CHESSNOID

I know most experts think the economy is fixed and on its way back to normalcy.  I think we have entered into the age of the  Bush-Obama Depression.  The main reason is we have an ever growing deficit which is a bubble in itself waiting to bust.  When that happens, every American will feel the effects worse than the housing bubble bursting (see Frontline video Ten Trillion and Counting below).

Why do we have a deficit that keeps growing?  Well, currently our country is servicing 2 wars that is literally costing countless of billions of dollars.  That is a bulk of where our taxpayer money is wasted.  Secondly, we have countless government programs where taxpayer money is being given out with no expectations of it being recovered.  Literally, a few billion dollars go to CEO bonuses of these bankrupt companies we bailed out.

CNN.Money:

Some quick math: Of the authorized $700 billion, the Treasury Dept. has needed to deploy only about $450 billion.

About half of that has gone to investments in hundreds of financial institutions in exchange for preferred shares. From these programs, the government has gotten $71 billion back through repayments and $12 billion back through warrants and dividends.

The other half of TARP has gone to much riskier emergency lending programs or other non-lending initiatives. A big chunk of that will filter back to the Treasury’s coffers eventually. But a lot won’t be returned.

• Foreclosure help: Treasury said it will not get any money back from a foreclosure mitigation program called Making Home Affordable. Treasury has spent $22.3 billion so far and will eventually spend $50 billion on that program.
• Automakers: Taxpayers have sent $83.5 billion to automakers, $2.1 billion of which has been returned. Of the $50 billion in loans to General Motors, all but $6.7 billion were converted into common stock, and Treasury estimated that about $23 billion of that will be subject to “much lower recoveries.” Of the $15.2 billion that went to Chrysler, Treasury said $5.4 billion is highly unlikely to be recovered.
• AIG: The troubled insurer has a $182 billion bailout available to it, $70 billion of which is available from TARP. So far, Treasury has lent $44 billion to AIG (AIG, Fortune 500), and economists are dubious about getting the whole thing back. The company has pledged to repay its TARP loan in three to five years, but the insurer has missed three dividend payments already and won’t pay back most of its other loans.
• Citigroup: Treasury converted its entire $20 billion emergency loan to Citigroup (C, Fortune 500) into common stock. Financial industry experts note that though Citi’s stock is up 365% from its March low, Treasury didn’t convert the stock into common shares until the end of July, missing the vast majority of that rally.
• Other programs: Economists are also doubtful that companies like GMAC, Bank of America (BAC, Fortune 500) and CIT (CIT, Fortune 500) will pay back all or any of their loans. GMAC failed the capital stress test from May, and many believe the government will convert its $13.5 billion loan into common shares. We have $45 billion on the line with Bank of America, which is still struggling to work through its Merrill Lynch deal. And CIT is nearing bankruptcy, which would put the return of its $2.3 billion loan in jeopardy.

And that’s how financial experts calculated the $100 billion to $200 billion that Treasury is likely to lose.

The above numbers represent about half a trillion dollars that was spent by our government against the people’s will, and none of it did anything to stimulate the economy. NONE!

The government could have done nothing and we would be in a better situation today and have a smaller deficit. In Bush’s last year he spent almost a trillion dollars and in Obama’s first year he spent over a trillion dollars.  Both were supposedly saving the economy.  Where did this money go?  Did it save our economy?

CNN.Money:

Simon Johnson, professor of global economics and management at MIT.

… contends that the government had an opportunity with TARP to really fix what ailed the economy: Regulators could have thrown out failing corporations’ management, ensured that bad banks are less politically powerful and reformed regulation to rid financial institutions of irresponsible practices. Though the Obama administration is pushing for regulatory reform now, Johnson said the solutions don’t go far enough because there isn’t the same political will to ensure that the events of last year won’t happen again as there was during the crisis.

As a result, Johnson and others argue that it’s a false dichotomy between the bailout that Treasury drafted up and epic failure of the economy.

“There are serious questions about how TARP was managed, because it became much more intrusive into the economy than it should have been,” said James Gattuso, senior fellow of regulatory policy at the conservative-leaning Heritage Foundation. “The market was more resilient than many gave it credit for … but instead we gave money to companies like AIG and automakers. We aren’t going to see that money again.”

The experts have called the recession officially over.  Yet, we are still experiencing record foreclosures, record unemployment, and record budget deficits.  They say unemployment will stay in the double digits for at least another year or two.  If that is true, we will continue to have even more foreclosures and our ever expanding government will no doubt try to waste even more money with fruitless spending.

If you want to understand what these size of deficits will mean, watch the PBS Frontline video below.  It is easy to understand, very objective and non political. Just the facts.