Unless you’ve been living in a cave recently, you could not have missed all the chatter, spin and opinion being delivered about the “bail out” bill passed by the House and Senate and signed by the President this week.
One thing about this that strikes me as odd is how casually people toss around “$700 billion dollars”. I think this stems from the fact that we can’t really comprehend the size of a number like 700,000,000,000.
It’s a stupefying amount of money.
How much is $700,000,000,000 dollars?
Consider this. . .
If you had 700 billion one dollar bills and you wanted to count them, it would take you 22,197 years. That is assuming you counted a bill once a second, 24 hours a day.
If you laid all your bills end-to-end, the trail would run for 67,834,596 miles — the equivalent of 142 round-trips to the Moon.
Prefer to stack your bills on top of each other? You’re going to need a really long ladder as a stack of 700 billion one-dollar bills would be 47,506 miles high.
Of course your stack of $700 billion would only be 475 miles high if you had 100 dollar bills.
Photo Credit: Tracy R. Olson
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Well that certainly puts things into perspective. And a rather frightening one at that, but what could you buy with $700,000,000,000? (other than Rhode Island?)
*mercutioms last blog post..Interdisciplinary Studies Class Ten
700 billion dollars is quite a stunning number. What seems even more stunning to me is that I don’t really think this will help the average consumer. So much money that will just be a band-aid for our economic problems.
mercutiom asks, “but what could you buy with $700,000,000,000? ”
Great question! According to various Internet sources you could buy:
305 Virginia Class nuclear submarines
or
156 Nimitz Class aircraft carriers
or
1,400,000 Tomahawk cruise missiles
If you don’t need the defense protection these items provide, you could instead purchase 500 space shuttles. Or just buy 10 and you’d have enough left over to launch them 1,524 times.
Or you could develop, assemble and operate seven International Space Stations.
T0 put it in terms normal people can understand, you could buy 8,850,117 Cadillac Escalade’s (fully loaded). That would be one for each man, woman and child in the states of Arizona and Nevada.
Okay, now let’s figure out how much interest we will pay on the 700,000,000,000. What will that add up to?
*Dan Connolly – Atlanta Real Estate Guides last blog post..Bailout alternatives that have $0 cost to the taxpayers.
Jay,
My personal favorite is this one:
There are 31,536,000 seconds in one year.
So to pay off the $700 billion even if you paid off $1/second it would take you 22,197 years to pay if off!
But then again.. no one in Washington seems to be worried about paying anything off.. so. It’s a moot point!
Ya 700 billion is an astronomical number it’s too big to even think about. Hopefully this money actually does what they say it will and will satisfy the financial situation currently ongoing.
This is damned terrifying. While I understand the role we play in the world economy and that this isn’t just giving rich CEOs golden parachutes, you read the latest add-ins like wooden arrow clauses and such and wonder…
Which is a bigger mistake. NOT making the bailout and having things fail. Or MAKING the bailout, having things fail, and being 700 billion worse off to boot.
Paint an ironic picture of the USA being the only “Made in the USA” thing in the Walmart discount bin.
Something local and even more frightening… Arizona just had a RECORD month for foreclosure notices (there should be a link to that post below)…
442 foreclosure notices sent out EVERY DAY (on average) to folks in Maricopa County.
The AZ Director of the Dept. of Housing had ominous words regarding the money being spent to artificially “fix” the market, or at least the prices of things on the market:
“Last month, the U.S. Department of Housing and Urban Development announced Arizona would get $121 million to help areas blighted by foreclosures, but officials are doubtful even that large sum will mitigate the growing problem. ‘Is it enough? No, it’s not nearly enough compared to the magnitude of the problem,’ Arizona Department of Housing Director Fred Karnas said.”
*Edges last blog post..Foreclosure Notices, Recessions, and Bailouts, Oh My! – Arizona Breaks New Record For Number Of Foreclosure Notices Sent
It sure is a lot of money! I like the pink for October look too
*Chelles last blog post..Real Estate Development Marketing
Hey I noticed you added keyword luv too – nice! Good to see more blogs joining in
I thought it was a lot of money until I looked at our national debt – more than $10 trillion – or over $33,000 per person (Yep, all 300+ million of us) – wtf?
After looking at the national debt, which is what Washington probably looks at often, $700 billion doesn’t seem like much. A simple drop in the bucket on an amount that isn’t reasonable, comprehend able or responsible – just like the current administration.
The US has already spent that much in Iraq, and will spend much more. So, it seems that spending that much to assist ourselves out of a problematic situation, regardless of how we got there, makes sense. It is unthinkable, however, that the financial CEOs cash out on the winning gambles, but the US people pick up the tab when they lose.
