Bloomberg Analyst: $700 Billion Bailout Could Balloon to $5 Trillion
Conservative House Republicans and economists warn about the toll a $700 billion federal bailout of the financial sector would have on the taxpayers footing the bill. But according to Bloomberg TV analyst Marc Faber, the actual cost could be closer to $5 trillion.
Faber, author of the â€śGloom Boom Doomâ€ť report, appeared on Bloomberg TVâ€™s Sept. 26 broadcast of â€śBloomberg Todayâ€ť and noted just how small the proposed $700 billion bailout is compared to the overall
â€śSo now they try to solve the problem by having this credit bubble actually extended and I think the $700 billion will be like a drop in the bucket because the total credit market in the
In his Bloomberg TV analysis of the financial bailout, Faber noted the inconsistencies of government intervention to date, but not without taking a swipe at the compensation of Wall Street executives.
â€śThe reaction to that is inconsistent,â€ť Faber said. â€śYou let essentially Lehman Brothers go bankrupt but you save AIG and you save other brokers by merging them with banks and then you come with a bailout plan that should be paid by the taxpayer, when Wall Street last year in total received a compensation of $69 billion - $38-39 billion of which were bonuses paid to the executives essentially of Wall Street.â€ť
Faber told â€śBloomberg Todayâ€ť host Jeremy Naylor the solution isnâ€™t government intervention through a bailout, but to figure out how to eliminate the excessive leveraging in
â€śWell first of all, I think the decline of home prices of 20 percent is a relatively minor decline so far,â€ť Faber said. â€śAnd itâ€™s created so many problems. Itâ€™s not the problem that home prices have gone down. The problem is excessive leverage. And somewhere, somehow, the U.S. has to try to bring down the excess leverage that exists in the system â€“ that incidentally was built over the last seven to 15 years under Fed chairman Mr. Greenspan and then also under Mr. Bernanke.â€ť