should be well within the capability of the US to cope with it.
Afterall the war in Iraq is estimated to have cost $3 trillion.
So I don’t think that we are witnessing something as dire as suggested by much of the media commentary. It is not the end of the world, and certainly not the end of capitalism. If anything I suspect in a few years time it will be yet another proof that while modern capitalism is certainly not immune from crises, it is better than all alternative economic systems at dealing with them.
September 20, 2008 | Graham
Sub-Prime easier than Iraq
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At least the US Govt has reacted by keeping cash flow and confidence there.We still don’t know how many other of their financial institutions have a wobbly boot.They really don’t know what the losses will be.
If the US tax payer is going to bail them out,what should happen is that a special long term tax be struck for those institutions who were saved.They should pay it all back.Socialising losses?Bah humbug.
If they are not penalised,they will learn nothing from their mistakes and just repeat this scenario in the future.
Comment by Arjay — September 20, 2008 @ 8:29 pm
The US will never learn from their mistakes. They have had the 1987 share boom & bust, the Savings & Loan crises, they have had the Tech boom, now Sub-Prime.
They only know about greed & self-enrichment. Until the US mind-set changes (ha ha) nothing will change
Whatch the best financial movie of all time – “Wall Street” the theory “Greed is Good” will never change
Comment by Baz — September 22, 2008 @ 9:49 am
The war in Iraq has not cost $3 trillion. That is an estimate of its eventual long term cost, including health care and rehabilitation for war veterans.
QUOTE
September 21, 2008
$700 Billion Is Sought for Wall Street in Vast Bailout
By DAVID M. HERSZENHORN
WASHINGTON — The Bush administration on Saturday formally proposed a vast bailout of the United States financial system, requesting unfettered authority for the Treasury Department to buy up to $700 billion in mortgage-related assets from financial institutions based in the United States.
The proposal, not quite three pages long, was stunning for its stark simplicity. It would raise the national debt ceiling to $11.3 trillion. And it would place no restrictions on the administration other than requiring semiannual reports to Congress, granting the Treasury secretary unprecedented power to buy and resell mortgage debt….
The ambitious effort to transfer the bad debts of Wall Street, at least temporarily, into the obligations of American taxpayers, was first put forward by the administration late last week, after a series of bold interventions on behalf of ailing private firms seemed unlikely to prevent a crash of world financial markets.
A $700 billion expenditure on distressed mortgage-related assets would be roughly what the country has spent so far in direct costs on the Iraq war and more than the Pentagon’s total yearly budget appropriation. Divided across the population, it would amount to more than $2,000 for every man, woman and child in the United States.
Whatever is spent will add to a budget deficit already projected at more than $500 billion next year. And it comes on top of the $85 billion government rescue of the insurance giant, American International Group, and a plan to spend up to $200 billion to shore up the mortgage finance giants, Fannie Mae and Freddie Mac.
http://www.nytimes.com/2008/09/21/business/21cong.html
Comment by MikeM — September 22, 2008 @ 11:35 am
My reading of the assistance given institutions by govt will one day become a profitable investment?
One can only hope?
fluff
Comment by frank luff — September 22, 2008 @ 12:01 pm
There has been some content on these pages presenting all sorts of views about the warp and weft of reasoning employing modern language that has completely lost me.
If this thread is about Iraq and the present US embarrassment – I’m reasonably confident history will prove that they, the new-age American Caesars, have blown it out their collective Kazoos.
They have overextended themselves, not materielly, militarily, or by way of capability, but by way of coming to a crunch attempting to finance the worldwide effort of hate against just about everyone else.
By George, have people forgotten that GW11 was supposed to make a profit, by way of various cosy arrangements.
Well. That didn’t/couldn’t happen.
And even such an American institution as the National Geographic was becoming a little testy about the ransacking of recently restored national monuments in Iraq,and the fund of history, especially the National Museum.
For the US – it is not a matter of learning from their mistakes.
It certainly is not the fault of the citizens of the place if their elected masters themselves are caught in a trap of having to support doctrines as faulty and not too entirely different as caused the collapse of the Komsomol (USSR).
I’m sure there are readers out there who want reassurance that the status quo will be maintained.
Trouble is it won’t be.
Haven’t you noticed this last year the price of fuel/energy/food going through the roof?
Wondered why?
All I need to say for the mo-
Comment by A NON FARMER — September 26, 2008 @ 10:06 pm
this ‘crisis’ is a text book example of Naomi Klein’s Shock Doctrine. They are using it as a pretext to drive the wedge of deregulation even deeper. Bush did his best to frighten people into submission in his speech, and said ‘the regulatory reform will come later’.
Imagine giving the builder who messed up your house to the point of it nearly falling down a fat contract to fix it up? The head of another bank about to go under will get at least $13m for 3 weeks work!
Paulson is a former money market man, and presided over the whole shambles.
Funny how the Dems and Republicans couldn’t possibly agree on a health care system or an energy policy, but are standing arm in arm to ‘solve’ this ‘crisis’ with bipartisan resolve.
Sends off a lot of warning bells to me. The devil will be in the details, which the public won’t get to hear about until it is signed into law.
Comment by Ronda Jambe — September 27, 2008 @ 10:14 am
this ‘crisis’ is a text book example of Naomi Klein’s Shock Doctrine. They are using it as a pretext to drive the wedge of deregulation even deeper. Bush did his best to frighten people into submission in his speech, and said ‘the regulatory reform will come later’.
Imagine giving the builder who messed up your house to the point of it nearly falling down a fat contract to fix it up? The head of another bank about to go under will get at least $13m for 3 weeks work!
Paulson is a former money market man, and presided over the whole shambles.
Funny how the Dems and Republicans couldn’t possibly agree on a health care system or an energy policy, but are standing arm in arm to ‘solve’ this ‘crisis’ with bipartisan resolve.
Sends off a lot of warning bells to me. The devil will be in the details, which the public won’t get to hear about until it is signed into law.
Comment by Ronda Jambe — September 27, 2008 @ 10:14 am