Jay, it really won’t be that much when you factor in the inflation that is about to kick in. It will be like the Zimbabwe dollar and that will help our National Debt to China and other countries will just disappear.
Of course, those living on retirement or other entitlements will have a hard time. Kind of like us living on commission.
Wouldn’t it have been better if the GOVERNMENT gave each of us tax payers $200,000 to pay off our mortgages, car loans, student loans, etc. than to try and save banks and insurance companies. I would spend the money and put some back in savings and the trickle up effect would cure Wall Street. Then the big shots could keep their golden parachutes and have big junkets.
Greg, I’ve heard that a bit and while it’s usually dismissed quickly, I have to say that given the chance (and this grows ever more real every day) that the bailout fails and we’ve authorized the gov’t to further reduce the value of the dollar…
That actually isn’t that far out of a plan. Or try an alternative plan. Maybe lessen the “gift” and still buy bad debt. We’re going to feel a LOT better if the economy crashes if we have enough cash to pay rent for 6 months.
I think an argument could be made for that. After all, McCain said last night that he’s going to let people renegotiate their mortgages on current market values (though probably not you folks who actually make your payments).
Seems no matter which of the two parties you vote for, it’s a vote for Socialism.
Might as well go all the way out and let the people have some cake too
Candidates want to talk about “energy independence”… how about “economy independence”?
I’d love to get a nice check in the mail (if we are mailing out checks at all, that is) that I could use as a fallback to support myself for half a year or two or three (etc.. etc..) if the economy collapsed.
Hell, at this rate, I’d probably rush out and use it all to buy gold with =P
*Edges last blog post..Property Taxes Going Up, MythBusters, Central Banks, and How Our Inflation Compares To Japan
Jay-
Wow! When you put it that way, it’s amazing. A totally amazing number.
But, what really makes me mad are the AIG people that went to a spa and wrote it all off, letting the tax payers pick up the bill. I don’t like the executive “golden parachutes.” It just stupid to pay people for doing a bad job.
*Marianne Snyggs last blog post..My Guitar Lessons
A Message to Our Leaders from Middle Class America
Both of our Presidential Candidates should hear and understand this message. It is most certainly time for change! Both of these leaders have left middle class America in fear of their inability to manage a crisis situation, and have demonstrated anything but change.
John McCain has continued to emphasize how different he is from Bush, what a maverick he is, and how populist his policies are. Now, in an instant, by supporting the bailout legislation, and thumbing his nose at the Republican alternative, he has thrown it all away.
Barak Obama, looking much like McCain and Bush, quickly abandoned his pledged allegiance to middle class America by supporting the bailout legislation. On October 6, 2008 as America watched Barak Obama on the national news, speaking to a group of his supporters he said, “We need to do what Bill Clinton did in the 1990’s and put people first again.” That comment must have infuriated many middle class Americans, given the current status of our economy that Bill Clinton helped to engineer.
The Clinton Administration and Congress actually planted the seeds for our current economic disaster! Our leaders now act like they have been dealt a bad hand, and don’t have the time to use the sound judgment necessary to craft a bill that addresses the root cause of our economic crisis. A review of the following excerpts from an article that was published by Steven A. Holmes, on September, 30 1999 in the New York Times will show that our leaders have had more than sufficient time to address the issues related to our economic crisis.
Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980’s.
”From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. ”If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”
In review, Steven A. Holmes stated, back in 1999, that this additional risk may not pose any difficulties during flush economic times, but may run into trouble in an economic down turn. So how did “Slick Willy” ensure that we would encounter a huge economic down turn? With the assistance of Congress, he signed a free trade agreement with China that ensures a huge advantage for China manufacturers over U.S. manufacturers. The lack of controls in this agreement, as it is currently written, has resulted in a surefire recipe for disaster.
The U.S. trade deficit with China is the largest, with one country, in U.S. history—$201 billion. That deficit has cost 410,000 U.S. jobs and job opportunities in the past two years alone, according to the Economic Policy Institute. At the same time, China’s workers are denied basic workers’ rights. China’s frequent violations of workers’ rights give that nation an unfair trade advantage that has cost more than 1 million U.S. jobs overall, according to a petition filed with the U.S. Trade Representative by the AFL-CIO and the Industrial Union Council (IUC).
