What $700 billion could buy
We’re spending $700 billion to bail out the idiots who got us into this mess and we end up with nothing to show for it but the bag we’re left holding and maybe a disaster averted (we hope).
We could be spending a lot less to get a lot more. A national wi-max buildout would cost between $5 billion and $14.5 billion. That would enable every American to get high-speed access to the internet and to its education, commerce, connectivity, innovation, jobs, and value. With a lot left over.
Or take the $700 billion and divide it by America’s 114.5 million TV households. Minus the 40-percent-plus margin that cable companies make on internet access (that’s the number I heard from them), we could provide broadband access to every one of those homes for about $300 a year. That means we could give every American free broadband access for 20 years.
We could buy 3.5 billion One Laptop Per Child machines. Want world peace and understanding? Give one to every Muslim on earth and every citizen of China (or since China can afford them, make that everyone in India or everyone in Africa and South America combined) and you’d still have more than 500 million machines left over.
Or we could give 4.4 million Americans free college educations at private institutions. We could give 23 million Americans free college educations at public institutions like mine. That alone would improve our competitive position and transform dying industries.
Or we could more than triple total annual R&D spending in the U.S. I can’t find total R&D on alternative energy but with this money we could multiply what Google.org is spending by a factor of 35,000.
Of course, these comparisons are specious. We’ll see a lot of op-ed charts that make such apples-and-kumquats correlations. The point will always be the same: Where are our priorities? Where are we investing our money?
And what are we getting out of spending this $700 billion. We, the people, damned well better make demands on our representatives to get something for our money.
Tom Evslin has a good list of suggestions that would in some ways treat the bailout like a bankruptcy reorganization. Robert Reich has a similar suggestion for a “giant workout of Wall Street.” Here’s Don Tapscott calling for unprecedented transparency. These are about extracting a pound of flesh for our ton of gold.
But I also want something about investing in our future and the economy: broadband access, technology, education, R&D, something that will build the future rather than mortgage it.
: LATER: Says Umair Haque:
The time is now.Now is the time for revolutionaries to step up and build something better, something more real, and something greater.
There will probably never - at least in our lifetimes - be an opportunity for total economic reinvention this tremendous.
Tags: finance
September 21st, 2008 at 11:24 am
[...] Jeff Jarvis: What could $700 Billion buy? Of course, these comparisons are specious. We’ll see a lot of [...]
September 21st, 2008 at 11:47 am
Wait a minute. The $700 billion is going to be used to buy mortgage assets from financial institutions — most likely, a lot of the toxic waste generated by all the sub-prime loans that were handed out. Here are some key paragraphs from the proposed authorization:
“(a) Authority to Purchase.–The Secretary is authorized to purchase, and to make and fund commitments to purchase, on such terms and conditions as determined by the Secretary, mortgage-related assets from any financial institution having its headquarters in the United States.”
“The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time”
Source: http://blogs.wsj.com/economics/2008/09/20/treasurys-financial-bailout-proposal-to-congress/
In hindsight, we can see that it really was bad business to make certain loans to certain folks — which is why lenders had to be coerced into making these loans in the earlier years, because good business practices would have prohibited such lending. Of course, this mess was exacerbated by criminal activity on the part of some lenders, appraisers, and homebuyers (all of whom should be punished appropriately), facilitated by the ratings agencies and bankers who tried to rake in as much fee income as possible, and allowed to gain momentum by the complete failure of Congress to provide the responsible oversight they are supposed to provide — especially, of Fannie Mae and Freddie Mac. All of which pushed the bill higher, sure, but the bill would have been there regardless.
But, at the end of the day, the bulk of the $700 billion will be used to make good on all the sub-prime debt that has been defaulted on — loans made to folks who couldn’t afford to pay them back. Presumably, the bulk of that debt was used by folks to buy homes — which was the goal of Congress all along.
September 21st, 2008 at 12:47 pm
[...] post by Jeff Jarvis… We’re spending $700 billion to bail out the idiots who got us into this [...]
