Buddy Can You Spare … $6,000?

Wow. The IMF really knows how to annoy me. I know they’re well meaning, by and large, and are trying to provide super analysis of our current crisis so that politicians everywhere have ample background against which to develop their plans.

But.

Do they have to let me know just how much this will all cost? They do. And it isn’t a pretty picture.

Their latest effort suggests that when the dust finally settles on the Great Recession and we have stabilized the banks the taxpayers will have spent approximately $1.9 trillion on the banks alone.

Naturally I wanted to figure how much I should contribute, so I did the math. Assuming there are about 320 million Americans, $1.9 trillion comes out to about $6,000 each. Give or take.

Ugh.

Now this is a projection and assumes all sorts of arcane stuff like the rate of loan losses given various factors such as unemployment and so on. But it isn’t a wild guess. It has all the hallmark of a very clever calculation.

Which makes it even more annoying.

They figure that the current $700 billion TARP will be nowhere near enough. Right now the administration has TARP in its budget as a loss of $250 billion. The difference between the $700 billion and the budget amount is their expectation of the toxic assets that will eventually turn out to be not so toxic after all. The IMF is a tad more skeptical. They obviously have a dimmer view of the chances of recovery for those toxic assets so they set aside $450 billion for this ‘direct’ intervention part of the overall bailout.

Next they calculate the cost of all the indirect stuff that the government is doing. Like the cost of coming through on the FDIC guarantees of various institutions and programs. That is projected to cost us about $800 billion.

Finally there’s all those programs the Federal Reserve Boards has been running to pump liquidity into the economy and to provide ‘non standard’ assistance for the banks and other financial companies who come knocking at its door. That’s costing us about $600 billion.

Add in some loose change and you arrive at the $1.9 trillion.

That is approximately 13% of our annual GDP. It’s a ton of money.

Needless to say the administration doesn’t agree with the IMF. Apparently the Obama team thinks the IMF is being far too conservative in its loss estimates so it’s sticking with its budget numbers for TARP.

Even so this is not a cheap exercise.

Which is why stuffing the financial genie back in the bottle is so important. And why keeping the costs to a minimum is crucial. When the range of estimates from best case to worst case has a spread of about $400 billion [best case cost $240 billion; worst case cost $640 billion] then everything you can do to limit the damage is crucial.

That’s a lot of schools. A lot of health care. A lot of anything.

$6,000 for every single one of us. That’s just to keep places like Citibank, Goldman Sachs, Bank of America, and JP Morgan Chase afloat.

Frankly I have better things to do with my $6,000 than to support the evidently needy folks on Wall Street. Somehow, when I meet them, they don’t look too needy. They seem to be living quite well, even though they just destroyed trillions of shareholder wealth. I know they’re going through the pain of giving up one or two of their houses. And the kids may now have to go to a lesser elite school. And that Upper East Side apartment may have to be downsized to something less ostentatious. And a couple of the annual trips may have to be curtailed. And … rats! Now I’ve let my anger leak through.

I know. I know. We need to save the banking system. I am the first to argue that. In fact I am all for saving the banks.

Its the bankers I don’t want to save.

I really don’t.

Maybe we can have a new plan?

We could each throw in $3,000 to save the banks. And then set up a voluntary pool to save the bankers. We could all contribute to this second pool according to our sympathy for them, up to a limit of an additional $3,000. Or maybe we should just be alowed to apportion our own $6,000 between the bankers and the banks.

I know how much I’d give to save the bankers.

What about you?

$6,000. That just bugs me. Thanks a lot IMF for pointing that out.