What Can You Buy With A Trillion Dollars?
Most people have a hard time envisioning a number as big as a billion, much less a trillion. How much money is a trillion dollars? Some examples may help to put that amount in perspective.
The G-20 summit committed to $1.2 trillion in new funds, with the aim of boosting the world economy, cleaning up banks, and increasing trade, among many other things. The stimulus plan is worth more than $800 billion and the second half of the bank bailout package is at $350 billion, which make up the $1.2 trillion, but the very idea of a trillion dollars exceeds what most of our minds, let alone a standard calculator, have the capacity to understand. What does a trillion dollars look like and what else could a trillion dollars buy?
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Surprise! AIG Gives Out Bonuses Despite Taking Billions in Bailout Money
If you think that getting $170 billion in taxpayer bailout money would embarass the AIG from giving millions in bonuses, think again: the beleagured financial company is going forward with plans for $165 million of bonuses and employee retention pays … with the government’s grudging approval:
A.I.G. had set up a special bonus pool for the financial products unit early in 2008, before the company’s near collapse, when problems stemming from the mortgage crisis were becoming clear and there were concerns that some of the best-informed derivatives specialists might leave. It locked in a total amount, $450 million, for the financial products unit and prepared to pay it in a series of installments, to encourage people to stay.
Only part of the payments had been made by last fall, when A.I.G. nearly collapsed. In documents provided to the Treasury, A.I.G. said it was required to pay about $165 million in bonuses on or before Sunday. That is in addition to $55 million in December.
(Photo: threecee [Flickr])
Previously on Neatorama: Posts tagged Economic Crisis
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Angry Senator: Let's Cap Wall Street Idiots' Salaries
Senator Claire McCaskill is angry at the Wall Street "idiots" who are giving out $18 billion in bonuses in 2008. So angry that she has just introduced a bill to cap their pay:
An angry U.S. senator introduced legislation Friday to cap compensation for employees of any company that accepts federal bailout money.
Under the terms of a bill introduced by Sen. Claire McCaskill, D-Missouri, no employee would be allowed to make more than the president of the United States. Obama’s current annual salary is $400,000.
"We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer," an enraged McCaskill said on the floor of the Senate. "They don’t get it. These people are idiots. You can’t use taxpayer money to pay out $18 billion in bonuses."
McCaskill’s proposed compensation limit would cover salaries, bonuses and stock options.
Who thinks it’s a darned good idea?
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The $700 Billion Rabbit Hutch
Recall the surprising news that banks can’t account for how they are using first tranche of the $700 billion federal bailout fund? Well, luckily, Freakonomics blog reader Gannon Hubbard found the answer: a $700 billion rabbit hutch on Amazon!
See also: The $700 Billion T-Shirt
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Dude, Where's My $700 Billion?
Treasury Secretary Hank Paulson has given out almost all of the first $350 billion of the $700 billion bailout fund, and the economy continued to slide down – so where did all those money go? Mike Madden of Salon.com finds out:
The infusion of money may have kept credit from tightening up further, but it certainly didn’t jump-start the economy — banks didn’t resume lending to businesses and consumers. Stock prices never really recovered from their early autumn plunges, and more than half a million jobs vanished just last month. With the benefit of hindsight, lawmakers now express regret about the way the bailout was handled — with few provisions for oversight of the banks or the Bush administration — and the public hates it more than ever. The feeling that money and political capital were squandered even helped endanger the far cheaper and more popular bailout of the auto industry. So what went wrong — and where did all that money go?
A lot of it is, apparently, just sitting in the bank. A Government Accounting Office audit released earlier this month showed the Treasury Department doling out buckets of cash: $15 billion for Bank of America, $45 billion for Citigroup, $3.5 billion to Capital One, nearly $6.6 billion to U.S. Bancorp. The feds were essentially taking out the trash — buying shares in various banks that had gotten themselves into trouble by issuing crappy mortgages using complicated formulas, assuming the cost of many of the mortgage-backed securities that were weighing down the balance sheets of every financial institution in the country. The feds were pumping money into these banks so they would feel free to make more loans — better, simpler, sounder loans. The epidemic of exploding mortgages and failing institutions would ease. But the banks did not start making new loans. They seemed to sit on their federal windfalls.
This is the point where I would be remiss if I didn’t point out our own T-Shirt on this subject: The $700 Billion T-Shirt
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