The Paulson Plan
Want to get a sense of exactly how expensive the Paulson Plan is?
1 million seconds is 11 days
1 billion seconds is 32 years
1 trillion seconds is 300 centuries
If we take on as much debt as Paulson wants (well over a trillion dollars) and we pay it back at the rate of a dollar per second, it would take 3 centuries to repay. And that assumes its "only" a trillion dollars . . . it could be much, much more.
Watch the greenback go down the rathole.
Monday, September 22, 2008 | 02:00 PM | Permalink
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I think you're off by an order of magnitude, isn't a trillion seconds equal to 31,709 years?
- Gregg
Posted by: GreggT | Sep 22, 2008 2:26:52 PM
He turned me into a newt.....I got better.
Posted by: Winston Munn | Sep 22, 2008 2:28:00 PM
Your math is off. A trillion is a thousand billion; if a billion seconds is 32 years, then a trillion would be approximately 32,000 years - considerably more than three centuries.
Posted by: Nick | Sep 22, 2008 2:28:34 PM
Who expects...really...that this will be repaid? As your post implies, BR, that just doesn't make any sense.
The govt is in inflate-or-die mode, and the markets recent price trends (gold, T-bills, oil, etc.) certainly indicate that they get the govt's intent.
That doesn't mean that inflation will be the result: the banks just need to hold onto their toxic-swap T-bills, and hunker down in their foxholes to survive. Even under the pressure of lowered interest rates (a near certainty) why would they aspire to do anything else?
My take is that this is what will happen. And that means deflation. In spades. Me-thinks Mr. Market has muffed the inflation call.
Posted by: Mark | Sep 22, 2008 2:31:36 PM
The 2 comments above are correct. A trillion seconds is about 30,000 years, or 300 centuries.
Posted by: David O | Sep 22, 2008 2:35:25 PM
32,000 years is right. And that is just THIS BAILOUT ... does not include the previous ones or any new ones like insuring all the non FDIC insured money markets. Which on a side note just makes me look like a chump for not going for the higher interest rates with the non FDIC money markets like all the smart people that knew the government would come in and bail them out if there ever was a problem.
Posted by: Jeff | Sep 22, 2008 2:36:45 PM
Barry, Barry -- love your objections to the big TARPit, but this is a little over the top. What is this in GDP terms? Less than 10%. What have our fiscal deficits been the past 6 years? And what has "actual" (not ex-inflation) inflation been during those years?
TARP isn't the end of the dollar, it's just the exclamation point at the end of a long, long death sentence.
Posted by: STS | Sep 22, 2008 2:36:46 PM
CNBC (via Mish) adds it up at 1.8 Trillion.
Posted by: johnw | Sep 22, 2008 2:36:59 PM
Anyhow, it's TWO THOUSAND DOLLARS each, for all of us. Every baby in a pram or bum pushing a shopping cart, every dishwasher and dentist, every bookie and banker (if thats not the same thing)
....Happy Thoughts!
Posted by: woodyy | Sep 22, 2008 2:37:49 PM
Using the $700 billion, the US could effectively purchase the following companies at their current market caps:
American Express
Citi Group
General Motors
JP Morgan Chase
Morgan Stanley
Wachovia
Goldman Sachs
Bank of America
Ambac
Washington Mutual
Wells Fargo
Posted by: Alex | Sep 22, 2008 2:38:05 PM
WHAT’S THE RUSH???
One model of what could potentially happen if we do nothing is Japan. No question that economic growth there has been sluggish for the last 18 years. But there hasn’t been a twelve month period over which any economic disasters have occurred.
The point is, there is no rush here. If this is such a good idea now, it’ll still be a good idea next year. We should just try to “muddle through” until at least January 20th.
Posted by: DL | Sep 22, 2008 2:43:40 PM
guys, how can I short the $$$$$?
thanks
Posted by: david | Sep 22, 2008 2:44:12 PM
Paulson as head of Goldman Sachs helped create this mess. As Treasury Secretary he could not foresee the extent of what was coming down the road. Now we are asked to believe that he can foresee what the consequences are in the future and therefore accept on faith that his bailout package is appropriate and necessary. All the while, he still can't understand exactly what they will buy and how they will do it.
