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January 6th, 2009
11:27 AM ET

Financial Dispatch: The $8 trillion bailout

President-elect Barack Obama talks with Rep. John Boehner and House Speaker Nancy Pelosi on Monday.

President-elect Barack Obama talks with Rep. John Boehner and House Speaker Nancy Pelosi on Monday.

Andrew Torgan
CNN Financial News Producer

Are you sitting down? Good. It's time to tally up the government's bailout tab. Congress, the Treasury Department, the Federal Reserve and other agencies have taken dozens of steps and spent billions of dollars to prop up the economy - including shelling out $29 billion for Bear Stearns, $345 billion for Citigroup and putting up $600 billion to guarantee money market deposits. Total price tag so far: $7.2 trillion. Now comes President-elect Barack Obama's economic stimulus plan, some details of which were made public on Monday, and the bill is getting awfully close to $8 trillion. Take a look at this bailout scorecard to see the tally.

Stocks on Wall Street opened higher ahead of a trio of economic reports. The number of homes under contract to be sold fell 4% in November as mounting job losses and weak consumer confidence deterred home buyers from signing contracts. Factory orders, meanwhile, declined for record fourth straight month in November as the recession intensified. The one bright spot - however dim - was the service sector, which improved somewhat in December but remained weak amid the ongoing recession. The service sector includes jobs in industries such as hotels, retail and health care.

And later today, investors will get a look at the minutes from the Fed's most-recent policy meeting in December, when the central bank lowered its key benchmark lending rate to a target range of 0% to 0.25%. Market mavens pore over these minutes for clues about the future direction of interest rates, although by setting such a low range last month, the Fed is just about out of ammunition.

Two more companies are cutting jobs. Cigna said late Monday it’s cutting 1,100 jobs, or 4% of its total workforce, to save up to $40 million. The health benefits company said it was making the cuts "in response to the economic downturn that will strengthen the company's competitive position." And Logitech, a maker of computer products, said it’s cutting 15% of its salaried work force, but did not provide a total number of the cuts.

Consumer bankruptcy filings in the U.S. increased by nearly a third in 2008. The American Bankruptcy Institute said overall consumer filings rose to 1.06 million in 2008, compared with 801,840 during 2007.

Crude oil climbed back above $50 a barrel today for the first time in four weeks following reports that OPEC producers were starting to comply with planned output cuts. OPEC, whose members produce about 40% of the world's crude, agreed last month to collectively cut production by 2.2 million barrels a day in order to bolster oil prices that have tumbled from an all-time high of $147.27 in July.

Citgo is suspending shipments of home heating oil to poor families in the United States. The oil company, owned by the Venezuelan government, is blaming falling oil prices and the global economic crisis. The controversial program started in 2005, in partnership with Citizens Energy, a Boston-based non-profit group. Critics called it a ploy by Venezuelan President Hugo Chavez to undermine the Bush Administration. Citgo donated $100 million dollars worth of heating oil to 200,000 American households last year.

Gas prices are up 1.6 cents to $1.688 a gallon - the 7th consecutive increase. The current national average is now $2.43 below the record high price of $4.114 that AAA reported on July 17, 2008. Two states have regular unleaded gas prices of $2 and higher. 48 states and the District of Columbia have regular unleaded gas prices below $2. The most expensive gas in Alaska ($2.502), while the cheapest is in Wyoming ($1.428)

On Monday, we learned that U.S. auto sales industrywide plunged 36% from year-ago levels in December, a decline that hit all of the major automakers, both foreign and domestic, and capped the industry's worst year since 1992.

Toyota plans to halt production at its Japanese plants for 11 days in February and March as a sharp slide in U.S. sales has left dealers with a glut of unsold cars. Toyota's 37% slump in December sales in the U.S. - its biggest market - was its sharpest decline in more than a quarter of a century and worse than declines at U.S. rivals GM and Ford.

Home prices in Manhattan held up remarkably well in the fourth quarter, despite the economic crisis. Reports released today by four of the city's biggest real estate agencies showed that the average price of condos and co-ops sold during the three months ended December 31 actually increased compared with a year ago. But signs of weakness are beginning to emerge; sales volume was down a whopping 40% from the fourth quarter of 2008, according to the Corcoran Group.

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Filed under: Andrew Torgan • Economy • Finance • Gas Prices • Oil • Wall St.
soundoff (9 Responses)
  1. RUAL

    With all this talk about the bail out for the auto industry, has everyone forgot about the insurance? will the insurance companies reduce their rates so that ppl can afford to buy a nice and descent vehicle without paying more for insurance then what their loan on a vehicle is. even with no accidents or tickets, the cost for a truck or suv is still outrageous. will the government impose some kind of restrictions for the insurance companies not to increase the rates when the bailout goes through. If you do get financed for an automobile, will you be able to afford the insurance rates if the premiums for them arent reduce to affordable payments. one hand washes the other, so you will still be in the same situation if all aspects of the economy isnt addressed properly. All of the economical crisis started from greed. Continuously increasing inflations and not getting an increase in pay. if they keep on increasing prices without making an adjustment for the working ppl that survive from pay check to pay check, then we will only be adding to the problem and not finding a way to solve the problem. We have to stop thinking about what will only affect us at the time and think about how will it affect us as a whole. Stop being individualist and become one as a whole. After all we all are Americans and we are just shooting ourselves in the foot trying to keep up with the Jones's. Lets fix our problem at home first before we try to help others. Lets get our yard cleaned before we tell the next door neighbor that they have trash in their yard. Fix America before its too late and we become the outsiders in our own country.

