07/22/10 Vancouver, British Columbia – A pop quiz: How much money did the US government inject into the American “financial system” from June 30, 2009, to June 30, 2010?
Drumroll…
$700 billion.
That’s right…the same amount promised to the financial system in TARP, back in 2008, when they were literally on the brink of destruction. Over the last 12 months, as the S&P 500 rose as much as 30% (up about 15% now, after the summer correction), evidently banks, brokers and lenders needed another $700 billion… just trust ‘em…really.
“The current outstanding balance of overall federal support for the nation’s financial system…has actually increased more than 23% over the past year,” wrote TARP inspector general Neil Barofsky this week, “from approximately $3.0 trillion to $3.7 trillion – the equivalent of a fully deployed TARP program – largely without congressional action, even as the banking crisis has, by most measures, abated from its most acute phases.”
You’re supposed to feel better, we’re told, that most of the money went to Fannie, Freddie and the FHA.
Hence we arrive at one of the underlying themes of this year’s Investment Symposium: Government out of control.
At the sharpened edge of this sword is Doug Casey. Here’s how he suggested the government fix itself in yesterday’s general assembly…not exactly “News at 10” material:
“What should they do? Well, I have a nice list of pointers,” Doug mulled onstage:
“1. Central banks, starting with the Fed, should be abolished. They serve no useful purpose. The US has 260 million ounces of gold. That can be used to back what’s left of the currency. What price, I don’t know – $10,000 an ounce?
“2. Urgently disband 95% of the government. I would go all the way, but I’m a gradualist. It’s not radical – it just means going back to the original ideas of the Constitution
“3. Withdraw troops from all countries around the world. End the insane wars in Iraq and Afghanistan. Cut the military back about 95% too. All these V-2 rockets and carriers are just junk, expensive junk. Their main purpose is going to be excellent dive sites for people of the next century.
“4. Abolish, totally, absolutely, the whole income tax and whole IRS.
“5. US government should default on the debt. That’s the honest way to handle it. They will likely do it subvertly with inflation over time, but I would prefer overtly.
“What are the chances this is going to happen? Slim to none, and slim’s out of town. It ain’t going to happen. Thus, they chose an uncontrolled collapse, not a controlled one.”
We suspect this is what Barry Ritholtz meant when he said he felt fatigued by all the “recession/depression porn” featured at this year’s Symposium. But hey… there’s plenty to be gloomy about.
Ian Mathias
for The Daily Reckoning
Ian Mathias
Ian Mathias is the managing editor of Agora Financial’s Income Franchise, where he writes and researches about retirement, dividend and fixed income investing. Much of his work is featured in The Daily Reckoning and Lifetime Income Report – Agora Financial’s flagship income investing advisory.
Previously, Ian managed The 5 Min. Forecast, a fun, fast-paced daily look into the future of global markets and macroeconomics. He’s also worked in public relations, where media outlets like Forbes, AP, Yahoo! and MSN Money have syndicated his writing. If he’s not at work, you’ll probably find Ian on a bicycle, racing up and down the “mountains” of Baltimore County. Ian has a BA from Loyola University in Maryland.
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