2008 Big Bank Bailout? $16.8 Trillion. This Time? MUCH Worse

The Latest from Seton Motley | Less Government | LessGovernment.org
The Latest from Seton Motley | Less Government | LessGovernment.org
The Coming Meltdown…

Bailouts – beget bigger bailouts.  Because human nature.

Getting rewarded for doing stupid things – makes it far less likely you’ll stop doing stupid things.

Which means the stupidity continues – and continues to accumulate.

Which means if the last calamity was a 6 on the Dumbness Scale – the next will be an 8.

Well, welcome to The USA 2024.

Remember the 2008 global economic meltdown?

Notorious therein was subprime home mortgage lending.   Loans with exceedingly awful terms – sold to tens of millions of people everyone knew couldn’t pay them back.

The Big Banks – backed by Big Government – then packaged them into toxic assets called Mortgage Backed Securities (MBSs).  And polluted the planet with them.

The results were as predictable – as they were awful…:

“Between January 1 and October 11, 2008, owners of stocks in U.S. corporations suffered about $8 trillion in losses, as their holdings declined in value from $20 trillion to $12 trillion. Losses in other countries averaged about 40%.”

The Big Banks and Big Gov were in on the catastrophe together.  So the Big Banks knew Big Gov was going to save their bacon – once the excrement hit the fan…:

“There’s going to be a bailout.  They knew.  They knew the taxpayers would bail them out.  They weren’t being stupid – they just didn’t care.”

And the bailout – was titanic…:

“The Special Inspector General for TARP’s summary of the bailout says that the total commitment of government is $16.8 trillion dollars….”

It didn’t go well…:

“The banks took the money the American people gave them – and they used it to pay themselves huge bonuses.  And to lobby the Congress to kill big reform.”

Speaking of killing big reform: To allegedly address “Too Big to Fail” banks – Congress passed the “Dodd-Frank Wall Street Reform and Consumer Protection Act.”

A law – the Big Banks wrote.  Shocker: It did not end “Too Big to Fail.”

Instead, it has made the Big Banks 50+% bigger.  It murdered 1000s of their small, community competitors.  The assets of which the Big Banks then bought on the cheap.  Using even more of our bailout money.

To say none of the underlying 2008 problems were addressed post-2008 – would be an existential understatement.

So the awfulnesses of the fundamentals then – only continued to get worse.

Well, welcome to The USA 2024.

Where the debt bubble is WAY beyond just house mortgages.

Total household debt (unadjusted for inflation):

Q4 2008:         $12.68 trillion

Q3 2023:         $17.29 trillion

Adjusted for inflation – that’s about equal.  Except for all the inflation-attending negatives – which makes it all far worse.

10 Common Effects of Inflation

And even worse….

American Salaries Aren’t Keeping Up With Inflation

Meanwhile, we have the Big Banks – being the Big Banks.

Big Banks Find a Back Door to Finance Subprime Loans

The Risk of Subprime Mortgages by a New Name

That new name – is “non-prime.”

List of Top Non-QM Lenders of 2024 – Non-Prime Mortgage Loans – Non-Prime Lenders

Which gets us to this: The inflation-adjusted, total housing mortgage debt – then and now.

Q1 2008:         $10.8 trillion

Q3 2023:         $20.03 trillion


And with inflation – these mortgages are even less affordable now than they were then.

But wait – there’s more….

The Commercial Real-Estate Market’s Impending Crash

Total commercial real estate debt – in 2020?  $3.66 trillion.

Have things gotten better since?  What do you think….

US Commercial-Property Distress Swelled in 2023

I can’t find a more current total – but it’s undoubtedly much larger than 2020’s $3.66 trillion.

So the Big Banks hold $20+ trillion in house mortgage debt – twice the 2008 Crash total.

And the Big Banks hold WAY more than $3.66 trillion in commercial property debt.  In a post-Covid Lockdown world – where hundreds of millions of humans have transitioned away from working in commercial properties.

Big US Banks Are Reportedly Trying to Dump Commercial Real Estate Loans – But Buyers Are Scarce as Pressures Mount for Property Markets

So now – this 2008-esque inevitably is beginning to happen.  And, again, it’s going global….

Banks Are Being Rocked Again As Real Estate Losses Mount:

“(A) fresh chill is running through banks as far apart as New York, Tokyo and Zurich.

“Common to all of them – mounting losses on lending to the troubled commercial property sector….

“The value of many buildings has plummeted as millions of workers have stuck with pandemic-era remote working, leaving vast tranches of office space vacant or underused.

“At the same time, historically high interest rates have made it harder for real estate developers – who often take out huge loans to finance projects – to make good on their repayments.”

Property values plummeting?  Historically high interest rates?

Why that sounds just like the 2008 housing crisis – and those absurd balloon interest rates.

Except now inflation is far worse.  And wages aren’t keeping up therewith.

And the residential debt – is twice now what it was then.

Which brings us to the inevitable Big Bank bailout – coming after the inevitable global crash they again helped cause….

The 2008 bailout – was $16.8 trillion.

And total debt held is MUCH worse now – than it was then.

So what’s bailout going to cost us this time?

Oh: And here’s our Big Gov national debt – then and now:

2008:               $11.2 trillion

2024:               $34.2 trillion


Oh: And what about the interest rates on that debt – then and now?

Federal Reserve Slashes Interest Rates to Nearly Zero – December 16, 2008

United States Fed Funds Interest Rate:

“The Federal Reserve kept the Fed funds rate unchanged at a 23-year high of 5.25%-5.5%….

So for the looming Big Bank bailout?

Big Gov will be printing and borrowing WAY more than 2008’s $16.8 trillion.

Borrowing – at interest rates that are 5+% higher.

Printing – which means even more inflation.

Oh: And the Big Gov doing all of this – is itself carrying three times the debt it had then.

Oh: And Big Gov also has this on its books….

Social Security & Medicare Shortfalls Exceed $100 Trillion Over 30 Years

Death spiral, anyone?

And with all of these MASSIVE, geopolitical, geothermal bank and monetary problems – on what is Big Gov focusing?

Six Federal Agencies Are Investigating Online Payday Lenders

Of the $20.03 trillion Americans owe – I guarantee you the percentage owed to payday lenders is vanishingly small.

98+% of it – is owed to the Big Banks.

But the Big Banks are in crony, corrupt collusion with Big Gov.

So Big Gov investigates payday lenders.

And tees up a $20+ trillion bailout for the Big Banks.

Death spiral, anyone?