How much will the banking/mortgage FAIL bailout (FAILout?) cost us? Well, the total cost so far is over 4 trillion dollars. That’s an enormous number: 4,000,000,000,000. That’s roughly 600 times the number of humans walking the planet right now. It’s 20 times the numbers of stars in the Milky Way Galaxy. It’s about how many days separate us now from the Big Bang.
That’s a lot of cash, and it’s growing every day.
Still, there’s nothing like seeing it. The Voltage blog has posted a pie chart showing the cost of the bailout compared to other massive government plans. It’s a sobering plot, to be sure. Interestingly, they included the (inflation-adjusted) cost of both the Apollo missions and the running total of NASA’s budget since its inception in 1958.
The number they listed for that is 850 billion dollars. That’s a lot of money too, though only about 1/5 of the bailout… and that’s for 50 years of space exploration, one of the costliest endeavors ever undertaken by man. Think of everything NASA has done: gone to the moon, launched countless weather satellites, built a space station (more than one, really), orbited communications satellites, visited every planet in the solar system (Pluto soon, too), visited a handful of asteroids and comets… and don’t forget Hubble, Chandra, Spitzer, Fermi, Swift, Ibex, JWST, Kepler, Copernicus, the OAOs, IRAS, SWAS, SOHO, and many, many more. It’s hard to say how much Hubble cost, but I would guess it’s near 7 or 8 billion bucks by now. That’s only 1% of NASA’s lifetime budget.
And mind you, NASA gets less than 1% of the national budget today.
What to make of this? Well, I’m not precisely sure, except to point out that our grandest triumphs, in dollars, only cost us a fraction of our mistakes.
Tip o’ the accountant’s visor to BABlogee Dariush Molavi.
December 5th, 2008 at 11:14 am
The link seems to be broken…
December 5th, 2008 at 11:21 am
Dead link.
December 5th, 2008 at 11:23 am
They changed the URL since I drafted this post! I fixed it.
December 5th, 2008 at 11:24 am
Go here: http://voltagecreative.dreamhosters.com/blog/ and scroll down.
December 5th, 2008 at 11:24 am
Yup, broken. Here’s one that works: http://voltagecreative.dreamhosters.com/blog/?p=748
(I suppose this comment will have to wait for moderation, though.)
December 5th, 2008 at 12:09 pm
Really puts things into perspective.
December 5th, 2008 at 12:15 pm
Great. Now I’m depressed.
December 5th, 2008 at 12:20 pm
It is like putting the Sun next to Sirius 0.0
December 5th, 2008 at 12:29 pm
Saying the bailout costs “us” 4 trillion is unfair. You factor in the money that these banks are getting today in the bailout, but what about the money that they have payed in taxes by these banks over the last 200 years? Who do you think has payed for NASA all these years, its been banks and other multi-billion dollar industries. I’m not saying I agree with the bailout, but comparing what the government gives to a sector that has directly given the government trillions over the years to NASA is ridiculous.
December 5th, 2008 at 12:35 pm
Four trillion one dollar bills, all stacked up would reach a height of 271,464 miles.
December 5th, 2008 at 12:46 pm
There are some additional charts here which are GDP adjusted (which, to me, is a necessary correction):
http://www.ritholtz.com/blog/2008/12/more-bailout-comparisons/
It’s also weird to me that they didn’t include the Manhattan project, WWII, WWI, the Civil War, etc, etc.
@Mitch. The banks have already benefited greatly from the infrastructure that the gov’t provides, to imply that they deserve this because they’ve payed taxes in the past is a little insane.
December 5th, 2008 at 12:57 pm
Unfortunately the Voltage pie chart suffers from an overload of glitz. The pies are tilted to appear three-dimensional, and so the wedges are slightly distorted. Secondly, and much worse, the smaller pie (representing the various project budgets) has its diameter – instead of its area – scaled by the total dollar amount. That second pie should actually be about 92% of the bailout pie diameter, instead of its approximately 85%. I know that I’m nitpicking, and perhaps losing sight of the big picture, but I hate to see good numbers trashed by sloppy graphics.
