Filed under: Business/Economy, January Volume I- 2009, National | Tags: Bailout
By Noora Ahmad
Islamic Post Staff Writer
Barry Ritholtz, author of the forthcoming book, Bailout Nation, gave an estimate of United States bailout costs so far: $4.6165 trillion. While Mr. Ritholtz calls the figure conservative, he did not hesitate to note, “The current Credit Crisis bailout is now the largest outlay in American history.”
The financial historian says the only single expenditure which came close to four trillion dollars was World War II, whose original cost was $288 billion, but when adjusted for inflation would have cost $3.6 trillion today.
With regards to the current war spending, Ritholtz’s estimate about the cost of the Iraq invasion was considerably lower than the figure given by former vice president of the World Bank, Joseph Stiglitz. According to the world-renowned economist, the cost of the Iraq war came up to 3.3 trillion U.S. dollars in February of 2008. This would mean that dollars spent Iraq war alone come close to those needed to rescue the financial services of United States.
Mr. Ritholtz also calculated other major expenditures in American history, adding them together with adjusted inflation rates. Yet, he says, they still do not add up to the 2008 bailouts.
The Colorado Independent reports that, according to Ritholtz, “Fixing the credit crisis will cost more than buying half the country, fighting three costly wars, saving the country from the last depression, fixing the last home loan crisis, building the middle class, exploring space and putting a man on the moon,” even by current fiscal standards.
Here are Ritholtz’s estimated figures:
“•Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
•Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
•Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
•S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
•Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
•The New Deal: Cost: $32 billion, Inflation Adjusted Cost: $500 billion ,
•Invasion of Iraq: Cost: $551 billion, Inflation Adjusted Cost: $597 billion*
•Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
•NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion
TOTAL: $3.92 trillion”
“It is wasteful, very wasteful,” retiree William Dwyer told Reuters about Citigroup’s $300 billion bailout during random interviews in New York City on the subject. After the U.S. Treasury bailout of Citigroup, taxpayers lament the 20-year recently sealed contract in which the financial institution pays $400 million to the New York Mets for the rights to name its new stadium Citi Field. Market analysts claim, however, that the company still must advertise if it wishes to come out of the slumps and help restart the economy.
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