Numbers have always played a significant role in the news of the day. If there is a natural disaster we want to know how many people were injured or killed, how many homes were destroyed, etc. If there is a war going on we like to have the casualty reports of dead and wounded. The world of sports is nothing but filled with stats and numbers for every conceiveable aspect of every sport and each game and season. Take a look at your typical daily paper or news source on the internet and pay attention to how much of each news item is related to a number. Many times those numbers are mere curiousities and sometimes they are the very heart of the story and have a great bearing on our lives and futures. The questions regarding our economy and the disputes about the reality or fiction of Global Warming are all about numbers. Our economy is doing better if you believe certain numbers and the earth is perilously close to an extinction tipping point if you believe numbers of the Al Gore’s. What is striking is that so many of the numbers are given with no supporting data and background as to their source or methodology of creation, yet they are accepted as the gospel truth by the average Joe. Others are plain and true as the nose on your face yet we pass by them without every thinking through the implications of them.
Let’s review some of the numbers that recently have been in the headlines and ponder their impact on our lives. First we had the AIG rescue. We know that the number for that Government, Inc. mission is 180 billion give or take to date. Are you convinced we are better off having advanced that money? The insurance companies were sound according to all reports. No one would have lost their life insurance payments or health benefits or property damage claim reimbursement. That is a lot of money going to investors, many overseas. Second, we have the infamous TARP plan which was a smooth 700 billion. Last report I saw all but 132 billion has been doled out to various banks, not to buy their toxic assets but to purchase preferred stock and warrants in the banks. Last week we got back 68 billion from 9 of the banks and the Treasury said they would retain the funds for further use with other banks in need. It has become a revolving line of credit for banks apparently. Government, Inc. now owns 34 % of Citibank and controls everything that bank does as lender, regulator and majority owner. Even after the return of the 68 billion Government, Inc. still owns the warrants to acquire common stock in those nine banks as of today. Next we have the program announced by the Fed to buy over 500 billion of mortgage backed securities in the market to free up money for new lending. I haven’t seen any accounting of how much of that money has been spent, have you? What did we get for the money. Don’t forget the TALF money which is another reported 650 billion. Some of that money was to be used to buy credit card debt, student loans and car loans. Where did it go? Of course we have lent about 10 billion from last I saw to GMAC for its financing pr0grams.
Then there is the money for GM and Chrysler–to the tune of 50 billion and counting so far. Does anyone believe it will top out at that number? Both entities are now owned by Government, Inc. and the unions to the extent there is any difference between the two. I am sure the unions believe they bought their politicians fair and square and are merely getting their due.
Next up is the announced plans of the Treasury to sell notes and bills to support the almost 2 trillion in deficit spending for the current year. That number alone is staggering when you consider the deficit for this year alone will be 1.7 trillion and counting. Remember that it has already been reported that tax revenues are down some 44 billion from prior years to date. Combined with this issuance of Treasury notes is the program of the Fed, in addition to all its other buying programs, to buy 300 billion in Treasury bills this year alone; additionally the Fed is buying as much as 1 trillion in mortgage securities, this is different from their earlier program and in addition to that. The Fed Reserve has printed up at least 1 Trillion since last September in new money. Just turned on the printing presses and let them run. That money has been used to buy some of those Treasury bills.
We have a proposed cap and trade law that will raise taxes by 650 billion over ten years. The tax will be on anything and everything that consumes energy in its manufacture, transport or use. That is a tax added to the already existing taxes on gasoline and diesel fuel. The latest number floated for the health care overhaul is 1 trillion and I believe the administration threw out that number with their fingers crossed behind their back.
I will let you pick your own number about the unfunded debts for medicare, medicaid and the social security administration. There have been so many estimates thrown around you have lots to choose from. Lastly, we are projected to have as much as trillion dollar deficits as far as the eye can see. When you read the fine print the talk about reducing the deficit is really an intention to reduce the growth of government programs, not a real dollar reduction in anything. The Federal budget will continue to grow. Almost one in five Americans are now on some type of government payroll be it local, state or the Federal level.
As an intellectual exercise I would love to know how this story will end. Be nice to know exactly who is going to pay for all of this. Won’t be me, I will be pulling on harp strings while others are dealing with this debt. The short term answer is pretty clear. The Fed is printing money fast enough to satisfy every drunken sailor in port, but how long can they do that before the drunken sailors destroy the port?
Another day we will talk envoirnmental numbers. www.olcranky.wordpress.com
“In framing a government which is to be administered by men over men the great difficulty lies in this: You must first enable the government to control the governed, and in the next place, oblige it to control itself. ” Alexander Hamilton.