September 21st, 2008 at 12:56 pm
[...] still undecided on the bailout (though I’m 98% opposed to it), but I do like Jeff Jarvis’ perspective on the $700 billion. Among a list of national initiatives which would cost less than $700 billion, he [...]
September 21st, 2008 at 1:20 pm
The most astounding thing about the Administration’s bailout proposal is what it doesn’t provide for. All it says is that the Secretary of the Treasury is given $700 billion to buy mortgage related assets issued before Sept 17, 2008. It provides no limitations or guidance on which assets should be acquired and says that actions taken under the program “may not be reviewed by any court of law or any administrative agency.” Earlier programs with similar goals (HOLC, RFC, RTC, etc.) had at least some constraints placed on them and were, in fact, reviewed by the courts.
This seems like yet another attempt to exploit a national emergency in order to strengthen the unitary presidency and lead us closer to an effective monarchy.
bob wyman
September 21st, 2008 at 1:33 pm
sure, the scale of this bailout points out how we could better spend taxpayer dollars, but a fat lot of good wimax in every home would do if the market’s in shambles, the country’s savings are depleted, and people are out on the street because their homes have been forclosed.
September 21st, 2008 at 1:37 pm
The government is purchasing 700 billion in bad mortgages, yes. However, it’s not like they are worth nothing. It’s a possibility that the government will actually end up making money on this investment.
So it’s not 700 billion wasted, it’s just 700 billion invested with not much certainty of how much it’s really worth…
September 21st, 2008 at 3:34 pm
[...] Jeff Jarvis has some interesting thoughts about what $700 billion could buy - and how it could change this country. Possibly related posts: (automatically generated)Blame the [...]
September 21st, 2008 at 7:55 pm
$700B would also pay about 1/4 of the cost of the Iraq war — but only if you ignore the additional cost in lives and suffering.
September 21st, 2008 at 9:41 pm
[...] A lot of money. As Jeff Jarvis says, that’s a whole lot of OLPC’s or college [...]
September 22nd, 2008 at 5:23 am
[...] For a depressing take on this - here’s Jeff Jarvis’ reminder of what $700 billion could buy. [...]
September 22nd, 2008 at 11:23 am
I doubt that many mortgages will be purchased, good, bad, or indifferent. Instead, the tower of securitization based on those mortgages will be moved from the financiers to the public purse, leaving the underlying mortgages unchanged (and therefore not in any way affecting the risk, value, or prospects of the derivative securities, for those who might be inclined to believe that somehow the taxpayer will eventually make part of the money back).
September 22nd, 2008 at 3:05 pm
Great post! Is there any possibility that you might be interested in covering the Green Median Show I am chairing is Boston on Out 1-2?
http://www.greenmediashow.com
Over 60 amazing speakers will be addressing the sustainability of print and digital media supply chains.
Media supply chains represent more than $1 Trillion of the US GDP and consume more than 250 billion kilowatt hours of electricty.
Any recovery of the economy or hope for media transparency must include measures to address the sustainability and security of our media supply chains.
Best
Don Carli
Chairperson
The Green Media Show
September 22nd, 2008 at 3:52 pm
Why don’t they pay down everyone’s mortgage who makes under 250,000 or set an amount per mortgage to buy them down. That would make the paper good and pump much needed dollars into the economy and not in the hands of the banks. Of course there may be other money they require but at least the taxpayer would get a direct benefit.
September 22nd, 2008 at 6:46 pm
READ IT AGAIN. specifically the last 5 words. Its not 700b, its much MORE.
“The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time”
September 22nd, 2008 at 7:51 pm
great post — provides a bit of real context for how big $700 bln really is. hard to conceptualize a number that big.
i’m by no means a policy wonk, but guess the key question is what is the downside of NOT bailing the idiots out. couldn’t agree more that it’s an awful waste of money in hindsight, but given where we stand now, how much of a choice do we really have. i don’t have the answers, but would love to hear from people who know more than i.
September 23rd, 2008 at 1:57 pm
[...] Jarvis even questions whether the $700bn that the US government is pledging to bail-out the US economy could be better [...]
