Lots of analyses how the bailouts to be approaching $7T in commitments (not draw downs), which, as a percent of GDP, is approaching the level reached during the Great Depression from all of the various bailouts/stimulus/jobs programs. Much of this seems to be going to the banking sector, the same sector that got us into this mess peddling snake oil like subprime mortgages, SIVs, CDOs, ARS, CDSs and so much more - and pulled huge amounts of profit out of the economy. Bill Bonner at The Daily Reckoning puts this in perspective:
Before 1987, only about one of every 10 dollars of corporate profits made its way to the financial industry – in payment for arranging financing, banking and other services. By the end of the bubble years, the cost of ‘finance’ had grown to more than 3 out of every 10 dollars. Total profits in the United States reached about $6 trillion last year; about $2 trillion was Wall Street’s share. What happened to this money? Other industries use profits to build factors and create jobs. But the financial industry paid it out in salaries and bonuses – as much as $10 trillion during the whole Bubble Period. And now that the sector finds itself a few trillion short, it waits for the government to open its purse
It is as if the last few years were an illusion foisted on Main Street
by Wall Street and the Fed, and while Main Street ran hard to stay in
the same place, Wall Street took out a grossly disproportionate share
of profits. Consider this analysis:
Real median household income in the U.S. was $50,577 in 2000 when
George Bush took office—it is $50,233 today. The government has added
over $4 trillion to the national debt during that time. ... The only way people have been able to maintain their lifestyle has been
to borrow against their house and run up their credit cards. That is a
phony improvement in lifestyle.
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