December 5th, 2008 at 1:02 pm
Mitch,
Using your logic, the government should be giving away money to every single tax payer. Nice idea, but whether you like it or not, we actually do need to have a functioning government.
There is TREMENDOUS need for reform, but your argument is nonsensical.
December 5th, 2008 at 1:19 pm
*sigh*
You need to consider much of the bailout is loans or buying investment products. The money doesn’t just vanish into nothing. Some may even turn a profit some day.
No, I’m not saying the bailout is a great thing, but a little perspective and understanding beyond the micron-thin, colorized coverage from WorldNetDaily or DailyKos is needed. Or silly pie charts that compare apples to oranges.
Consider that many of the bad mortgage backed securities have already been beaten down in value by the market. The feds are getting these things really cheap relative to their original values. If they are smart, they will keep the credit markets fairly frozen until all the purchases have been made, and then turn the knob to defrost.
The takeover of AIG has *already* produced a net positive on paper. Some estimates indicate that the initial $700 billion could turn a $100 billion profit. Merrill Lynch let go of some of their assets at less than 25 cents on a dollar.
My only real question is: how do I, as a private investor, get in on this directly?
Hey, Bill Clinton agrees with me: http://www.cnsnews.com/public/Content/Article.aspx?rsrcid=36325
Or you could all sit there and sulk in an ideological slump. Your choice.
Four trillion one dollar bills, all stacked up would reach a height of 271,464 miles.
Does that take the compression caused by the weight into account?
December 5th, 2008 at 1:27 pm
I guess my reaction to this is….so?
Astronomy deals in big numbers..because things are big. Astronomical, you might say. So is the US economy. It’s really big. (Revise remarks later to insert lines from the Hitchhikers Guide here). Piling the dollar bills to the moon is only interesting. To me it seems meaningless since the numbers are so huge to begin with.
Mitch does have a point. This comparison only looks at the flow of money from the government to the banks. Unlike NASA, the banks do pay large amounts of money to the government in the form of taxes. (Ignoring of course the taxes generated by the spending of that government money).
I think one could also argue that the cost of the space program is greater than the $850 billion quoted above, too. The infrastructure required (including an airforce, industry, population, housing, etc) really does add up to quite a lot. (Of course, those are dual use costs). My point is that this isn’t really apples to apples at all.
December 5th, 2008 at 1:56 pm
Those numbers are somewhat garbage, for reasons explained here:
http://www.newyorker.com/online/blogs/jamessurowiecki/2008/11/how-much-have-w.html
$4 trillion is current exposure if the entire systems goes pop. But if that happens, we’ll have bigger problems, like keeping the cannibals off of our yards.
December 5th, 2008 at 2:23 pm
Service temporarily unavailable.
December 5th, 2008 at 2:39 pm
[...] Astronomy, especially since CNN is doing away with their coverage of those areas. Today’s choicest bon mot from Mr. Plait involves comparing the bailout boondoggle to the money we’ve spent on NASA [...]
December 5th, 2008 at 2:49 pm
@Jeramyk
“The banks have already benefited greatly from the infrastructure that the gov’t provides”
If this is true than so have you and everybody else.
“to imply that they deserve this because they’ve payed taxes in the past is a little insane.”
I’m not saying that they deserve it, but it is crazy to say that “our” money is being used to bail them out when they have payed so much year in and year out. Simply looking at one side of the equation makes no sense.
December 5th, 2008 at 2:54 pm
@Daffy
“Using your logic, the government should be giving away money to every single tax payer.”
We do that as well (stimulus packages), and many economists think it is a good thing.
December 5th, 2008 at 2:58 pm
@Quiet Desperation
Well the only thing I can figure out is the weight… lets see if we assume the weight of a single newly minted US dollar is uniformly 1 gram:
((1000^4)*4)/1000 = 4,000,000,000 Kilograms.
Hmmmm a 250,000 mile long object a few inches wide would be like a giant needle into the earth right. I wonder what would happen to the very bottom of the stack.
