Visualizing The True Cost Of The First Bank Bailout: $3.5 Trillion And Rising At Over $1 Trillion Every Year

Tyler Durden's picture

In his latest letter to clients (which we will present shortly), Diapason's Sean Corrigan has one chart that explains beyond a shadow of a doubt what the true cost of the (First) Great Financial Crisis, the failure of Lehman, and the bailout of the US financial sector, is. The premise is ridiculously simple: the chart below compares the trendline of US debt before and after the Lehman from September 2008, and the rescue of everyone else who unlike Dick Fuld, was in Hank Paulson's good graces. What is immediately obvious is that US debt is currently $3.5 trillion higher than where it would be had America's banks not received a rescue. That is Sean's conclusion. It is however incomplete. The truth is that this is a proportional increase which if extrapolated into the future, means that every year the US will incur well over $1.2 trillion each and every year as a result of bailing out the banks. That is the true cost to Americans regardless of what Tim Geithner may claim. But note how we said First. Unfortunately, the Second Great Financial Crisis, that of bailing out insolvent sovereigns, is currently and process. And when all is said and done, the global cost in terms of new "trendline" debt will be many more trillions in incremental debt every year. And despite what economic voodoo theories say, near infinite debt always ends in near infinite pain. It will this time too. Guaranteed.

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Careless Whisper's picture

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scatterbrains's picture

You forgot Citi not trying to feel the love today bitches!

Pladizow's picture

"The issue which has swept down the centuries and which will have to be fought sooner or later, is the people versus the banks" - Lord Acton 1834-1902.

"Are we there yet?" - Bart & Lisa to Homer -

Quixotic_Not's picture

"Are we there yet?" - Bart & Lisa to Homer

A very direct, apropos comment that speaks to the human nature based paradigm of "arrival".

Everyone wants to arrive at there place in the Ponzi, to fully enjoy their piece of the Ponzi pie, fully realize there American dream, there endless supply of free lunches...

Even at this late stage in the bankster/politeer game, there are sheeple trying to reform BIG government to meet their ideologies, mindlessly following each other over the cliffs of ignorant bliss, still!

Witness the Tea Party and OWS movements that, instead of throwing out an utterly corrupt, completely useless political party duopoly, are attempting to unCORRUPT the (D) & (R) Free Crap Empire™, throwing darts at the BIG government dartboard that has been hidden from public sight for at least three generations now...

They aren't concerned with TRUTH, only their own personal demons, and as long as THEY THINK someday THEY MIGHT arrive, ending the .GOV system that has looted the planet since WWII is doable, they just have to get other people to believe in THEIR totalitarian solutions!

We don't need to just to readjust the (D) & (R) Free Crap Empire™, a little here and there, we need to arrive at FULL STOP, cleanse the apparatus and restart OUR government.

Unfortunatley, there's a reason it's called average intelligence, and there's also a reason that RAPE, PILLAGE, PLUNDER and MURDER continues unabated...

Whenever the legislators endeavor to take away and destroy the property of the people, or to reduce them to slavery under arbitrary power, they put themselves into a state of war with the people, who are thereupon absolved from any further obedience. ~ John Locke 1690

Until the brainwashed electorate realize that to stop the banksters, and their politeer brethren, you MUST END the Ponzi, nothing will change!

There is a solution, and it's the same solution that established the USofA and ended, what was at that time, the BIGGEST Ponzi on the planet - The Divine Right of Kings:

The state of nature has a law of nature to govern it, which obliges every one: and reason, which is that law, teaches all mankind, who will but consult it, that being all equal and independent, no one ought to harm another in his life, health, liberty, or possessions ~ John Locke 1690

Keep It Simple Stupid (KISS)


Quixotic_Not's picture

And the moment that I, or anyone else, posts an AMERICAN solution to the crisis, TPTB @ ZH un-sticky the thread...


SRV - ES339's picture

So what action have you taken to address the situation, other than diss those that have?

OWS has broken the inertia... a very important step, and short of an all out revolution (I'm guessing you're not up to participation in that either), all we can expect at this point. 

