$7,400,000,000,000

That’s what the Fed is pledging to “rescue the financial system,” according to Bloomberg.com. That’s 50% of 2007 GDP, or 288% of 2007 federal tax revenues. Makes my prior post sound look like a praise of good budgeting.

$4,284,500,000,000

That’s what the so-called “financial crisis” of 2008 has cost the federal government directly… so far.* Wonder how that stacks up to other crises? CNBC has a slideshow showing the costs (inflation-adjusted) of some of the biggest government projects ever.

There are many events not listed in that slide show, of course. Two of the most notable: the Civil War ($60.4 billion in 2008 dollars, for both sides) and World War I ($253 billion in 2008 dollars).

For comparison, $4.28 trillion is approximately 31% of 2007 US GDP. It’s also 167% of 2007 federal tax revenues. How’s that for deficit spending?

You may bring your eyebrows back to earth now.

* Some of this money is in the form of loans. Many of these loans are to companies hemorrhaging cash faster than they can borrow it and are explicitly designed as relief against bad assets, however, and the crisis is hardly over. So, counting this money as lost is only wise.

The Only Graph You Really Need to Understand the Auto Industry’s Problems

It’s the best one-image summary of why the Detroit Three are in such hot water, and it’s on Michigan economist Mark Perry’s blog.

(h/t Greg Mankiw).

Quote of the Day

“Indeed you can usually tell when the concepts of democracy and citizenship are weakening. There is an increase in the role of charity and in the worship of volunteerism. These represent the élite citizen’s imitation of noblesse oblige; that is, of pretending to be aristocrats or oligarchs, as opposed to being citizens.”
– John Ralston Saul

Are Stocks Really A Bargain?

Elliott Wave International asks, “Are stocks really a bargain?” If you believe your eyes, the answer is pretty clear.

P.S. In case you were wondering what the current DJIA dividend yield is (click the link above to see why this is relevant), you can see that here.

Nation of Burkeans?

The National Review features a fantastic piece by Alexander Benard and Anthony Dick on America’s True Genius. The thesis: change does not make a nation great, and it certainly is not what has made America great. Rather, it is the constitutionally-mandated stability of our system of laws – the difficulty of implementing radical change – that makes this nation so good at weathering storms and enduring for so long. My favorite bits:

In fact, the Founding Fathers designed our Constitution so as to make it very difficult to bring about significant changes. New legislation requires majorities in both houses of Congress followed by a presidential signature. Constitutional amendments are even more difficult — the easiest method is for an amendment to pass both houses of Congress by two-thirds majorities and then be ratified by three-fourths of all state legislatures. This suggests the Founding Fathers were suspicious of quick and easy change.

The actual genius of America, and what makes our country unique, is precisely the opposite of change. It is that our country was founded on certain timeless principles, laid out in the Declaration of Independence and put into practice by the Constitution. These principles include the conviction that all men are created equal, that they are endowed with certain inalienable rights, that among these rights are life, liberty, and the pursuit of happiness; and that governments are instituted among men to secure these rights, and to provide freedom of conscience, freedom of speech, and equal protection under the law.

and especially:

Our constitutional structure recognizes the value of stability, and that change can be (indeed, often is) more damaging than uplifting. It acknowledges that existing social structures and traditions are not merely vestiges of an ignorant past, but rather reflect the accumulated wisdom of our ancestors and the evolutionary fruits of centuries of social experimentation. It respects the organic nature of political communities, with their interdependent parts woven together in a web of complexity that confounds even the most well-laid plans of radical social engineers.