Welcometo
The financial crisis
The credit crisis
The economic crisis
The bailouts
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What does it all mean? The economy - millions, billions, trillions
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Is a picture really worth a thousand words?
Jobs Lost
Sept 403,000
Oct 320,000
Nov 533,000
Total 3 months 1,256,000
Total 2008 2,000,000
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◄ Utopia ? ►
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Back to realityCrisis <=> Bailouts
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$ in Billions U.S. Maximum commitment Tapped so farCommercial paper program $1,800 $271Term Auction Facility $900 $415Other assets $606 $606Finance-company debt purchases $600 $0
Money Market Investor Funding Facility $540 $0
Citigroup bailout $291 $291
Term securities lending $250 $190Term Asset-Backed Loan Facility $200 $0Other credit extensions $123 $87Discount window $92 $92Commercial paper program No. 2 $62 $62Discount Window No. 2 $50 $50Bear Stearns assets $29 $27Overnight loans $10 $10Secondary credit $118 $118Federal Reserve total $5,671 $2,219
Loan guarantees $1,400 $0Guarantee to GE Capital $139 $139Citigroup bailout $10 $10Federal Deposit insurance Corp. total $1,549 $149
Troubled Asset Relief Program $700 $330Stimulus package $168 $168Treasury Exchange Stabilization Fund $50 $50Tax breaks for banks $29 $29Treasury Department total $947 $577
Hope for Homeowners $300 $300Federal Housing Authority total $300 $300
U.S. Government Total $8,467 $3,245
$8.5 trillion: breakdown of the rescue
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$ in Billions U.S.Maximum
commitmentTapped
so far
Federal Reserve $5,671 $2,219
FDIC $1,549 $149
Treasury $947 $577
Housing $300 $300
U.S.A. $8,467 $3,245
Summary of the $8.5 trillion rescueThe big picture
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$5,671
$2,219
$1,549
$149
$947$577
$300 $300
$8,467
$3,245
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
U.S
. B
illi
on
Do
lla
rs
FederalReserve
FDIC Treasury Housing U.S.A.
Programs & Total
$8.5 Trillion Rescue
Maximum commitment Tapped so far
The $8.5 trillion Rescue Plan
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Commitments per AgencyProportions (Pie-Chart)
Maximum commitment
Federal Reserve, $5,671, 67%
FDIC, $1,549, 18%
Treasury, $947, 11%Housing, $300, 4%
Federal Reserve FDIC Treasury Housing
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Amounts tapped per AgencyTapped so far
Federal Reserve, $2,219, 68%
FDIC, $149, 5%
Treasury, $577, 18%
Housing, $300, 9%
Federal Reserve FDIC Treasury Housing12
Details, details
• Now we examine the numbers for each agency– First the dollar figures– Followed by the graphics for each
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$ in Billions U.S.Maximum commitment
Tapped so far
Commercial paper program $1,800 $271
Term Auction Facility $900 $415
Other assets $606 $606
Finance-company debt purchases $600 $0
Money Market Investor Funding Facility $540 $0
Citigroup bailout $291 $291
Term securities lending $250 $190
Term Asset-Backed Loan Facility $200 $0
Other credit extensions $123 $87
Discount window $92 $92
Commercial paper program No. 2 $62 $62
Discount Window No. 2 $50 $50
Bear Stearns assets $29 $27
Overnight loans $10 $10
Secondary credit $118 $118
Federal Reserve total $5,671 $2,219
Federal Reserve
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Federal Reserve Programs
$1,800
$900
$606
$600
$540
$291
$250
$200
$123
$92
$62
$50
$29
$10
$118
$271
$415
$606
$0
$0
$291
$190
$0
$87
$92
$62
$50
$27
$10
$118
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800
Commercial paper program
Term Auction Facility
Other assets
Finance-company debt purchases
Money Market Investor Funding Facility
Citigroup bailout
Term securities lending
Term Asset-Backed Loan Facility
Other credit extensions
Discount window
Commercial paper program No. 2
Discount Window No. 2
Bear Stearns assets
Overnight loans
Secondary credit
Maximum commitment Tapped so far
Federal Reserve
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Loan guarantees $1,400 $0
Guarantee to GE Capital $139 $139
Citigroup bailout $10 $10
Federal Deposit insurance Corp. total $1,549 $149
Federal Deposit Insurance Corp.
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Federal Deposit Insurance Corp. Programs
$1,400
$139
$10
$0
$139
$10
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600
Loan guarantees
Guarantee to GE Capital
Citigroup bailout
Maximum commitment Tapped so far
FDIC (Fed Deposit Insurance Corp.)
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Troubled Asset Relief Program $700 $330
Stimulus package $168 $168
Treasury Exchange Stabilization Fund $50 $50
Tax breaks for banks $29 $29
Treasury Department total $947 $577
Treasury Department
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Treasury Dept. Programs
$700
$168
$50
$29
$947
$330
$168
$50
$29
$577
$0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000
Troubled Asset Relief Program
Stimulus package
Treasury Exchange Stabilization Fund
Tax breaks for banks
Treasury Department total
Maximum commitment Tapped so far
Treasury Department
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Hope for Homeowners $300 $300
Federal Housing Authority total $300 $300
Federal Housing Authority
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Back to overall situation
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“Big” numbers (billions)
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Past & recent major expendituresTotal = $3,662.6 billion
$0.2
$0.1
$500.0
$115.3
$454.0
$237.0
$698.0
$256.0
$551.0
$851.0
$0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0
Louisiana Purchase
Alaska Purchase
The New Deal
Marshall Plan
Korean War
Race to the moon
Vietnam War
S&L Crisis
Invasion of Iraq
NASA lifetime budget
Past & recent major expenditures
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“Small” numbers (billions)
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Foreign Holders of Treasury Securities
$585.0
$573.2
$338.4
$185.2
$182.2
$141.0
$91.8
$69.0
$60.9
$2,860.5
$0.0 $500.0 $1,000.0 $1,500.0 $2,000.0 $2,500.0 $3,000.0
China
Japan
UK
Carib Bnkng Cntrs
Oil Exporters
Brazil
Luxembourg
Russia
Hong Kong
Total Foreign Holders of TreasurySecurities
Foreign Treasury Security Holdings
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Is it all doom and gloom?
May be
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US Nominal GDP (billions)
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US Nominal GDP per capita (billions)
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Should we be worried?• “Things will get worse before it gets any better”
• We have been there before and came out of it
• Have we learned out lessons?
• Things are very different this time– Much, much higher numbers– We owe a whole lot more already– Several fronts of instability in the world– All the world’s nations are in this together
• We need to help each other out of this crisis29