Seer's picture

If I could have I would have given you more than my allowed quota of a single green arrow.

We must, however, also understand the impact of GROWTH itself.  The banking industry is but an extreme extension of the ramifications of rampant growth; clearly we've seen how ugly things can be; but, just dumping this element still leaves us with the core issue...

StychoKiller's picture

The slope of that next leg up on the chart WILL require ropes and pitons!  Govts, banks, Ignorati, please let me introduce you to Exponential functions!

Pitchman's picture

Pladizow: Right you are.

The chart and commentary s all fine and good (really bad) yet the true cost must take into account the $14 Trillion ++?? in guarantees and backstops which represents untold $ Trillions in opportunity costs or money withdrawn from funding future growth.  Zero Hedger's please provide an analysis of this.

OH: And then there is the other shoe.

- Inflection Point


Unprepared's picture


But, but, but ... the NPV(bailout CF) assuming a required rate of return of 0% is higher than the economic opportunity cost of lost campaign and lobbying donations due to lower bankers’ bonuses.

The rational political decision is easy to make.

Do not argue.


adr's picture

Fitch upgraded Ford because they shipped 100k Explorers to dealer lots that won't sell last month.

redpill's picture


samsoro's picture

you mean $3.5 trillion (not billion) in the main text

Ruffcut's picture

Yes should be T as in TREASON.

Dr. Richard Head's picture

Interstingly enough the left right divide was so prominate that Obama, McCain, and Bush ALL supported this effort of unbridled theft that Obama and McCain voters were busy arguing over bullshit on the edges of the problem. 

The force is strong in the media.

scatterbrains's picture

They're gonig to need a new wedge. Guns and abortion is getting old. What will it be I wonder?

Dr. Richard Head's picture

It's already playing out - OWS versus Tea Party. Battle royal bitchez.  I am going to sit that one out of course. 

Temporalist's picture

Well kind's more of the "Class Warfare" theme they are throwing out.  That is why everyone on all sides have said it.  It's obvious.  Dems think they are lower class even though they claim to be the educated elite and Reps think they are the wealthy class that needs to care about taxes when they are mostly lower middle class blue collar.  They don't even know where they really stand so pitting them against one another will be as easy as always.

Woodyg's picture

Funny but one of the creators of the tea party- not the coopted koch brothers version - said he agreed with the OWS.

Hell many tea partiers are down at the protests -

The main problem is it doesn't fit neatly into your 2 parties against each other flawed paradigm.

Both parties are Captured.

earleflorida's picture

the OWS have already cannibalized the TP's

bigwavedave's picture

Trillion with T Byler 

flacon's picture

"T" as in Teats, or "B" as in Boobs... Same difference...does it even matter any more?

s2man's picture

... pretty soon you're talking about a lot of money.

Zero Debt's picture

No worries, just 0.003 quadrillion. Ctrl+P

jekyll island's picture

To Hell with the Sovereigns, the Fed just allowed BAC to put us taxpayers on the hook for $1 trillion.  WTF???  Europe is just a headfake, the Fed is about to bail out TBTF's all over again.  




L G Butz PhD's picture

Yes, more SAD news. Saw that too on the blogs, but did it make MSM yet?

DormRoom's picture

USD-YEn collapsing.  Japan's gonna go into a deep recession, agitating sovereign default risk.  How's the world going to handle that crisis.

U.S kicking can down the road, facillated EZ crisis.  EZ kicking down the road, may bring huge trouble for Japan.   Everyone is kicking the can down the road, hoping someone else blows up.    

buzzsaw99's picture

the joo bankers don't give a rat's ass about the japs. fuck 'em.

Fukushima Sam's picture

Things are looking up in Japan.  They have a whole new market exploding for decontamination services.  This is bullish for the Japanese economy!

"If blasting with power washer does decontaminate, I am pretty sure Russians, Ukrainians, and Belarusians have done that long time ago."

LawsofPhysics's picture

The debt is a fraud, pass the hopium pipe.

PaperBear's picture

"US debt is currently $3.5 billion higher than" ?

Shouldn't that be trillion ?