December 5th, 2008 at 3:03 pm
LOL… not sure about that QD. I don’t think they took that into account, but still…
December 5th, 2008 at 3:06 pm
Apparently the link is broken again, I get a 404 error.
December 5th, 2008 at 3:30 pm
@ Mitch
“If this is true than so have you and everybody else.”
I totally agree, but if I make a long series of terrible decisions I don’t expect the government to bail me out (not that I wouldn’t cash the check if they insisted
)
December 5th, 2008 at 5:02 pm
Try this link:
http://www.voltagecreative.com/blog/wp-content/uploads/2008/11/bailout-pie.png
December 5th, 2008 at 5:30 pm
Lol. Phil, you said, “…orbited communications satellites, visited every planet in the solar system (Pluto soon, too)…”
But Pluto isn’t a planet anymore, right? So NASA has already visited every planet in the solar system.
December 5th, 2008 at 7:08 pm
The true number is that 8.5 trillion is available close to 4 trillion has been used.
December 5th, 2008 at 7:08 pm
Eh. You can kiss the NASA budget goodbye, Phil. It’s under the bus with that.
You somehow imagined your particular passion was immune ? Be careful what you wish for – you just might get it.
December 5th, 2008 at 7:19 pm
I wonder how long before a VAT is proposed to cover the cost of all the stealing… I mean “borrowing” that took place.
http://money.cnn.com/2008/12/01/news/economy/tully_vat.fortune/index.htm
December 5th, 2008 at 10:26 pm
http://www.blackmesasource.com
December 5th, 2008 at 10:43 pm
The bottom line is: thanks to the fairly recent removal of regulations passed by congress to prevent another market crash and depression like the one in 1929, we now have a similar problem. Those regs were put in for a purpose–and they were NOT an attempt to “socialize” the economy or stifle “Free Market Enterprise.” It was to stop greedy fools and greedier con men from creating an imaginary prosperity that one day would disappear like a soap bubble.
Now the very same people who grew rich from deregulation want the rest of us to cover their losses after the bubble burst. A government intervention? I thought that smacked of socialism.
Quiet Desperation: So where did the guvmint get the money to make such great purcases? It surely did not have any in savings. How are they loaning non-existant money–no matter what the bargain purchases are?
This makes as much sense to me as one of the original premises of the S&L debacle that risky mortgage debts could be sold as “assets.”
OF course they are getting beaten-down securities cheap, but most were worthless to begin with–they had a value “on paper” and nowhere else. Ten times zero is still zero.
December 6th, 2008 at 1:30 am
@Quiet Desperation and @JoeSmithCA
Regarding the stack of dollar bills: I wouldn’t worry so much about the weight… I’d worry more about it hitting THE MOON!
You know what would be more fun than just stacking it up? We could wrap all that money around the earth in a geostationary orbit (22,240 miles above sea level, about 165,000 miles around) and still have enough left over to take every human being on the planet out for a REALLY fancy dinner!
December 6th, 2008 at 1:48 am
“Unlike NASA, the banks do pay large amounts of money to the government in the form of taxes.”
But other than provide a place to keep money and get loans from, they don’t do much, essentially just moving money around. This crisis was caused by too much bad debt and too many exotic, overvalued investments. This isn’t going to help anyone but the fatcats on Wall Street
December 6th, 2008 at 6:40 am
I guess they changed the URL yet again because the link didn’t work… but I did find it at
http://voltagecreative.com/blog/2008/11/scary-bailout-money-info-graphic/
Interesting, they have all of NASA in one slice BUT they also have the Moonshot as another… did they take that out of original NASA portion or are they doublecounting??
December 6th, 2008 at 7:26 am
So the argument against the comparison is that banks pay money to the government and NASA doesn’t? That argument is flawed because it doesn’t take into account the jobs created by NASA work. For instance, NASA recently awarded the GOES-R contract to Lockheed Martin. It’s projected that contract alone will generate 100 jobs this year and other 100 jobs in 2009. Jobs means taxes, which go to the government.