September 23rd, 2008 at 10:07 pm
Well said, Jeff.
(it’s been a while since I visited your blog)
September 24th, 2008 at 8:05 am
My pay has gone down from 7 years ago, (just like many others) and they want to pay me less this coming year. Correct me if I’m wrong but hasn’t everything gone up? This is why we are having this problem. It is affecting the poor near poor more then any class in America. If the rich business owners think paying people less so they can make more is the way to go they are wrong. That leaves the people who buy your product with less money to spend so you will make less. (Its just going to spiral down to where we are today). There are 300 million or so people in America. Why not give 1 million to each person, tax free. See what that would do for the economy. Seems to me allot of things would be purchased. Homes, cars, computers, food, and educations. Every part of the country’s economy would get some stimulation from it. Now that may be far fetched because people would go crazy. Quit jobs and such. But there are allot of things 700 billion could buy and bailing out the greedy seems like a waste of my hard earned cash that that will hopefully make to the next paycheck.
September 25th, 2008 at 3:18 pm
[...] debbano subire tutti i danni di questa dissennata politica (c’è anche chi pensa a quante cose si potrebbero fare con tutti questi soldi…). Purtroppo in questo momento il salvataggio è indispensabile per [...]
September 26th, 2008 at 6:29 am
[...] on what $700 billion could buy - and should. Essential [...]
September 26th, 2008 at 12:25 pm
When you consider that one person in five in the world doesn’t have safe drinking water, I think a free laptop is the last thing on their minds.
September 29th, 2008 at 4:52 pm
Instead of bailing out the scumbag bankers, let’s use this money to for several other things that our country needs such as: 1) Alternative energy 2) Drilling/ Exploration 3) buy a large island and send all violent convicts there 4) create maglev trains all over the USA 5) Develop more rail to trails as well as bike lanes (the roads are far too unsafe and Americans are getting too fat–and this isn’t new technology, but using your noggin (go look at European and esp. the Germans and see how wonderful this form of transportation is) 6) Develop re-usable packaging to eliminate waste 7) Develop communities with “town centers” where people can walk to a store or children can walk to school
Encourage people to grow there own food. And I almost forgot, buy another large island for the bankers, lawyer, and politicians–there all the SAME. No, better yet, put them on the same island as our violent criminals–I got my money on the criminals (100% chance of winning since they are all criminals, however, it’s just that some steal money with a pen and other’s with a gun. Just my thoughts, Mike
September 29th, 2008 at 7:17 pm
Pay cutts on all government jobs from pres. down….congress. Do you know what these idiots make??? Look at the country now???
Open your eyes America!
September 29th, 2008 at 10:25 pm
@Les Hull $1 million to every American would be $300,000,000,000,000, that’s $300 Trillion. Even if you give $1 million to every household, it’s still over $100 trillion dollars. I get what you are saying, but lets not get giddy and think this is going to cost less then $1 million per American. It’s actually less then $2500 per American.
September 29th, 2008 at 11:53 pm
Try this on for size. The entire set of NASA projects leading from mercury to the last apollo flight made totalled areound $100 billion in 1994 dollars. the actual Apollo flights totalled around 17.5 billion. split up between the 17 apollo missions, these cost around a billion dollars a pop. figuring 1$ in 94 currency is about 5 today, im just making up numbers here, but, thats about $5 billion per mission. 700/5 = 140 rockets sent to the moon. we are not talking tax breaks here, we are talking lunar colonies. $700 billion is alot of money, and I personally would have been upset to see it go to mismanaged companies.
September 29th, 2008 at 11:55 pm
and sorry, I appear to not be able to spell totaled correctly. Or around for that matter.
