What The Bailout Costs More Than: Marshall Plan, NASA, Vietnam War... More
November 26, 2008 7:18 am

By Barry Ritholtz

.....If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. People have a hard time conceptualizing very large numbers, so let’s give this some context. The current Credit Crisis bailout is now the largest outlay In American history.

Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures – combined:

• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

TOTAL: $3.92 trillion

That is $686 billion less than the cost of the credit crisis thus far.

The only single American event in history that even comes close to matching the cost of the credit crisis is World War II: Original Cost: $288 billion, Inflation Adjusted Cost: $3.6 trillion

The $4.6165 trillion dollars committed so far is about a trillion dollars ($979 billion dollars) greater than the entire cost of World War II borne by the United States: $3.6 trillion, adjusted for inflation (original cost was $288 billion).

Go figure: WWII was a relative bargain.

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The Tax History Conservatives Want Us to Forget
November 27, 2008 6:16 pm

By David Sirota

......Norquist begins the debate with the claim - I kid you not - that "the economy is in the present state because when the Democrats took the House and Senate in 2006 you knew those tax increases were going to come in 2010." He insisted that, "The stock market began to collapse as soon as you recognize that those old tax rates were coming back." Yes, because under "those old tax rates" - ie. Clinton-era tax rates - the economy was so much worse than it is today.

As you'll see, the CNBC reporters start laughing at Norquist, having trouble taking him seriously. And I must say, I really wasn't sure he was being serious - but, of course, he was. I went on to make the point that I've often made in the past - the point that conservatives simply want everyone to forget: Namely, that President Clinton faced down a recession in 1993 by raising taxes on the wealthy in order to finance an economic stimulus package, and the economy subsequently boomed.

That simple, undeniable bit of history undermines the entire structure of conservatives claim that raising taxes on the super-rich will hurt the economy. And as you'll see from Norquist's response, they simply cannot deal with that truth. Indeed, Norquist actually goes all the way back to the 1920s as his example that raising taxes on the wealthy impedes economic growth - somehow ignoring the history from 15 years ago. He then goes on to claim with a straight face that Franklin Roosevelt created the Great Depression (this, along with the "center-right nation" propaganda, seems to be the right's new talking point).......

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Why a no-strings Citigroup bailout when conservatives like Mitt Romney argued that automakers should go bankrupt?
November 27, 2008 8:42 pm

Bill Scher

As we all know, Mitt Romney is the smartest and greatest businessman that ever graced our land. For some reason, I haven't heard him weigh in on the bailout of Citigroup. But since he already offered a plan for dealing with the struggling auto companies, I imagine we can simply apply the same principles for dealing with General Motors as we do for Citigroup.

Mitt says: We need "new labor agreements to align pay and benefits to match those of workers at competitors."

Citigroup's average salary is $87,000, much more than its competitors JPMorgan Chase ($66,000), Wells Fargo ($56,000) and Bank of America ($43,000).

Citigroup's average salary also is more than the average salary of a GM assembly-line worker ($28/hour, or $58,240 for a full year of work.)

Clearly, those Citigroup contracts need to be re-worked if the firm is going to be viable.......

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Lest We Forget
November 28, 2008 6:19 pm

Paul Krugman

A few months ago I found myself at a meeting of economists and finance officials, discussing - what else? - the crisis. There was a lot of soul-searching going on. One senior policy maker asked, "Why didn’t we see this coming?"

There was, of course, only one thing to say in reply, so I said it: "What do you mean ‘we,’ white man?"

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Updating ATLAS SHRUGGED for the Financial Crisis
November 30, 2008 3:25 pm

Barry Ritholtz

Has ever a more pedantic, tedious tome been penned by any theorist before or since Atlas Shrugged? The odious combination of ideological rigidity and academic purity makes for a compelling manifesto for the naive and weak-minded.

The work has become the Das Kapital of the 20th century . . . Both were wrong, too long, and poorly written - and each has proven to be wildly destructive to the political economy.

Ironically, only one has been shown to be damaging to capitalism itself - and that wasn’t Marx’s s work, it was Rand’s.

Which makes this McSweeney parody all the more hysterical:

1. "Damn it, Dagny! I need the government to get out of the way and let me do my job!" She sat across the desk from him. She appeared casual but confident, a slim body with rounded shoulders like an exquisitely engineered truss. How he hated his debased need for her, he who loathed self-sacrifice but would give up everything he valued to get in her pants - Did she know? "I heard the thugs in Washington were trying to take your Rearden metal at the point of a gun," she said. "Don't let them, Hank. With your advanced alloy and my high-tech railroad, we'll revitalize our country's failing infrastructure and make big, virtuous profits." "Oh, no, I got out of that suckers' game. I now run my own hedge-fund firm, Rearden Capital Management." "What?" He stood and adjusted his suit jacket so that his body didn't betray his shameful weakness. He walked toward her and sat informally on the edge of her desk. "Why make a product when you can make dollars? Right this second, I'm earning millions in interest off money I don't even have." He gestured to his floor-to-ceiling windows, a symbol of his productive ability and goodness. "There's a whole world out there of byzantine financial products just waiting to be invented, Dagny. Let the leeches run my factories into the ground! I hope they do! I've taken out more insurance on a single Rearden Steel bond than the entire company is even worth! When my old company finally tanks, I'll make a cool $877 million." Their eyes locked with an intensity she was only beginning to understand. Yes, Hank ... claim me ... If we're to win the battle against the leeches, we must get it on ... right now ... Don't let them torture us for our happiness - or our billions."

More of Novel Here.

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