Where Has The Money Gone?
Stocks fell a little today as the news is still bad. More importantly, they fell below 8000 today, and stayed there.
Bonds gained (lower interest rates) today as there was a rush to quality, and bonds have much more quality than stocks.
The Dollar went sideways.
Gold gave up its gain from Friday, as people are taking profits right now. We’ll wait for the buyers to come back.
Oil and gasoline fell today – let’s see what this really means. If oil can get below $40/barrel, then maybe we’ll be seeing a new low in oil prices in the near term. Otherwise, we won’t.
Where has all that money gone???
I’ve dedicated today’s economyguy to taking a snapshot of all the money that Congress, the Treasury and the FED has given out during our crisis. As you read through these numbers – just consider how big they actually are. Also, consider whether these monies will be paid back to the government sometime or not. Remember that YOU are backing all these numbers through your taxability.
SAVING WALL STREET
The government has taken these steps to aid financial institutions.
Term-auction facility: $1.5 trillion in loans to banks so far in exchange for otherwise unwanted collateral. The Fed increased its monthly auction limit to $300 billion in October, up from $20 billion when the Fed began the program.
Dollar swap lines: Unlimited dollars to 13 foreign central banks to provide liquidity to foreign financial institutions. The Fed lifted its cap after raising it to $620 billion in October from $24 billion in December.
Bear Stearns: $29 billion in a special lending facility to guarantee potential losses on its portfolio. With the lending facility, JPMorgan was able to step in to save Bear from bankruptcy.
Lending to banks: $77 billion lent on average every day to investment banks, after facility opened to non-commercial banks for first time in March.
Cash injections: $250 billion to banks in exchange for equity stake in the financial institutions in the form of senior preferred shares.
Mortgage-backed securities purchases: Up to $410 billion allotted to purchase troubled assets from banks.
Fed rate cuts: Down to 1% in October 2008, from 5.25% in September 2007.
SAVING MAIN STREET
Consumers are benefiting from the government’s actions in recent months.
Stimulus checks: $100 billion in stimulus checks made their way to 140 million tax filers to boost consumer spending and help grow the economy.
Unemployment benefits: $8 billion toward an expansion of unemployment benefits, to 39 weeks from 26 weeks.
Bank takeovers: $13.2 billion drawn down so far from the FDIC’s deposit insurance fund after 19 bank failures in 2008.
Rehab foreclosed homes: $4 billion to states and municipalities in assistance to buy up and rehabilitate foreclosed properties.
Student loan guarantees: $9 billion so far in government purchases of student loans from private lenders. Higher borrowing costs made student loans unprofitable for a number of lenders, many of whom stopped issuing the loans.
Money-market guarantees: $50 billion in insurance for money-market funds. The Fed then began to lend an unlimited amount of money to finance banks’ purchases of debt from money-market funds. The Fed then agreed to purchase up to $69 billion in money-market debt directly. In October, the Fed said it would loan up to $600 billion directly to money-market funds.
Housing rescue: $300 billion approved for insurance of new 30-year, fixed-rate mortgages for at-risk borrowers. The bill includes $16 billion in tax credits for first-time home buyers. But lenders have been slow to sign on.
Deposit insurance: $250,000 in insurance for interest-bearing accounts, up from $100,000. The FDIC also issued unlimited guarantees on non-interest- bearing accounts and newly issued unsecured bank debt.
SAVING CORPORATE AMERICA
Uncle Sam has intervened to help companies in the following ways.
Business stimulus: $68 billion in tax breaks to corporations to help loosen the stranglehold on businesses trying to finance daily operating expenses.
Fannie Mae, Freddie Mac: $200 billion to bail out the mortgage finance giants. Federal officials assumed control of the firms and the $5 trillion in home loans they back.
AIG: $152.5 billion restructured bailout, including a direct investment through preferred shares, a easier terms on a $60 billion loan, and new facilities meant to take on the companies exposure to credit-default swaps.
Automakers: $25 billion in low-interest loans to speed the industry’s transition to more fuel-efficient vehicles.
Commercial paper facility: $243 billion in corporate debt purchased so far by the Fed since its so-called Commercial Paper Funding Facility opened.
Here are the last numbers:
Dow Jones 30 Industrial – 7937 (down 64 points)
10 Year Treasury Bond – 2.72% (down 0.12%)
Euro – $1.2851
Gold – $907 (down $21)
Oil – $40.08 (down $1.60)
Gasoline – $1.15 (down $0.12)
That’s quite a list, thanks for keeping track of it for us.
I am doubting that we the people will see much of a return on our investment. Well that is other than keeping the current flawed system going and keeping the people who got us into this mess in power.
Doesn’t seem like a fair deal for taxpaying Americans.
And what’s even more interesting is that the spending has just begun. When you see Congress trying to get us “stimulated” by passing stupid spending plans that wouldn’t stimulate a dead cow, then you get an idea of the chance we have as citizens of seeing any of that money come back into the Treasury.
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