Here are a few things we now know about the U.S. China Free Trade Agreement:
Removal of costly and delaying trade barriers, such as tariffs, quotas and conditions, inherently leads to easier and swifter trade of consumer goods. Unfortunately companies that choose to keep their manufacturing operations in the U.S. do not have a level playing field with those companies who choose to move their manufacturing operations to China or simply purchase their products from Chinese manufacturers. Simply stated, there are no tariffs on the goods manufactured in China, while there are taxes on goods manufactured within the U.S. What that means is that U.S. manufacturers will choose to either move their manufacturing operations to China, or they will choose to purchase Chinese manufactured products. If they fail to do this they will lose business to those manufacturers who have chosen to reduce their costs through these options.
The use of less expensive materials and labor acquired through free trade leads to a lower cost to manufacture goods. Unfortunately the less expensive labor is found in China, not the U.S. What that means is that U.S. manufacturers will utilize more labor from China and less from the U.S. in order to reduce their costs.
The result is either increased profit margins (when sales prices are not lowered), or increased sales caused by lower selling prices, or a combination of both. Unfortunately many U.S. consumers, seeking lower costs, succumb to greed in much the same way as manufacturers seeking higher profits. Both the consumer and the manufacturer are looking at the short-term results and are not considering the effect of lost American jobs to the economy as a whole.
Free trade has caused more U.S. job losses than gains. In a free trade arena, all things are forced to become equal. That includes labor conditions and labor rates. As long as we are willing to accept the same labor conditions and labor rates that the Chinese provide, then we should be comfortable with the U.S. China Free Trade Agreement, as it is currently written. If not, then we should add some controls in the language.
So why would our leaders make such decisions? What advantage could there possibly be to engineer such economic recipes for disaster? Has anyone noticed that many corporate CEO’s and investors are making record breaking salaries, bonuses, and profits, while the average middle class American is struggling to make their mortgage payment, unemployment is soaring to new heights, and the stock market is plummeting at record rates? Imagine being one of those investors or CEO’s who have reaped huge profits at the expense of the middle and lower class Americans. Imagine being able to take that big cash savings to purchase the assets, owned by the average middle class American, for pennies on the dollar. Why would our leaders make these decisions? It certainly feels like the interests of the average middle class American have been sold out in favor of the interests of the wealthy. While Obama and McCain continue to preach that they are going to help the middle class, we continue to watch the numbers of the middle class dwindle as many Americans move from the middle class to the lower class, and as the upper class reaps record profits. When their businesses fail, however, we are expected to bail them out. Yet, when their businesses realize record breaking profit they don’t spread the wealth. CEO’s and investors walk away with millions, even billions and the middle class American is left holding the bag.
Now our leaders are suggesting that, out of desperation, we should act hastily, and sign off on a massive bail out plan for the mortgage industry. The last time I checked, those mortgage institutions took a risk in order to make a profit. Often in business, when the risk pays off, huge profits are made. Has anyone heard the oil companies stepping up to the plate to bail out those who can’t afford to make their mortgage payment? I don’t believe anyone would expect them to. They took the risk to earn those profits. Likewise the middle class American should not be expected to bail out those mortgage companies who willingly took a risk to make a profit.
It’s easy to point fingers at our leadership. So, in all fairness, what would a viable alternative be for the use of $850 billion of our hard earned wages? Everyone realizes that our dependence on foreign oil is a big contributor to the current squeeze on the pockets of the average middle class and lower class American. So why don’t we invest that hard earned cash in a new, revitalized energy infrastructure, to include windmills, solar panels, nuclear power plants, compressed natural gas, geo thermal energy, and more. This would reduce our dependence on foreign oil, create hundreds of thousands of jobs, and put the average middle class American in a better position to afford their house payment, and ultimately the mortgage companies would be greeted with a new pool of low risk mortgage applicants, and they would be put in a better position as their current customers bring their mortgage payments current. This would be a win for all.
How is it that the average middle class American can see these things while our leaders, who are compensated dearly to plan for our future well being, don’t seem to have the ability to see the forest for the trees. Perhaps we need an average middle class American to be the President of the United States as opposed to someone with eloquent speaking skills, or a heroic background.
Written by
Dave Conklin
Average Middle Class American
Florence, Kentucky USA
Well you have a good point, 700 billion is a lot and for our country to complain that there isn’t any money is really sad.
I think people are just worried about thier own money right now. With banks not lending and credit cards taken back lines of credit they hope all the money opens up the credit markets again. I wish they used the money to give out lows not give it to banks to buy treasure bonds like they did.
Be sure: This is not yet the end!
I liked the way you explained how much does $700 Billions look like. The other side of $700 billions..little funny though!!
$700 billion is an astronomical figure, especially if look at it the way you have illustrated. Hopefully it will be worth it and we will see results of this “bail out”, otherwise we would feel very bad that we will have to leave debt for future generations.
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