$23,700,000,000,000

$23,700,000,000,000
That number, gentle readers, is the current estimated maximum total liability for our Government’s exposure to TARP. Neil Barofsky, the Special Inspector General of TARP, said “the total potential federal government support could reach $23.7 trillion.” [BBC Business News July 20, 2009, http://news.bbc.co.uk/2/hi/business/8160282.stm].

Full and fair disclosure, this amount is the estimated maximum amount. Actual results could be less. No one knows what the final exposure will be. Judging and testing my memory, I do not recall any government program that was funded for less than the maximum amount.

$23,700,000,000,000 is a staggering number to me. It’s real money.

I did some math with my Microsoft Calculator program because it will let me go into the trillions for calculations and my old HP 12C won’t. Assuming there are 300,000,000 people in the United States, the federal government support works out to about $80,000 for every man, woman, and child in America.

I try to watch the television news on a regular basis. I am fairly certain that I watched the news last Monday or Tuesday. I wonder how I missed that. I also read my local newspaper, the Los Angeles Times. Both news sources I think missed the number. It should have been the basis for some sort of news story I would think.

All of you gentle readers who tend to favor the conspiracy theorists’ point of view are free to mull that possibility over as you see fit.

Another way to look at the total potential federal government exposure number is by comparing it to our current national debt level. At the end of June 2009, the national debt was just over $11.5 trillion: you can Bing or Google “national debt” if you want to. Again using Microsoft Calculator, the exposure is just over twice our total national debt.

I also decided to compare the federal government support number to the nation’s Gross Domestic Product. The most recent number for GDP is $14.1 trillion. Doing the math again, the exposure is not quite twice our GDP.

Anyway you care to do the math, it is a truly staggering number.

Why should you, gentle reader, be worried about the size of the number?

You should be worried because I think this amount is completely unmanageable and could wreck our economy and therefore way and quality of life. The first obstacle is how we pay for it. I don’t know how and I have my doubts that anyone else does. Financing is not much of an option. I am fairly certain that the Chinese and the rest of the world are not going to continue to blindly purchase our debt at the rate we have been issuing it.

As the value of our debt declines, we will have to pay a higher interest rate. This is basic, classic economics, as the risk of loss increases so does the interest rate. Higher interest rates led to inflation.

And so, the economy slowly and inexorable begins a death spiral from which it will be almost impossible to extricate itself. That thought makes Freddy Krueger and Jason look like Tweedle Dee and Tweedle Dum.

I’ve scared myself enough today. I don’t want to think about any of the subsequent obstacles today or tomorrow. You can ponder them on your own gentle readers.


Be well and stay happy.