Many are against the proposed bailout plan for obvious reasons, but has anyone calculated the true cost of it? Let's do that here.
The proposed scenario is as follows:
It starts with the proposed $700 billion. Imagine it being spent immediately due to the purchase of toxic mortgages which is the downfall of economy at present. Its latest victim being WAMU, the worst bank failure in all of U.S. history, so far.
The actual "cost" of this $700 billion to us taxpayers?
At a mere 4.34% interest over the course of 30 years, the U.S. is looking at a cost of $30 billion in interest per year.
To simplify things and put it in even better terms, so to speak, $30 billion per year is approximately 1/5 of 1% of the U.S. gross domestic product.
Consider also the obvious: The repayment of this loan. It isn't just about interest. This very large sum of money needs to be paid back in a reasonable amount of time.
What is the worst thing that can happen? The U.S. spends $700 billion to purchase assets that are on a steady decline and even worse, it never gets any of the money back.
Then, it is left with absolutely nothing in return. (Not unlike many U.S. citizens who have purchased homes in the past five years.) Given this dire potential outcome, Uncle Sam would then have to hit up us taxpayers to pay off part of the principal every year for 30 years, until the loan is all redeemed.
What will the cost of that be to taxpayers each and every year?
The answer is $42 billion. $42 billion is the total of principal and interest.
Now that figure is 1/3 of 1% of the United States' annual gross domestic product.
So, there you have it. The cost of the bailout. It isn't $700 billion. But then, again, that is if the worst thing happens. That is only if the U.S. doesn't get a single dime back. The truth of the matter is, though, that the U.S. Treasury will most likely get money back, if not all of it.
Best case scenario: Perhaps the United States Treasury will actually make some money on this deal.
Sunday, September 28, 2008
Subscribe to:
Post Comments (Atom)
Looking For A Small Business Growth Opportunity?
As seen in Fortune and Inc. Magazines
I did an online search to see what is available to those wanting to start their own lawn paint business, and frankly, I was disappointed at the lack of resources. To be even more frank, I was surprised by advertisers who seem to be offering a lawn painting business in a box, for lack of a better term, and at a huge upfront investment to the entrepreneur. It is not wise to put so much money out up front at the beginning of any business.
In my ebook, you will learn:
- How to formulate a business plan and how to reach your personal/professional goals;
- What equipment you need, where to get the equipment, and how to use the equipment;
- How to market your grass paint business, to include building a website, online marketing, search engine optimization, "on foot" marketing, how / where to purchase marketing materials, and who your likely customers are;
- How to prepare estimates, where to get your information from, and how to deal with your customers (recommendations for payments, billing, etc.);
- Common pitfalls and mistakes to avoid;
- List of best resources with hyperlinks included so that you can click on the resource and be immediately directed to the recommended vendor, website building company, etc.
- And much, much more!
No comments:
Post a Comment