Cost of bailing out the US could soar

» Cost of bailing out the US could soar
India's GDP is in the vicinity of US$ 1 trillion and that of the US in the vicinity of US$ 14 trillion. The reason we gave you this stats was to put into perspective another number. And that number concerns the total cost of the bailout of the US financial system. Many of you must be having the US$ 700 bn in TARP (Troubled Asset Relief Program) money in mind give and take a few billion dollars. But not Neil Barofsky, the special inspector general for the TARP program, who has come up with the largest figure yet. He believes that the total federal government support to the financial system could reach a whopping US$ 23 trillion. This number, as per New York Times, would amount to US$ 77,000 for every person in the US and of course, is US$ 10 trillion more than the US GDP.

However, if reality would have been anything close to that, don't you think the global financial markets would have tanked by now? Indeed. But the fact remains that the number as per Mr. Barofsky's own admission is vastly overrated. It assumes that every bank in the US fails and also assumes that all of the assets held by money market mutual funds, including Treasury Bills, turn out to be worthless. What then is the actual number? While Mr. Barofsky does not have an answer to it, as per estimates, the US has spent less than US$ 2 trillion so far. The global financial markets can thus breathe easy for the time being. The US$ 23 trillion number was blurted out just to have a proper context.