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Pox Americana: The Real Cost of Bailing Out Wall Street

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Posted on Oct 4, 2009
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One million dollars could fit on a standard pallet. One trillion dollars requires considerably more room. For scale, note the tiny human figure at the left-hand tip of the $1 trillion array.

By Matt Bivens, TomDispatch

This article was originally published by TomDispatch.

Introduction by Tom Engelhardt

With up to 61% of Americans, according to a recent poll, convinced that things are going badly indeed in Afghanistan and an official 9.8% of Americans unemployed, Congress is set to respond. This week, it’s slated to pass a $636 billion appropriations bill for the Pentagon that will include another $128 billion for our Afghan and Iraq Wars. Meanwhile, the president and his advisors are about to consider the latest plan by our Afghan War commander, General Stanley McChrystal, to gainfully employ up to 40,000 more Americans in Afghanistan. 

By the way, as in the Bush years, all dollar figures associated with the Pentagon budget and our wars should be considered underestimates. Various military expenses like the upkeep of our nuclear arsenal aren’t even in that budget. Depending on who is doing the figuring, estimates of all U.S. defense-related expenditures—and this first budget of the Obama era is already larger than the last monster one from the Bush era—can run upwards of a trillion dollars. As for the war expenses, they invariably prove short of the mark and end up having to be supplemented. 

When it comes to the Afghan War, this is practically guaranteed. Being prosecuted many thousands of miles from home over long, often embattled, supply lines, it is proving staggeringly expensive. According to one recent estimate, for instance, it costs more than $750,000 a year simply to keep a single U.S. soldier in the field, while the cost of delivering a single gallon of gas to the war zone is estimated at up to $100

And then, don’t forget the Afghan army. Its U.S.-NATO upgrade program is already costing an estimated $8 billion a year and is clearly about to be expanded by the Obama administration. As the Afghan government is essentially poverty-stricken, that means its army is going to be U.S. property for years to come.

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Consider this a small introduction to TomDispatch newcomer Matt Bivens’s striking analysis of American investment practices.  Tom 

Follow the Money

Cure Millions of Leprosy—or Just Give Hank Paulson a Tax Break?

By Matt Bivens

There are many possible responses to the news that we have committed more than four trillion public dollars to Wall Street.

Mine is a roar of admiration.

Four trillion dollars! Holy hell! I didn’t even know that was possible!

U.S.A.! U.S.A.!

After all, the cost of World War II in inflation-adjusted dollars was $4 trillion. This bailout thing is just getting started, and already we’ve burned through that.

Without even noticing.

Certainly without rationing sugar or collecting scrap rubber or any of that nonsense.

Who’s the Greatest Generation now, baby?

Admit it. You feel it too. Just imagine someone snatching your laptop off a table and throwing it, Olympic-discus style, hundreds… and hundreds… and hundreds of feet. Sure, you’d be upset (and stuck with the bill). But however briefly, you’d feel admiration for the physical feat: Look at that thing fly!

So it goes with our bailouts, wild tax cuts, and war budgets. The money in play is staggering, but everyone acts like that’s something to mope about. Where’s the excitement?

Often, after reading an incomprehensible dollar figure, I’ll Google “What does a trillion dollars look like?” to get myself fired up. One example of where this takes you shows a million dollars (pathetic, wouldn’t fill a grocery bag), a billion (interesting, I could fit it in a truck), and then a trillion. (Wow, it spreads for acres! Look at that tiny human included for scale!)

It turns out that the United States can pick up that sort of weight and just smash it down on whatever the hell we want. Like Optimus Prime with giant square green paper fists. Slam! Slam!

Yet we’ve committed not one trillion dollars to the incompetent and/or corrupt, but more than four trillion dollars. That’s according to a report to Congress from special inspector general Neil Barofsky, the overseer of the bank bailout program.

Technically, Barofsky adds, Wall Street’s IOU to you and me is at about three trillion dollars these days, since some of it’s been paid back. Relieved? Don’t be. As these tsunamis of public wealth pour out, ignore the slosh and focus on the order of magnitude. The entire Gross Domestic Product—the number reflecting all wealth generated in this nation for this year—is only $14.1 trillion. So whether the sum of our money that’s now their money is $3 trillion (1/5th of all wealth generated in America in a year) or $4.7 trillion (1/3rd of all wealth generated in America in a year), it still means that, for a big chunk of the year, every single one of us was working for Goldman Sachs et al.

Barofsky’s report also suggests that Wall Street’s tab might ultimately work out to $24 trillion, which would be $80,000 per American, or $320,000 for a family of four. But that’s, like, totally the worst-case scenario. (Still, wouldn’t it be impressive? I envision huge, five-foot-cubed, shrink-wrapped pallets of dollars dropping from the sky onto my neighborhood, smashing houses, crushing cars, killing beloved pets, blasting craters into asphalt streets. Yeah!)

