If you’ve been following the news of the financial meltdown caused by a mortgage crisis in the United States, you’ll already know that the US Congress first rejected a $700 billion bailout to the banking industry but after a bit of arm-twisting and backroom politics, reversed their decision and have now gone ahead with the bailout.
One of the most interesting aspects of the story however, is just how staggering of an amount $700 billion is and some other rather mind-boggling numbers associated with that amount.
For example according to a number of different sources, $700 billion is slightly above or slightly below the entire cost to the American taxpayers of both the Iraq and Afghanistan Wars since Sept. 11, 2001, which estimates suggest is somewhere between $680 billion and $820 billion, and counting.
Seeing as how they’re into it, if the wars in Afghanistan and Iraq were to start today, $700 billion would allow the Pentagon to spend another seven years at war on both fronts, and still have enough money left over to cover the cost of the Army’s annual budget of more than $140 billion.
Besides building 1,750 new bridges, $700 billion could cover the cost of upgrading all of their most deficient bridges four times over. In the area of health care, $700 billion could provide every citizen of the United States with universal health care coverage for six years.
Another way to look at it might be by comparing it to the cost of repairing and rebuilding New Orleans following Hurricane Katrina’s devastation two or so years ago. Including all current and projected rebuilding plans as well as the replacing or upgrading of all coastal levees, the entire bill is a mere $7 billion – or just one per cent of the cost of the bailout.
Heck, for that kind on money, one could run entire countries very successfully. Take Denmark for example. With a gross domestic product of $312 billion in 2007, the bailout is more than twice the size of that country’s entire economy.
If research and technology is your thing, you might be interested in knowing that $700 billion could buy 70 Hubble telescopes or about seven international space stations. It could also fund the entire budget of America’s premier medical research institute – the National Institutes of Health for the next 20 years or the US national intelligence budget for 15 years.
Some other interesting figures regarding that amount of money suggest $700 billion could pay the wages of 22 million average-earning Americans for a year according to the US Labor Department and the Apollo program that resulted in the first-ever human walking on the surface of the moon in 1969 cost only $164 billion in today’s dollars.
It has also been reported that $700 billion cover one year’s health care bills for more than 85 million seniors, disabled people, children and low-income Americans enrolled in the two largest government health care programs, Medicare and Medicaid; the government could pay off the $550 billion in outstanding student loan debt in the United States, and then some.
High finance, big government and the average Joe American weren’t the only ones affected by both the financial crisis and/or subsequent bailout either, as the sporting world is also starting to feel the heat.
Fans can expect to see a few changes due to the crisis the most notable of which will be new names for a number of stadiums south of the border, and this wont be the first time.
Following the bust of pretty well the entire ‘dot-com’ phenomenon of the 1990’s, as well as a few other scandalous misadventures that occurred along the way, Houston’s Enron Field – remember them?, was quickly changed to Minute Maid Park and others like PSINet Stadium in Baltimore and CMGI Field, the former home of the New England Patriots, virtually disappeared overnight.
Others who’ll soon be changing names due to the fact that the original sponsors no longer exist, include the Wachovia Center arena in Philadelphia and WaMu (Washington Mutual) theatres at Madison Square Garden in New York City and in Seattle.
Things aren’t much better on the other side of the big pond either as Manchester United, one of England’s most prolific and stories soccer franchises used to be sponsored in part by American International Group – better known as AIG.
Prior to the financial collapse, AIG was the 18th largest company in the world and that’s probably why their logo was splattered across Man U’s jerseys, but not anymore. Since the collapse, AIG has been taken over by the US government.
Here’s a few more mind-boggling numbers as provided by the Globe and Mail that might bring a bit of clarity to the issue:
$5,354.61 – That’s the share that every taxpayer in the United States is expected to absorb at part of the $700 billion bailout.
90 – The number of federally insured banks in the US that have already failed or are on the verge of failing.
$55 billion – Mortgage-related losses of the 10 largest financial-service companies in the US in 2007.
$320 million – The total compensation packages paid to the CEOs of those very same 10 companies.
35 to 1 – Ratio of the average CEO’s pay compared to the average American worker in the 1970s.
90 to 1 – Ratio of the average CEO’s pay compared to the average American worker in 1994.
275 to 1 - Ratio of the average CEO’s pay compared to the average American worker in 2007.
But perhaps the most revealing statistic of them all, and the one that drives home the old saying that alludes to the fact that the aside from winning a huge lottery or cashing in on a big inheritance, the only way to get rich is through hard work:
$3.2 trillion – Amount in dollars of loans to homebuyers with bad credit and undocumented incomes that received top grade ratings from New York-based ratings companies from 2002 to 2007.
As a result of not doing their homework or cutting corners for years by those ratings companies, many of those who received unbelievably sweet mortgages simply cannot, or will not repay them, and the tiny snowball starts rolling down the hill.
Along the way, the banks and financial institutions in America start to panic and severely restrict long-term loans to bosth individuals and business, and the tiny snowball starts growing out of control.
By the time the now mammoth snowball crashes into Wall Street, hundreds of thousands of businesses in the US have gone under because they not longer have any cash flow and they’re forced to layoff many of the very same workers who got those sweet mortgage deals in the first place.