    January 6, 2009 at 4:04 pm |
  2. Lisa

    Once again I'll say, there is a very simple answer that will cost the government no money, help we the people, the consumers, and yes, will make the banks unhappy. CUT INTEREST RATES. On mortgages, all loans, credit cards, etc. Even if it's only for 5 years. The banks will still make a profit, albeit not as large a profit. And money will be put back into the hands of we, the people. If my credit card payment is $300 instead of $500 or 600, that gives me $200-300 to make a car payment with, buy a toy or two, put money back into the economy.

    While I thank PE Obama for his idea to give me a whopping $500 back/year, that averages out to less than $50/month (which would probably go to paying the increased home heating bill, car insurance, home insurance, etc.), it isn't going to stimulate the economy. It's going to help us pay for necessities but that's about it.

    We need something that's going to give us real money back in our pockets for a sustained period of time.

    And bankruptcy filings may go down if the credit card companies would be willing to work with us to reduce our payments. But they aren't. The government gave them theirs and screw us. I don't know, maybe I'm just weird in thinking that getting something back on what we borrowed is better than getting nothing. But then, I don't run a bank. Maybe it is better for their bottom lines to show these losses rather than have the loans repaid.

    At some point, the "experts" (those who live in ivory towers and don't have to worry about how to pay the heating bill or have to choose between paying the rent or buying groceries) need to start listening to the real experts - those of us who are living and experiencing these issues on a daily basis.

    January 6, 2009 at 3:12 pm |
  3. TK

    CITGO used to be a US owned company and due to the policies of the American Government in the 80's under Reagan and Bush etc we lost that company. CITGO should be nationalized. Venezuela was a hide out for NAZI's after WWII and should not necessarily be considered friendly to the US!

    January 6, 2009 at 2:53 pm |
  4. Arachnae

    Total price tag so far: $7.2 trillion.

    I would be interested to know how much of that is money actually SPENT and how much of it is in the form of government guarantees.

    January 6, 2009 at 2:35 pm |
  5. Mary V., Salt Lake City, UT

    FIRST of all let's remember that Hank Paulson is a Bush appointee, and the bail out for Wall Street was HIS idea and Bush backed it 100%.

    Second, before the far-right-folks complain about the stimulus package, I want to ask: Where were you when Bush was bankrupting our Nation with a growing National Debt...... of over $10 TRILLION.......owed to China, Saudi Arabia & Dubai?

    Last, I have read both the New York Times & the Wall Street Journal articles and editorials on this, and have come to the conclusion that both liberal (Paul Krugman, Nobel Prize Winner for Economist) and conservative economists AGREE that the stimulus will help "jump start" our economy!

    How about a little trust? Ya' all trusted Bush, which bankrupted us...... how about a little faith in the new guy? Give him a chance, for Pete's sake!

    January 6, 2009 at 1:45 pm |
  6. Gene Penszynski from Vermont

    P.S. If there is any 'Nationalization' of anything it SHOULD be Nationalization of these 'investment firms' they're the actual soldiers of the G W Bush neo-con 'Let the Markets Control themselves' Ponzi scheme and they are the ones that should be removed from power and/or be under the constant observation by those elected to protect and serve the American Public.

    January 6, 2009 at 12:03 pm |
  7. Gene Penszynski from Vermont

    One thing that I really don't fully understand about this whole bailout proces is that 'investment firms' get money handouts for doing absolutly nothing more than 'money changing' while companies that actually make things and the general public at large just has to figure out some way to survive this mess on their own with idiots like Rush Limbaugh and company blaming the average American worker for spending him/her self into debt. It's been the whole process of conservative government encouraging Middle America spending itself into debt that has kept this neo-con government sanctioned Ponzi scheme going for the last eight years ! The only people that sem to have benefited from this at all are a few con-artists at the very top and the COMMUNIST Chinese and the SOCIALIST Indians ! CAPITALIST Middle Income Americans are the ones that have suffered beyond belief. Seems like SOCIALISM and COMMUNISM are the only REAL winners here NOT the myth of 'free trade' and 'free markets'.

    The reality is that these 'investment houses' are the REAL 'Biggest Ponzi schemes' in history and they have had their hooks so far into the greed grubing neo-con government of G W Bush . that they've been able to manipulate funds to their hearts content !!!!!!!
    Let's get the 'money changers' out of the temple (Washington) and back on the 'street' where they belong !!!!!!!!!!!!

    January 6, 2009 at 11:50 am |
  8. Cindy

    I don't see how with all of this bailout and add on Obama's 8 trillion that we are going to ever get back on track or be out of debt! This is just getting even more ridiculous by the day! They've given out all of this money yet nothing has changed. Will Obama's plan be any better? I don't see it helping. How does he plan on running the government with no money?

    And on CIGNA...I used to work for them and I have to say they have always been one to cut corners. They are one of the huge companies that ship their work overseas to countries that pay their people cheaper wages. In fact they closed down their whole offices here and shipped their work overseas...which put thousands of people out of work. Thankfully it was long after I had left but some of my friends and family still worked there then. So I have no sympathy for them at all!

    Cindy...Ga.

    January 6, 2009 at 11:43 am |
  9. Annie Kate

    8 trillion dollars – man, what a lot of money. At some point this has to stop – we can't keep spending money we don't have and printing up new money. It makes our dollar worthless. In the Great Depression in some countries, especially in Europe, the value of paper money fell to such a degree that people carted their money around in shopping baskets. One person turned their back for a moment on their basket and money and yes, got robbed. The only thing was the thief took the basket and left the money – the basket was worth more. I hope we don't come to that.

    January 6, 2009 at 11:34 am |