September 30th, 2008 at 2:28 am
700 billion
you know this is just for the rich. what is it 15% (i dont have the numbers) a realy fast and easy fix. that would but REAL money into the ecomy s this. theres roughly 300 mill people in the US. give them all 1 mill $. take out back taxes of coures. then take out an income tax and out in a flat 3% tax on income. across the board!!
you get rid of tax dodging everyone pays there fair share. and the irs would be done with,BUT we could have a national health care system. bailing out people that make 100k+ a year were most of the american populatiion is scraping buy with 40k doesnt make sense.
if every let say working american was given 1 mill dollars instead of the credit companies and investores. that would
#1 bail us out of debt
#2 increase cash flow into the current economy
#3 bail out even the rich of the current month - month crisis of paying bills
# 4 would spur investments in 6 months (once the confidence is back up with XMAS shoping with this 300 million)
if the small business doesnt see the short term effect then they will fail.
bailing out the large business that screwed the average home buyer and credit .
so why bail out these firms that gave credit with big balloon payments or so call GUARNTEES that an intrest rate would go up. laws were broke and they should fail.
if the dollars whould put into the public with some measure too make sure that the debits were paid with it. and THEN MAKE SURE that credit was not thrown out like free pass. then and only then can we get out of this “debresion” like state
September 30th, 2008 at 1:48 pm
I hope nobody’s surprised by the bailout attempt. I mean the role of the State is to protect the interest of the ruling class. This protection comes from multiple branches of the State, including the law makers (Congress). This is why slavery was legalized, the forced removal of indigenous people was codified into American law, and labor restrictions have intensified against all working people. America has been built in the interest of the rich minority and on the backs of the poor and oppressed masses with the help of the State’s laws. This hasn’t changed in the past 200+ years and never will change without a change in the ruling class or the abolition of the State.
September 30th, 2008 at 10:20 pm
Is this sucker really gonna go down if the bailout doesn’t happen?
What happened to Section 8 (the controversial all-powerful treasury secretary provision in the bill) - is it still there?
Anyone?
October 1st, 2008 at 8:03 am
Believe me, if Wall St cant sell this crap, we should not touch the stuff.
That bill better not pass!!!
Frank
October 1st, 2008 at 9:11 am
Does anyone realise just how huge $700 billion actually is?
If converted into dollar bills the sum would be 650,321 meters square - enough to fill wall street to a depth of 26 meters (85 feet) assuming Wall street is half a kilometre in length and 50m wide.
If you were to load the sum into a B52
October 1st, 2008 at 9:14 am
bomber it would take 1200 missions to drop it all at maximum payload into the fiancial abyss that is wall street and frankly do just as much good as spending it buying worthless “toxic instruments”.
Bax.
October 1st, 2008 at 10:25 am
So, wait a minute…
You would rather have wireless internet access across America, rather than saving hundreds of millions of people’s retirement money, savings, and education funds (internationally, might I add? This doesn’t affect only the United States) You seem very misinformed.
I do agree with you that the companies who got us into this mess in the first place should not be let off so easily, however, is it really their fault? Who was it in the first place that bought these houses with insanely inflated prices and then walked away from their mortgages? That’s right, ordinary people.
October 2nd, 2008 at 2:26 am
[...] Jarvis, se pregunta en BuzzWord ¿Qué podrían comprar 700 billones de dólares?. Citando fuentes de Sprint, Jarvis afirma que con [...]
October 2nd, 2008 at 8:30 pm
[...] Jeff Jarvis @ Buzzmachine excerpt: We could buy 3.5 billion One Laptop Per Child machines. Want world peace and understanding? Give one to every Muslim on earth and every citizen of China (or since China can afford them, make that everyone in India or everyone in Africa and South America combined) and you’d still have more than 500 million machines left over. [...]
October 3rd, 2008 at 12:16 am
The speed-of-light measurement was off by a factor of nearly 100.
The technology of the era was not up the task. With new technology came new calculations for the speed of light path traveled in a vacuum one meter length is 1/299 792 458 of a second.
