Just a few weeks ago, I outlined how the $700 billion advertised price tag of the bailout was only a drop in the bucket.  In actuality, the Fed has used over $3.2 trillion of taxpayer money to bailout incompetent financial institutions.  But even the $3.2 trillion figure doesn’t explain it all.

To date, the Fed has spent only half of the advertised $700 billion bailout fund.  But it is absolutely certain that the other half, $375 billion, will be spent soon after Obama takes office, if not sooner.    The reason it has not been spent yet is because there are 23 other underreported bailout programs to tap into totaling $8.5 trillion!   $3.2 trillion has been pissed away to executive bonuses wasted spent so far.  That number will increase quickly to $3.5 trillion after Obama takes office. And it is virtually certain that 100% of the approved $8.5 trillion bailout will be wasted away spent before this financial crisis is over.

Rather than reinvent the wheel, I will refer you to the Bloomberg chart below that outlines the total cost of the bailout.  But just a few notes on how and why we will likely hit the $8.5 trillion mark:

  • Commercial paper program – These are the “loans” made to destitute financial institutions, who in turn use the absolute worthless, shittiest mortgage loans they have as “collateral”.  There are slim chances of the government getting paid back.  And there are even slimmer chances that the government will get more than 5 cents on the dollar for the worthless assets posed as “collateral”.  Only $271 billion has been wasted so far, but give it some time, and the $1.8 trillion mark will be hit, and likely raised!
  • Money market guarantees – $540 billion approved to guarantee the money markets, which in my opinion, are very likely to fail.
  • Loan guarantees – $1.4 trillion posted by the Fed to guarantee bank to bank lending.  Now the banks have no fears about transacting with other insolvent banks because they will turn to the government to guarantee their losses.  And those losses WILL occur as the rate of bank failures does not seem to be slowing.  You can expect the full amount of that $1.4 trillion guarantee to be spent.