Bank bailout could cost $4 trillion

[marketcrazy1]

NEW YORK (Fortune) -- The cost of the bank bailout is likely to be much higher than $700 billion.

While the Obama administration hasn't asked Congress for more money yet, some experts warn that government spending on support for struggling financial services companies will ultimately reach into the trillions of dollars.

The first half of the controversial $700 billion program to help banks has already been spent -- mostly on buying up preferred shares of troubled banks.

Part of the remaining $350 billion may be used to purchase troubled assets from bank balance sheets and place them in what Federal Deposit Insurance Corp. chief Sheila Bair has dubbed an "aggregator bank."

And while taxpayers will surely recover some of that sum eventually, more money is likely to be needed in order for the bank rescue to work.

"The amount of working capital you'd expect the government to take into this would be around $3 trillion to $4 trillion," said Simon Johnson, a senior fellow at the Peterson Institute for International Economics and author of its Baseline Scenario financial crisis blog. http://money.cnn.com/2009/01/27/news/bigger.bailout.fortune/index.htm ---- HOLY SHIT!!!

[notesdev]

1. And what does $4 trillion buy?

It had BETTER buy some scalps, that's all I got to say. No way I am going to be happy with a mega bailout on a no-fault basis, and I'm pretty sure that the vast majority of US voters feel the same way.

[marketcrazy1]

2. they may not be happy about it

but what will they DO about it??? if recent history is any guide -- not much!!

[notesdev]

4. If anything

would cause the peasantry to rise up with torches and pitchforks, watching the economy plundered with the political class actively assisting the process would be a good candidate to trigger such an event.

There's a reason the existing order was rejected soundly and overwhelmingly this year. Those who now hold power would be wise to heed the message.

[w4rma]

3. All we are doing is bailing out shareholders. That is it. Nothing more. (nt)

[LeftHandPath]

5. Thats $4 Trillion, plus compounded interest...

Remember, we dont pay down our debt, we simply roll it over, year after year, decade after decade.

At some point, the servicing of this endless debt becomes more than we can afford to pay.

And then, like Iceland, we default.

This is not going to end well.

[Taitertots]

6. 4 trillion is what

$10,000 per per in the US.

The largest theft against the American people in history garners bi-partisan support.

[Rydz777]

7. Agreed. It's also about 30 percent of the US's total income

(GDP) for a year. Hey, folks, let's all donate a third of our income this year to bail out the banks - and live very carefully on what's left.