Smallpox and Bikinis

And yet could we employ this financial muscle in a more constructive way?


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weslen1's avatar

By weslen1, October 7, 2009 at 10:28 am Link to this comment

First of all, we need to get one thing straight. WE did not GIVE Wall Street a single DIME. The money was STOLEN from us by Bush, Bernanke, Paulson, Geathner (forgot how to spell his name) AND CONGRESS among others. WE were NOT given a voice in any “debate” on the matter.
WE wrote, emailed, called and protested all across the country for OUR elected “leaders” to NOT do what they did, but WE no longer have any control whatsoever about what is done with OUR money. THAT is WHY we ONLY have money to wage wasteful, unnecessary, perpetual wars and pay subsidies (handouts) to any corporation big enough, to eliminate American Jobs, subsidies to DRUG companies to CHARGE AMERICANS TWICE OR MORE AS MUCH as they charge OTHER countries for the same, subsidies to INSURANCE COMPANIES as they charge us 10 to 100 times the true COST of health care, subsidies to THEMSELVES in the form of voting their own pay increases and bigger expense accounts and jet planes, and on and on. WE THE PEOPLE are irrelevant in this country and the politicians couldn’t CARE LESS.
EXAMPLE? Go back and watch the videos of the “debates” on helping Americans save their homes and the “debates” on expanding or extending unemployment benefits. WALL STREET got trillions and MAIN STREET got the SHAFT!

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By Louise, October 7, 2009 at 9:36 am Link to this comment

I think first we need to get over the notion that we have any money!

Then we need to quit watching CNBC tell us everyday how well a hand-full of speculators, brokers and professional gamblers are doing manipulating what looks like our money.

Then we need to take a few minutes of our precious time looking for another job and let the nameless, faceless, unknowns who jerk us all around know, they need to go directly to jail, without passing GO.

And how do we do that? Quit supporting them. Just quit, right now! Click your heels together and say, I will never go in Walmart again, I will never use a credit card again, I will never allow an Insurance agent to use my bathroom again, I will never vote “conservative” again, I will never accept without question anything a professional politician says again. And the really tough one, I will never buy another gun.

Course that will be hard to do. But aggressively working to bring about the failure of Corporations and financial institutions deemed to big to fail, cant possibly be any worse than passively suffering while their collapse slowly, painfully approaches.

At some point in time, when NOBODY is buying ANYTHING, if nothing more we’ll have the satisfaction of watching them all fall down. Which by the way, we should have let them do in the first place!

And what’s all that got to do with green? Probably nothing except once they all fall down I bet a lot of folks will return to nature. It is still possible to grow carrots and potatoes in a planter box!

Ok, I know. When it comes right down to it, nobody wants to go back to the way it was. Back in the day when we all had to fend for ourselves, and wipe our own bums.

Report this

By stcfarms, October 6, 2009 at 9:52 am Link to this comment

True, conservation is essential if we are going to get out of the financial and
environmental messes that we have created. It is not possible to get 6.7 billion
people to quit feeding the beast unless there is a less expensive alternative.
Once people become self sufficient they will not need an oppressive
government or bankers. When clean energy costs less than fossil fuels the
polluters will go broke.

By Ouroborus, October 6 at 11:41 am #

Without conservation all of the green dreams are just that; dreams. We cannot
continue to feed the beast; which of course is us.

Report this
Ouroborus's avatar

By Ouroborus, October 6, 2009 at 8:41 am Link to this comment

stcfarms, October 6 at 11:34 am #

Without conservation all of the green dreams are just
that; dreams. We cannot continue to feed the beast;
which of course is us.

Report this

By stcfarms, October 6, 2009 at 8:34 am Link to this comment

Some of us ignored the government and continued to work on clean energy.
The choice of alternative energy depends on where you live but Mother Earth
News can show you how to build a system for your area. My area has the
Mississippi river so I am building an undershot water wheel system on rafts. I
prefer the river current as an energy source because it is constant.

  Hydrogen is my personal favorite as well, for the reasons that you have
stated. It can be made from any energy source and hight tech is not the best
way to do it. It is not cost effective to add complexity to an energy system as
the repair costs rise exponentially. KISS (keep it simple, stupid) is a rule that is
often ignored.

By Inherit The Wind, October 6 at 6:50 am #

Think about it—
The technology that could have been 30 years further along, all developed
here in the USA.
Wind
Solar
Geothermal
River Current
Efficiency
Natural gas instead of coal and oil
and my personal favorite: Hydrogen.