The banks have done a horrible job with their bailout money so far. Instead of going to loans, most of the money they got was used to buy other banks and to pay dividends to stockholders. They weren’t as regulated as they should be so the money did not get to the areas they needed. Even if its hard to get full calculation of how much this is going to cost, there is still a lot of waste that equals years of NASA’s budget. Even if it received 1 billion of the money, it would be a fantastic addition.
December 6th, 2008 at 8:12 am
@Elizabeth
Forgot to write something about this. It seems like this is not “double counting,” more just putting ideas out there that people can get their heads around. All time budget is hard to grasp. Sending people to the moon, not so much.
What’s annoying is the inclusion of NASA’s all time budget. Why is that group singled out? It’s the only government agency listed. It feeds into the idea that NASA is a huge outlay of the government each year. The other projects are projects, with a beginning, middle, and end.
December 6th, 2008 at 12:35 pm
A while back you criticized libertarians for not realizing that some of the things that government does are worth doing. That’s a bit of a straw man. A better characterization of our position comes from your conclusion: “that our grandest triumphs, in dollars, only cost us a fraction of our mistakes.” We have plenty of non-government organizations handling many of these good areas and as the response here to your call for planetarium donations showed, many individuals would be willing to help finance important scientific projects as well. With government, we could still have a NASA-like organization if it made its appeal directly to the public (which, let’s admit: NASA would be a much better organization anyway if it were trying to appeal to the public). We’re a great country precisely because we don’t need government to accomplish these noble goals. On the other hand, I’d imagine that public support for the bad things that government does, such as financing massive corporate welfare bailouts and needless and devastating overseas wars, would be next to nil. Government sprinkles in a few of these fraction-of-a-percent budget items in order to distract people from the massive amounts of bad spending and create the illusion that we’re dependent on it.
December 6th, 2008 at 12:45 pm
Steve A: You’re ignoring Bastiat’s hidden costs. To create those 100 jobs, NASA needed money from taxes. Paying those taxes prevented people from buying things (increasing demand and indirectly increasing jobs) and companies expanding (increasing jobs). Since government is huge and anything that huge is necessarily inefficient, left in private hands that money would probably have created 200 jobs (scattered all over, instead of concentrated in one highly visible place).
Supporting a government policy because it will “create jobs” is a fallacious argument. If the government really was trying to create jobs, they could do an equally good (well, equally bad) job by paying people to repeatedly dig and fill holes. Since government gets all of its resources from taxing other people, it can’t create anything that they couldn’t have created already. If you’re going to argue that we should have NASA, you should argue not that it creates jobs (as on the net balance it doesn’t), but rather that the use it’ll put the money to is better than the use that the people taxed would put their money to.
December 6th, 2008 at 3:43 pm
I hate to paint a dark picture, because I love NASA and all its accomplishments as much as the next person, but America is insolvent, on the verge of bankruptcy, and China is now refusing to continue financing the debt. America is broke, and cant spend any more money, on anything, for a long long time. It’s that bad.
December 6th, 2008 at 10:11 pm
Here’s a question we should all be asking: Where is 4 trillion dollars gonna come from?
December 7th, 2008 at 9:24 am
@Miko
My argument was not that NASA’s worth was only because of jobs. Reread the first part of my post. My argument was to argue the claim that NASA doesn’t give back anything to the government. I think NASA is worth it just for what it does.
You seem to have a skewed vision of what is preventing companies from expanding as well. It’s not taxes. It’s the salaries of those at the top of the company. Any job cuts you see are often used to keep corporate salaries and bonuses as high as they were.
December 8th, 2008 at 9:37 am
I couldn’t agree more: “our grandest triumphs, in dollars, only cost us a fraction of our mistakes.” On the mistake side of the equation, I’m also sure that the hidden opportunity costs of some government ventures are even more staggering than the 2008 Bailout and Large Government Project plots shown by Voltage. Thanks for the NASA perspective, too!