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I'm a designer/engineer. I'm also a cofounder at Posterous.

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The Bailout is more costly than the Race to the Moon, wars in Iraq, Korea and Vietnam, Marshall Plan, combined

via ritholtz.com

Barry Ritholtz (who is an avid Posterous user, by the way, go subscribe!) puts together yet again some sobering news for those interested in what's really happening out there.

In 12 months, we've outlayed more public funds than the largest, most expensive government projects in 206 years.

Dang, we should have just gone to Mars instead.

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Posted 5 months ago

11 comments

Jun 19, 2009
John Dustman said...
we should adjust the louisiana purchase for inflation
Jun 19, 2009
Anthony Martin said...
For sake of argument, what would going to Mars accomplish? All I'm saying is, why do we consent to this lunacy?
Jun 20, 2009
Norswap said...
Bleh. What about inflation ? I think the right cost WAY more than the left. But it's true that spending so much over a so little period of time is impressive.
Jun 20, 2009
Anthony Martin said...
Who cares about left vs. right? They are obviously on the same team!
Jun 20, 2009
Holy Astronaut said...
Louisiana cost less than Vietnam War? Lol I guess it's cheaper to purchase a country than to fight for it.
Jun 20, 2009
Divvyshot Blog said...
Norswap: It looks like the chart already accounts for inflation since the Louisana purchase is represented as costing more than $50bn. At the time of the purchase it was only $15MM USD.

However the chart is somewhat misleading. The US received debt and equity in exchange for the "bailouts" you see on the left. These securities could potentially be worth more than the total amount invested. It's even possible (although unlikely) that given a low cost of capital the US will profit from its investment.

My point is that we really won't know what the cost of these bailouts will be until a decade from now.

I'm not arguing for these bailouts (personally I opposed them). I'm just pointing out that it's more complicated than that graph.

Jun 20, 2009
Anthony Martin said...
The debt and equity the US government used to monetize the bailouts will turn out to be completely worthless.  If not, then there was no problem in the first place, thus no need for bailouts.

To put it another way, the US took the very assets as collateral that caused this mess.

Not only that, but this chart is only the tip of the iceberg.  The total probably amounts to 14 times the world GDP.  
Jun 20, 2009
Garry Tan said...
Anthony -- not necessarily true. In a panic-scenario where everyone is rushing for the doors, losses got locked in and a spiralling depression scenario can occur. So assuming that's correct, the bailout may still prove to be a good thing. It's just a sad state of affairs that it had to happen.
Jun 20, 2009
Anthony Martin said...
It's always a matter of "seen vs. unseen." One can always argue that the problems created by excessive debt can of course be fixed by even more excessive debt.  But what harm does the fix itself cause?  
Jun 21, 2009
ravi said...
Garry, the key is to figure out how to get some of the bailout money to Posterous to further expedite custom themes and such ;-). The government offers a better deal than any VC would: we take a 50+% share, but don't worry we want no voting privileges on the board. And there's more where that came from! BTW, I am with Anthony Martin on Mars.
Jun 22, 2009
李殷玲 said...
insanity.

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