Duuude's picture


...regardless of what Tim Geithner may claim...


carbonmutant's picture

Amazing linearity....

oak's picture

It is only a slope change, wait util 2015, there might be another steep chnage.

msorense's picture

This is what media shills like Erin Burnett are trying to hide from the American public.  Instead of informing them of the true cost of the bailouts they do the American public a complete disservice.  She sure found the stupidest protestor - I think anyone who reads this blog regularly would have been able to put her in her place.

mjk0259's picture

She probably 'interviewed' 6 and picked the worst one to broadcast. Anyway, protestors are doing their job just by pointing out that the system is not working. They should not be expected to understand more than that.

trav7777's picture

that's exactly how news works.

Even "respected" sources like 60 Minutes do it...for example, in a hatchet piece on polygraphs, they did 19 poly examiners and only ran with the 3 that supported their agenda.

tickhound's picture

Engaged to Citigroup banker...

She is not in the service of the public therefore her job isn't to inform you.  She's in the service of her current and former employers... Goldman Sachs, Citi, NBC/GE, CNN.

She actually believes what she says...

She has become quite the symbol for what is wrong in our economy, how it functions, who it benefits, and sadly who we choose to celebrate.

Watch her get shouted down at OccupyVegas.  She is obviously rattled...


tickhound's picture
A look into Erin's soul... and her "heart" from Men's Health mag just a few years ago.   EIGHT WAYS TO IMPRESS ME - Erin Burnett 1. Pack Your Bags

Any guy who can plan a trip to an exotic locale, such as Mongolia, Mozambique, or Papua New Guinea, would impress me.


2. Buy Me a New Atlas and Globe


You could unlock my heart by allowing me to dream up my next trip. I love to travel, and hope to eventually set foot in 100 countries. I have many more to go.


3. Do Something Special for My Parents



Family is important to me, so round-trip business-class tickets to Australia and New Zealand for my parents would earn you big points in my book.


4. Relax Me


Yoga keeps me calm, so I'd be impressed if you thought to send a yoga instructor to my apartment for private sessions.


5. Help Me Work Out


Finding an exercise bike at my door would be great for rainy days when my Raleigh M80 mountain bike and I are stuck indoors.


6. Edify Me


Reading is a passion of mine, so a gathering with a couple of my favorite authors, especially Jared Diamond (Guns, Germs, and Steel) and Robin McKinley (The Blue Sword) would make for an exceptional evening.


7. Please My Palate


Hiring a personal chef to prepare meals for the few nights a week I am home would be unforgettable.


8. Send Me Packing


A man who recognizes the importance of my time with the girls is a keeper. A long weekend spa getaway for my sisters and me would be perfection.


ALL 8 ways include BUYING HER SHIT.  The perfect shill for debt financed consumption.

Momauguin Joe's picture

Stupid cunt. She needs the man; the man doesn't need her.

Quixotic_Not's picture

Marie Antoinette also believed in what she said when she exclaimed Let them eat cake!

She too was a whore representing the ruling elite of her nation, the House of Bourbon, how did that work out for her?

"Fear is the foundation of most governments; but it is so sordid and brutal a passion, and renders men in whose breasts it predominates so stupid and miserable, that Americans will not be likely to approve of any political institution which is founded on it."  ~ John Adams

ImNotARobot's picture

Erin Burnett is certainly a shill, but a damn hot shill. 

davepowers's picture

would edify Erin Burnett

would not edify Erin Burnett


pole of the day ;)

Tic tock's picture

with numbers like these, cannot anyone, Republicans', the President, the Joint Chiefs, stand up to Bernanke? - is this not a clear and present domestic threat?

Woodyg's picture

Sorry but all three named above have been bought off for decades.

GeneMarchbanks's picture

After the second bailout that chart goes parabolic. Not too far off now.

baby_BLYTHE's picture

When the money stops flowing down to the man on the street, the blood starts flowing in the streets- Gerald Celente

centerline's picture

I enjoy watching Celente interviews.  He is very animated.  He is also going to be proven correct.  Unfortunately.

Manthong's picture

Geez, when will people finally understand that financially, they are all dead men walking?