$8.5 trillion rescue

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

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Do

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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

© Samuel S. TanSamTan@ieee.org

Thank you

Be contented

Be tolerant

Be humble

Be healthy30