One day a Zen master was walking in the jungle and came across a large man eating tiger charging behind him, in a split second the made the decision to run down the path to escape the man eating tiger, suddenly he was at the end of the path which was a edge of a shear drop cliff dropping a long way to jagged rocks, so below which would be a sure death. So, the Zen master was faced with being eaten by a large man eating tiger or jumping off the cliff to sure death! The Zen master looked at the edge and notice a small vine at the edge of the cliff growing over the edge, with a split second decision he decided to use the frail vine to get over the edge of the cliff. The frail vine began to give way and the Zen master was falling to sure death to the jagged rocks below, when he notice a fresh beautiful bright red strawberry growing on the cliff right in front of him, the last thought from the Zen master was this is got to be the best tasting strawberry he has ever had. The economy would be the Man-eating tiger and the frail vine is the rescue or bailout plan. The strawberry is the pork barrel attached to the rescue or bailout plan.
Local Entrepreneur is selling Caps & T-shirt with the logo “Got $700 billion?” http://www.cafepress.com/092308
October 3rd, 2008 at 7:00 am
I think the bailout should not happen, look what happened after 9/11 when there was such a rush to fix things fast. Now they are trying to rush this big cash bailout through before anyone can get a good look at just what it is.
Everyone should check out C-Span it really opens one’s eyes to how they handle things. Last night one of the participants stated that the 7 billion was an arbitrary amount picked out of the air by paulson. Everyone should contact their representatives and let them know how the american people really feel about this. If enough people protest they will listen especially since many of them are coming up for re election. Here are some who were on C- span that you should contact to protest the bailout. Representative Balart, Mcgovern, Sessions, slaughter, hastings, jackson lee, and pelosi. can go to http://www.speaker.gov think it gives info or maybe can contact them not sure. Here is a phone number Lou Dobbs posted on his news cast and it is good you can reach them through this number (202) 224 - 3121 I also heard that the chamber of commerce was pushing for the passage of this bill. Everyone should contact their local chamber of commerce and tell them that it is not appropriate for the group to be twisting arms on capitol hill to bailout crooks who caused the problems in the first place. Apparently big business lobby is in full swing on this and putting pressure on representatives who they have an relationship with. Hearing this just makes it more apparent that we need to get some good regulations going both on business and government. Big business should not have so much power in washington that they can twist arms. I would say it is time for seperation of business and government. How can our government be for the people when they are beholden to big business, to me this seems a conflict of interest and something that needs changed. I would hope that everyone who objects to this bail out would contact washington and let them know it is not acceptable to bail out the one’s who caused the problem. Here is another interesting thought why do they not try some of the alternatives i have heard talked about first before spending billions? Could there be ulterior motives that have nothing to do with wallstreet one wonders. If one has free reign and no checks well the possibilities are unlimited, one just might disappear with a few friends who is to say what could happen given human greed. At the very least it certainly will not be used for those who really need it, the american people who are hurting in this economy. Now there is a thought bail out the public who has been hurt rather than those who caused the problem, what a novel idea and it would do some good.
October 3rd, 2008 at 8:53 am
What we are buying are mortgage backed securites that have been deemed at risk. This may include sub-prime and some good loans. 10% of all loans are subprime. 1.2trillion. That loss is not that great becuase if they fail, someone will buy them. Even so that would not demand a bailout.
The real reason behind the bailout is not those bad loans. It is the 62 trillon that would be paid to people that bet that this would happen. Through credit default swaps, you can profit when someone defaults on a loan. http://www.marketoracle.co.uk/Article6495.html
October 3rd, 2008 at 4:38 pm
It is already very depressing how many young soldiers died in Iraq and money wasted there, yet they keep sending MORE of our soldiers, RIP bless those families who lost their loved ones.
Now this $700billion. What else is next? So sad…
October 3rd, 2008 at 4:40 pm
So dissapointing…irresponsible financial action and recklesness, those bank and rich people get paid billions, while hard working families and future grandchildren are going to pay for the $700 they passed.
All those taxes they are going to TAKE out of you and your children’s paycheck just to cover the greedy billion.
JACK UP PRICES again so some of you rich people can get more greedy! Banks/wealthy folks benefits from all of this, get bailed out of their OWN DEBT!!!…Shoot all we need is $95,000 to pay-off our bills, so where is our APPLICATION and BAILING us on our DEBT?
