The 1.8 trillion dollars bailout

CNBC has made an interesting analysis on the US government bailout of the financial crisis.

It’s not just 700bn$, more like 1.8trn$. Quick laundry list:

• 700bn$ recently announced plan to buy assets from bank
• 150bn$ MBS purchase by Fannie and Freddie
• 85bn$ for AIG
• 90bn$ in repayment to JPM for Lehman
• 200bn$ for Freddie and Fannie
• 300bn$ for FHA
• 200bn$ of currently outstanding loans Fed’s issued to banks
• another 100bn$ in “smaller” things

Read it here for a fuller explanation.

I am not sure this plan addresses the real problem, which is the US consumer stretched way beyond the imaginable. It’s a big mess, and keeping the “banking system” (or part of it) afloat might not do the trick.

So much for 1.8trn$ investment, the S&P was down almost 4% today, back to were it was close of play Thursday. Really though times if 1.8trn$ buy you just a day of breath. In this whole mess, the S&P is down only 20% from the peak. I made a bet a couple of months ago with a friend of mine, to see it below 1,000 within 12 months. I think the market will have to catch up with the real economic situation, sooner or later.