Erase credit from the world’s biggest economy, and all that’s left is government.
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 comprised 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 U.S. is calculated at $10.5 trillion by the Federal Reserve. Another way to look at it: The bailout equals 67 percent of the entire U.S. economic output per year.
Sen. Byron Dorgan, a North Dakota Democrat, said on the Senate floor last week: “We’ve seen money go out the back door of this government unlike any time in the history of our country.”
But what is a trillion, really? Well, consider this: If you counted 1 million seconds it would take about 11-and-a-half days. A billion seconds would take 32 years to go by.
A trillion seconds equals 32,000 years. That times 9.7 is our problem right now.
“I like to say that I have a pretty good idea what I'll be doing a million seconds from now, no idea what I'll be doing a billion seconds from now, and an excellent idea of what I'll be doing a trillion seconds from now," children’s author David Schwartz tells Time magazine. He wrote a book for kids called “How Much Is a Million?”
How did we get here? Here’s a timeline:
Back in December of ’07, banks started to crack.
The Federal Reserve created a $2.1 trillion term auction facility to keep the financial system flush with liquidity. Obviously, that didn’t do the trick.
Three months later, Bear Stearns came a tumbling down. In February 2008, Congress and the Bush administration passed what was then considered a huge stimulus package — $168 billion.
The government spent $29 billion to rescue Bear, worrying that a failure of the investment bank would crash the entire financial system.
As we all quickly learned, Bear Stearns was just the tip of an iceberg. In short order, Fannie Mae, Freddie Mac, Lehman Brothers, AIG and Merrill Lynch fell apart, requiring the government and private capital to step in.
Detroit was next. Then AIG came back for more.
Now, of course, we’re talking about a huge fiscal stimulus package coming out of the Congress.
And, by some calculations, Treasury Secretary Tim Geithner on Tuesday promised up to $2.5 trillion in public help to coax private capital back into the game and start buying up bad mortgages loans, the root of all the problems.
A billion here, a billion there. Pretty soon, it adds up.
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