Report this

By Amy, October 6, 2009 at 7:44 am Link to this comment
(Unregistered commenter)

To Inherit The Wind:  Look up MIT Daniel Nocera. He invented a new way to break water into hydrogen and oxygen. Until now this was not a process that could be done on a small scale. But soon we’ll have the ability to run our cars and our houses on hydrogen fuel cells that we can fill ourselves safely.

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By Inherit The Wind, October 6, 2009 at 3:50 am Link to this comment

30 years ago Jimmy Carter warned us about dependence on foreign energy and on pollution from fossil fuels, particularly coal and oil.  Ronald Reagan and the Republicans promptly killed all such efforts and suppressed them for most of the last 28 years.  A golden opportunity was lost.

Think about it—
The technology that could have been 30 years further along, all developed here in the USA.
Wind
Solar
Geothermal
River Current
Efficiency
Natural gas instead of coal and oil
and my personal favorite: Hydrogen.

I’ve wondered for years why the weather-dependent energies, like wind and solar, couldn’t be used to render hydrogen from water.  Sure, you use more energy than you gain, but that energy would have been lost anyway.  The hydrogen is a way to store their energy to release it when needed.

I heard about fossil-fuel derived hydrogen and thought: That’s just nuts…every kid in chemistry class has seen the electrolysis of water into oxygen and hydrogen.  All you need is plentiful electricity and the windmills and solar panels give that. 

All this technological opportunities lost, thanks to Reaganism.

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By Ed, October 5, 2009 at 9:52 pm Link to this comment
(Unregistered commenter)

Needs are fairly simple. Wants have the potential to multiply almost endlessly. That’s where the trillions come from.

Two places where needs are being exploited are housing and health care. We need to redesign both. They can be made less expensive AND better. We build expensive high-tech medical devices and extend the lifespan by another few years, but is the average 30 year old really any healthier? Mentally, too?

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By Inherit The Wind, October 5, 2009 at 4:53 pm Link to this comment

Read today’s NYTimes about how Thomas H. Lee sank Simmons Mattresses, throwing thousands of people out of work, robbing them of their pensions, and how Lee and his company borrowed money on Simmons to pay themselves bonuses.  They sucked half a billion out of Simmons and their workers and put it in their own pockets.

Reader’s Digest has declared bankruptcy for the same reason—over-leveraged by investment banks like Lee’s.

HCA, the Frists’ hospital company is over-leveraged to the tune of 20-some-odd billions.

I thought Gordon Gecko was an exaggeration. Turns out that Oliver Stone didn’t know the half of it.

Cannibals destroying American businesses.  Soon, what are they going to be able to buy if they destroy it all?

Why isn’t Thomas H. Lee being charged with fraud, deliberate mis-management and malfeasance?  He knew what he was doing every step of the way.

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By amy, October 5, 2009 at 3:43 pm Link to this comment
(Unregistered commenter)

Great article, thanks for making my blood boil again.

If corporate money is allowed to control elections and own politicians, that’s it, forget it. We’re screwed. What’s really amazing is how little money it takes to become the only important constituent, pushing actual citizens off the bus. None of this will change until we repossess our government.

FUNDING The entire system of campaigns/elections must be replaced. Fair campaign financing could be cheap, comparitively. It would take just a few cycles to replace the gold-diggers with leaders.

VOTING I think that we should involve children because they’re the only ones we’d all trust. Imagine recounts performed by fifth-graders with their parents filming and posting counts to web sites and local cable tv for all to see.

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Anarcissie's avatar

By Anarcissie, October 5, 2009 at 1:33 pm Link to this comment

Fat Freddy:
‘http://www.bloomberg.com/apps/news?pid=20601087&sid=aZjQKyLci1AM’

“For wheresoever the carcase is, there will the eagles be gathered together.” [Matt. 24:28]

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Fat Freddy's avatar

By Fat Freddy, October 5, 2009 at 9:38 am Link to this comment

You don’t need a degree in economics, finance or business to understand that there is something very wrong with the relationship between the Treasury, The Federal Reserve, and the big four financial institutions (JP Morgan Chase, BoA, Wells Fargo and Citi), which by the way, controls 50% of all assets and has 40% of all deposits.

This is, by far, the biggest issue confronting our Democracy. Health care reform, the wars in the Middle East, and Global Warming combined do not even come close, due the enormous amounts of money involved.

This is not a Democrat/Republican, Left/Right, Socialist/Free Market issue. Please, take the time to watch these videos. Forward them to everybody. And urge everybody to support HR 1207/S 603,  Federal Reserve Transparency Act of 2009

http://www.youtube.com/watch?v=0mJBy5hQZDI&feature=related

http://www.youtube.com/watch?v=_jjXCm3W4hA&feature=channel_page

http://www.youtube.com/watch?v=cJqM2tFOxLQ&feature=channel_page

http://www.bloomberg.com/apps/news?pid=20601087&sid=aZjQKyLci1AM

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By stcfarms, October 5, 2009 at 9:28 am Link to this comment

It is good that you finally admit that you have a problem, it is the first step to
sapience.


