Where did the Trillions of Bailout Money Go?
The government has pledged $11.3 trillion for economic rescue – and has spent one-quarter of that. On what?
It’s enough to boggle the mind. If all goes well, it’ll be enough to help the economy recover.
The US government has deployed more than $3 trillion in an all-out effort to resolve a financial crisis and end a recession. It is acting as lender of last resort, investor of last resort, and consumer of last resort.
After more than a year of extraordinary federal interventions in markets and private companies, much still hangs in the balance.
At best, the federal efforts could stabilize the banking system, ease a record foreclosure wave, and kick-start an economic recovery. Then the Federal Reserve and Treasury would withdraw their stimulus before it sparks inflation or a run on the dollar by foreign investors.
At worst, the rescue could fizzle. While putting out a fire for a season, it could leave key banks still weak and the economy stalled, all while piling up a dangerous level of federal debt that limits options for the future. >>>
Efforts to stabilise the financial system could end up costing US taxpayers about 13.3 per cent of annual output, or $1,900bn over the next five years, according to analysis by the International Monetary Fund.
The dollar estimate, calculated by the Financial Times, equates to about $6,200 (€4,650, £4,200) per head of the population. >>>
Congress on Wednesday passed a $3,400bn budget resolution that laid the foundation for healthcare reform and a series of other Democratic policy goals, handing President Barack Obama a key victory on his 100th day in office.
The plan sailed through the House and Senate with overwhelming Democratic support but not a single Republican backed the measure, highlighting deep partisan division over a budget that would sharply increase government spending and expand the national debt. >>>
The US dollar weakened on Thursday against other major global currencies after demand for riskier assets continued to grow.
Positive market sentiment drove the dollar down 0.8 per cent against the pound to $1.4870 and 0.5 per cent against the euro to $1.3314. Sterling rose to a two-week high against the dollar after UK consumer confidence figures showed signs of improvement.
The US Federal Reserve kept monetary policy unchanged on Wednesday and said the pace of decline had slowed, but “economic activity is likely to remain weak for a time.” Markets viewed the decision and other global data as signs that economic growth might be starting to show signs of life. >>>