Financial Rescue Nears GDP as Pledges Top $12.8 Trillion

By Mark Pittman and Bob Ivry

March 31 (Bloomberg) -- The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.

New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008.

President Barack Obama and Treasury Secretary Timothy Geithner met with the chief executives of the nation’s 12 biggest banks on March 27 at the White House to enlist their support to thaw a 20-month freeze in bank lending.

“The president and Treasury Secretary Geithner have said they will do what it takes,” Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said after the meeting. “If it is enough, that will be great. If it is not enough, they will have to do more.”

Commitments include a $500 billion line of credit to the FDIC from the government’s coffers that will enable the agency to guarantee as much as $2 trillion worth of debt for participants in the Term Asset-Backed Lending Facility and the Public-Private Investment Program. FDIC Chairman Sheila Bair warned that the insurance fund to protect customer deposits at U.S. banks could dry up because of bank failures.

‘Within an Eyelash’

The combined commitment has increased by 73 percent since November, when Bloomberg first estimated the funding, loans and guarantees at $7.4 trillion.

“The comparison to GDP serves the useful purpose of underscoring how extraordinary the efforts have been to stabilize the credit markets,” said Dana Johnson, chief economist for Comerica Bank in Dallas.

“Everything the Fed, the FDIC and the Treasury do doesn’t always work out right but back in October we came within an eyelash of having a truly horrible collapse of our financial system, said Johnson, a former Fed senior economist. “They used their creativity to help the worst-case scenario from unfolding and I’m awfully glad they did it.”

Federal Reserve officials project the economy will keep shrinking until at least mid-year, which would mark the longest U.S. recession since the Great Depression.

The following table details how the Fed and the government have committed the money on behalf of American taxpayers over the past 20 months, according to data compiled by Bloomberg.

 http://www.bloomberg.com/apps/news?pid=20601087&sid=armOzfkwtCA4&refer=home

Well, he did promise change........

............. this is.... disheartening to hear that big a number, JUST SO FAR! I was opposed to the bailouts from the start, and I remain opposed. This debt is far too much for the USA to take on. Sure the DOW is up a bit today, but w/e.

In the end, did we really expect differently from Obama? I did not.

 Well, it's good to see that someone else had the common sense to think he was just another puppet. It really is sad that people are so decieved by the guy when if John McCain would have won and would had started pulling this shit, there would have been a large revolt in the U.S instead of "it's ok, messiah Obama knows best"lmao!

Yeah, I think McCain would have done something similar too, but probably not to this degree... I would still be mad as hell. Either way both parties are the same. A few token differences but really, you get to pick between the Republocrats and the Demicans. Why is it that so many of the Treasury Secretaries in recent memory have had major involvement with or with people from Goldman Sachs?

Really... This is both saddening and outrageous. The United States of Goldman Sachs... With Stock options and Profits for them.

Yeah, a revolt would do wonders. The government usually listens to their citizens right? So either we're stuck with massive spending and peacefulness or massive spending and chaos. I choose the former.

And let's not fool ourselves to believing that we could ever pay off the debt in the first place. If this country cared about its debt, Reagan wouldn't have gotten a second term.

no, mcain would not have been able to pull this crap. because the dems have the senate. this sucks im about to turn 18, and now im going to have to live through this debt. so much for retirement. :(

 Revolutions, don't necessarily always have to be violent, mind you it's hard to find one that wasn't. Now, the money that is being borrowed to pay this is printed by the Federal Reserve, which is privately owned and who collects interest on every dollar borrowed "printed from thin air". So, in a sense, this debt your government is putting on the heads of your children could necessarily be avoided but it would require a large number of people.

 Here's a link to the Obama Deception movie http://video.google.ca/videosearch?hl=en&q=the%20obama%20deception&um=1&ie=UTF-8&sa=N&tab=wv# . It's very compelling and i think everyone should watch it.

As for a revolution that was bloodless? The Glorious Revolution in Britain comes to mind. http://en.wikipedia.org/wiki/Glorious_Revolution

Just saying...