By rfidler, October 5 at 10:35 am #

a load of crap

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Ouroborus's avatar

By Ouroborus, October 5, 2009 at 9:04 am Link to this comment

Fat Freddy, October 5 at 11:23 am #
This kind of shit just fucking amazes me. Americans
should be tearing down the Treasury, GS, and the
Federal Reserve brick by brick with their bare hands.
But we can’t even get HR 1207 and S 603 passed to
audit the Federal Reserve. We deserve what we get.
What is going to take to get everybody really pissed
off?
===============================================

Boy, when you get the answer to that question; would
you let me know? I’ve been asking for 9 years and
still don’t have an answer. So, I left.

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Fat Freddy's avatar

By Fat Freddy, October 5, 2009 at 8:23 am Link to this comment

Let’s see. Where to start? Hmmmm.

Commercial lender CIT was given tarp money a while back. When they said it wasn’t enough, the Treasury refused to give them any more. So, they made a deal with Goldman Sacks (not a typo).

http://www.ft.com/cms/s/0/a5dcac30-b10f-11de-b06b-00144feabdc0.html

The federal government will lose $2.3 billion, and GS will get $1 Billion off the top, plus GS heavily hedged their investment with credit default swaps. According to the FT, GS will actually profit from the bankruptcy of CIT and the taxpayer will lose $2.3 billion.

This kind of shit just fucking amazes me. Americans should be tearing down the Treasury, GS, and the Federal Reserve brick by brick with their bare hands. But we can’t even get HR 1207 and S 603 passed to audit the Federal Reserve. We deserve what we get. What is going to take to get everybody really pissed off?

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rico, suave's avatar

By rico, suave, October 5, 2009 at 7:35 am Link to this comment

what a load of crap

Report this

By stcfarms, October 5, 2009 at 7:08 am Link to this comment

The way of true humans is invisible to most Americans
because it has not been passed down for generations.
The best hope for the masses is to follow the advice of
Tao Walker who was raised in the human way. I was
also taught the human way as a child but I am working
integrate some modern methods because the people
may not accept the spartan lifestyle of the human way.

There are many paths that can accomplish the goal and
no one path is best for everyone. Information on the paths
is available from many sources and cultures thanks to the
internet.


By Ouroborus, October 5 at 9:12 am #

Walk away and follow the way of a
true human. Easy it’s not; rewarding it is. It’s the
easiest/hardest journey you’re likely to take.

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Ouroborus's avatar

By Ouroborus, October 5, 2009 at 6:12 am Link to this comment

godistwaddle, October 5 at 6:13 am #

Do you mean the voracious beast, that devours
irresponsible economies with a gnashing of teeth and
rewards the ruthless while impoverishing the unwashed
masses? Is that the one?
There is a solution; walk away. It won’t follow you
because it can only survive in the hollow canyons of
financial districts. Walk away and follow the way of a
true human. Easy it’s not; rewarding it is. It’s the
easiest/hardest journey you’re likely to take.

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rico, suave's avatar

By rico, suave, October 5, 2009 at 6:09 am Link to this comment

“for a big chunk of the year, every single one of us was working for Goldman Sachs et al. “

If it were a choice between just two, I’d rather be working for Goldman than Nancy Pelosi, “et al” At least those greedy bastards are smart

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godistwaddle's avatar

By godistwaddle, October 5, 2009 at 3:13 am Link to this comment

Obama joined Bush in saving capitalism, that vicious system we’ve had grinding us down for 500 (?) years, thus preserving government by the richest, for the richest, and of the richest, as set down in the Constitution written by the richest.

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By stcfarms, October 4, 2009 at 8:51 pm Link to this comment

When you consider those that cannot pay their $80,000 because they are
homeless, unemployed, babies or whatever you will see that the price per
taxpayer is astronomical. I did not agree to pay this money and I will not be
conned by the crooks in Washington. There is a perfectly legal way to avoid
the debt, give up your citizenship and leave the empire. It is a small price to
pay to destroy an empire.

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Ouroborus's avatar

By Ouroborus, October 4, 2009 at 7:54 pm Link to this comment

It has been said that we bankrupted the Soviet Union
with the arm’s race; are we now doing the same to
ourselves? Then what?

Report this

By jj, October 4, 2009 at 7:32 pm Link to this comment
(Unregistered commenter)

Interesting article ... but I’m not sure that there would be much of difference
between giving our money to the bankers or big pharma ... both are equally
corrupt.

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