When $3 Trillion Seems Like Small Potatoes

The blogosphere is buzzing with the news that the U.S. rescue "could" reach $23.7 Billion after Neil "I Need PR Lessons" Barofsky (the special inspector general for the Treasury’s Troubled Asset Relief Program) said (bold mine):

U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies.

The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the U.S. financial system, including $6.8 trillion in aid offered by the Federal Reserve.

May be is the key. While the Fed and Treasury have spent an unbelievable amount of money to date in an attempt to save the system (which in itself may cause as many problems as it fixes), $23.7 trillion reflects such a worst case scenario that if that were to happen our government's debts are the least of our concerns (I'll let you doomsayers think out of the box with that one).

Further details as provided by the WSJ:

The $23.7 trillion figure also includes total forecast exposure of the Fed, the FDIC, the Treasury — outside the TARP program — as well as the cost of swallowing up Fannie Mae and Freddie Mac, not too mention the potential cost of the enlarged guarantees tied to agencies such as Ginnie Mae. (For the full rundown on everything thrown into the number check out this section of the watchdog agency’s quarterly report.)

Thus, the current balance is more like $3 trillion, which almost seems small after considering $23.7 trillion. Hmmm. maybe Neil Barofsky is better at PR than I first thought.

Source: WSJ