AP Photo / J. Scott Applewhite
The Federal Reserve Building in Washington, DC.
How big was the too-big-to-fail bailout of U.S. banks? If you said, "$700 billion," then you'd be limiting yourself to the Troubled Assets Relief Program (TARP) that was authorized in late 2008, in response to the financial crisis.
But if you're a student of economist L. Randall Wray at the University of Missouri-Kansas City, backed by a Ford Foundation grant to find out just how much the bailouts cost, you'd have a slightly different answer: $29 trillion. Almost $30 trillion, actually, if it's your policy to round up from $600 billion.
Here's Wray, at the Huffington Post:
[A]nalyses of the bail-out variously put the total at $7.77 trillion (Bloomberg) to $16 trillion (GAO) or even $24 trillion. He argues that these reports make "egregious errors," in particular because they sum lending over-time. He also claims that these high figures likely include Fed facilities that were never utilized. Finally, he asserts that the Fed's bail-out bears no relation to government spending, such as that undertaken by Treasury.
All of these assertions are at best misleading. If he really believes the last claim, then he apparently does not understand the true risks to which he exposed the Treasury as the Fed made the commitments.
Thomas Niedermueller/Getty Images
STRASBOURG, FRANCE - NOVEMBER 24: French President Nicolas Sarkozy (C) shake hands with German Chancellor Angela Merkel (L) and Italian Prime Minister Mario Monti (R) on November 24, 2011 in Strasbourg, France. The three are meeting to seek agreement on how to resolve the Eurozone debt crisis as both Monti and Sarkozy are under pressure to reassure financial markets over the future of their respective countries' economies. (Photo by Thomas Niedermueller/Getty Images)
The markets are rallying big-time today, with the Dow alone up more than 400 points. So what's going on? Elizabeth Harrow at Shaeffer's Research sums it all up rather neatly:
[T]he good news seems to be pouring in from all corners of the globe: Euro-zone leaders finally agreed on ground rules regarding the expansion of the European Financial Stability Facility (EFSF); policymakers in Beijing lowered their reserve requirement ratio for banks; and the Federal Reserve coordinated with the European Central Bank (ECB), Bank of England, Bank of Japan, and other major central banks to lower the cost of emergency dollar loans. And, as if the bulls needed another catalyst, the day's slate of domestic data was surprisingly robust. Payroll giant ADP announced that the private sector added a stronger-than-forecast 206,000 jobs last month, while pending home sales and the Chicago PMI also improved beyond economists' expectations.