October 4th, 2008 at 6:17 am
Well folks if you have been paying attention we now have tax breaks for childrens wooden arrows, rum, keeping movies in the US, Nascar and several others thanks to the bailout bill. So are they saying we should give our children weapons and rum send them to the movies and a race in place of the american dream that no longer exists. If everyone is smart they would check out exactly which of their congressmen and senators voted for this insane bill and when it is time for re election which it soon will be for many give them a vote they deserve, a vote of no confidence and vote their butts out that’s one power we do have and believe me when it comes time, I will not be voting for those who supported this bill. We need a government enema so we can get rid of these people who are in big business pocket. If you have been following the news big guys pulled out the heavy guns and twisted arms in government to ram this home. We need to stand up and demand that government not be in a position where they are beholden to big business. We should demand that big business in no way contribute to the election coffers of our representatives in washington. I noticed on C- span they the house were talking about how it affected small business, large business and wallstreet but not the people out here who keep those businesses going by spending our money there. It seems there is a total disconnect from reality in Washington as far as a regular persons problems go. Something else the stock market actually went down and has been wildly fluctuating. They also admit we are in a deep recession and that it will get worse before it gets better. Everyone should find out who their representatives are and tell them exactly how much we need childrens arrows and rum, not to mention wall street. Petitions with millions of signatures comes to mind.
October 4th, 2008 at 6:31 am
Oh and remember they were saying that if we bailed out one group then others would want bailed out. Well now California the state is saying they may need 7 billion to bail them out and meet their budget so where does it stop now that we have opened the door. Guess.
October 7th, 2008 at 4:32 pm
We could purchase 2.5 Milligrams of Antimatter…
It is the most expensive substance on Earth, at a cost of $300 Billion per Milligram!
October 8th, 2008 at 4:49 am
Hello again, if you have not checked out C - span you really should, it is really interesting to listen in and see just how disconnected these people are. They are trying to remedy the problem after the horse has left the barn so to speak. There seems to be no common sense these days. What came out today was that basically the stock market or business interests were basically running the equivalent of a gambling operation and they lost the bet. The government is now wondering if they should not have regulated these people better, I would say that is a little late now. It was also sickening to hear how much these CEO’s got in their golden parachutes, it was more than the average person would ever see in a life time. On top of that one of them not only walked away with a parachute but is even now getting a million dollars to consult, and he was in one of the companies that got in trouble. Something very wrong there. I think one mistake everyone made including home owners was to treat home ownership like a bank account, of course encouraged by those who stood to make millions from them. Homes should be places to live and make memories. People bought into the real estate story buy a home live in it a couple of years if that and then sell it for as high as possible which made a home a business instead of a living necessity. The cost of a place to lay your head in the last few years with these types of thinking have become astronomical. Places that were not even mansions going into the hundreds of thousands of dollars. Homes and mortgages should not be part of the stock markets portfolio. We need to get back to the idea that a home is shelter not big business. We have some basic needs some of which are shelter, food, clothing, and others. We should not put the necessities of living up for sale so to speak. It was clear to me from watching C -span that we need some very strict regulation of big business and banks. It in my opinion is also a bad practice that our government has of tacking a bill they can not pass any other way onto another bill that does pass. A good example is all the stuff they attached to the bail out that had nothing to do with it, like the arrows and rum. I think we need to let government know that everyone needs to change the way they do business. When they put a bill forward only that bill should be considered and by the appropriate group. What I mean by this is that a bill pertaining to agriculture should never go through the transportation department to get passed. On C-span they mentioned something about the fact that a bill on regulating business weak though it was had gone through the agriculture to get passed. Would one not think that to pass a bill regulating banking and business you would at least want it in the judicial branch. This happens more than people know, you can’t get a bill passed on it’s own so even though an agricultural bill has nothing to do with it you attach your bill to it so it will be easier to pass hopefully. This is a simplification of how things work but it would be like saying you can’t get an A in math so you take a science class so you can pass math. Bottom line you still don’t know math but you passed.