Has Paulson overcome his myopia and become clairvoyant!
Hey Hank, who'd ever believe a Wall Streeter after all this bull crap?
As for the figures Barry, you assume we can and will repay it. The real number is infinity, because we will default as a nation. Remember the bond vigilantes? Their new incarnation will be as empire levelers. Stocks may go to zero, bonds need only go to steep discounts to be the end of an enterprise. These dignitaries may pose as seers, but they are merely little Nero impersonators, fiddling while Rome, 'er the US, burns.
Posted by: sanjosie | Sep 22, 2008 2:44:55 PM
Question: I am not naive enough to believe that the government will actually turn a profit on this RTC-like plan, but, isn't it false to say that the expense will be the full 700 bn or 1 tn or whatever the outlay ends up? I mean, even if the government takes a loss on these securities, what are the odds that the loss will be 100%, 50%, or even 20%?
BR, perhaps you could weigh in.
Posted by: Adam | Sep 22, 2008 2:45:23 PM
It would be easier if... we have inflation at 100% a year.
Posted by: Sia | Sep 22, 2008 2:47:53 PM
Excluding financing costs to sell the debt of course....
Posted by: rightline | Sep 22, 2008 2:48:03 PM
I think Barry should put up a clock to count down the seconds until the debt is paid off. Every hundred years we could meet back here and have a little celebration.
Posted by: Joshua | Sep 22, 2008 2:49:54 PM
i like to think of it like this. if i spent $1000/second, it would take me 30 YEARS to spend $1,000,000,000,000. One trillion dollars.
if any of the ladies i hang around with could get $1000/second for their time, they would be pleased. they would also be far more deserving of it than these skanks in finance.
Posted by: randy | Sep 22, 2008 2:50:43 PM
The assets are worth nothing? If that's the case, your 'modest proposal' is a loser as well. Real estate prices won't grow to the sky nor go to zero. The cure for the real estate asset bubble-pop is time. Liquidity and a market for this stuff is what's needed now. Time will take care of everything else.
Posted by: Tom C | Sep 22, 2008 2:51:13 PM
david, so many ways to bet against the dollar but the safest are probably to be long oil and gold. (wait for a pullback!)
other ways are UDN (but it's just run up and is approaching overbot) which is the dollar short etf, or going long other currencies you like. FXY is the yen, FXE is the euro, etc....
Posted by: karen | Sep 22, 2008 2:56:04 PM
Ditto the above. Gold is going to go a lot higher. Wait for the pullback and load up.
Posted by: RW | Sep 22, 2008 3:06:15 PM
Here are the numbers with Paris Hilton, noted celebrity.
Give her seventy five years to go.
75yrs = 27,394 days = 657,450 hrs = 39.45M minutes = 2.367B seconds
1T / 2.37B sec = $422.51/sec, difficult even for her to spend or waste.
Posted by: JAN | Sep 22, 2008 3:09:10 PM
I took a slightly different approach to making this concrete, using weight.
First, 700 billion dollars in grams works out to be 771,618 tons. Measured in ships, that's about 7 1/2 of our largest Nimitz-class aircraft carriers (e.g. USS Ronald Reagan).
For comparison with egregious CEO pay, let's use 210,000,000 dollars (I call it the 'nardelli', for what Robert Nardelli received when leaving THD). This works out to be about 231.5 tons, or perhaps 6 PT boats ('McHales'?).
So the credit limit being requested is roughly 3333 nardellis.
Of course we'd have to get into micro-nardellis to start discussing matters relevant to us, but I've really got other things to be doing, so I'll sign off here.
Posted by: pmorrisonfl | Sep 22, 2008 3:14:14 PM
Yes,
it should be corrected to 3 Millenia.
Millennium Falcon.
Posted by: Clinton | Sep 22, 2008 3:22:48 PM
Where's Waldo? I mean where's Ben Bernanke? I'd have thought he'd weigh in and give a rough thumbs up or down on the idea.
Posted by: Michael Donnelly | Sep 22, 2008 3:32:09 PM
