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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
 Posted - 09/26/2008 : 18:15:14
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Friday, September 26, 2008
Marc Faber: US Needs as Much as $5 Trillion Financial Rescue
...Marc Faber, managing director of Marc Faber Ltd. in Hong Kong, said the U.S. government's rescue package for the financial system may require as much as $5 trillion, seven times the amount Treasury Secretary Henry Paulson has requested....
``The $700 billion is really nothing,'' Faber said in a television interview. ``The treasury is just giving out this figure when the end figure may be $5 trillion.''...
Considering-
-That the government said sub-prime was contained
-That only a short time ago the government said Fannie and Freddie weere solvent and ingood shape
-That the government always underestimates the cost of anything it buys or any problem it tries to tackle
Then Five Trillion Dollars is probably in the ballpark of how much the government is going to need to spend/buy/pump into the economy to make this plan work.
(Adios fiat US Dollar, it was nice to have known ya  )
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 09/26/2008 : 19:42:04
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And yet another voice adds to the chorus-
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Too Little Too Late
John Browne
........If citizens across the country could glimpse the horror seen by the Congressmen (of which we have long warned), then widespread panic would truly be the order of the day. In particular, people will be shocked to see how Paulson's seemingly vast request to Congress for some $1 trillion is utterly dwarfed by the likely problem.
Of course, Paulson does not want to scare Congress. So he has offered them his own version of a teaser mortgage rate of just $1 trillion. The true figure will only kick in later, like one of the adjustable rate mortgages that tempted millions of optimistic home buyers. Once Congress is locked in to a "blank check", the funds will keep rolling until the presses run dry!
.......The U.S. mortgage holdings are some $14.8 trillion, including some $3 trillion of commercial mortgages. Local government debt is some $3 trillion. But, even these gigantic figures pale in comparison beside the $20.4 trillion of consumer and corporate debt. Therefore, the total of non-Federal Government debt is some $38 trillion!
Of course, not all of it will default. All things being equal, possibly only a small proportion will fail, at least initially. But today, all things are not equal. We know that we are heading into a recession. This means that increasing amounts of debts will default.
The main problem is that predatory lending incurs a high default rate. So if only 10 percent of outstanding loans default, the Government will have to raise some $4 trillion, or more than 5 times what Congress is being asked.
It will increase the U.S. Government public debt by some 80 percent.
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$700 B isn't going to cut it
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