The quick answer is that we don't know. This is unbelievable, given that public tax money was used. As reported by the NYT, lawsuits brought by Bloomberg and FOX, as well as an Congressional effort to audit the Federal Reserve seek answers to these questions:
Who got money from the Fed? How much did they get? In exchange for what collateral? And under what terms?
Economist Simon Johnson has just issued a detailed report card of the economic condition of the U.S., as well as many other countries, and it's not pretty.
Writing at the NYT, Bob Herbert thinks that the U.S. desperately needs to turn things around. His concern is "frantic, debt-driven consumption, speculative bubbles, exotic financial instruments . . ." He's not buying talk of our economic "recovery":
We don’t hear a lot that is serious about the sorry state of the nation’s infrastructure or the trade policies that crippled so many American industries or our inability (or unwillingness) to compete effectively with China when it comes to the new world of energy for the 21st century or our abject failure to provide a quality public education for the next generation of American workers, scientists, artists and entrepreneurs. Speaking at a conference here on Wednesday, Gov. Ed Rendell of Pennsylvania said that if we don’t act quickly in developing long-term solutions to these and other problems, the United States will be a second-rate economic power by the end of this decade. A failure to act boldly, he said, will result in the U.S. becoming “a cooked goose.”
How bad is the U.S. budget deficit? It's so bad that I've lost sleep over it during the past year, even though the extent of the deficit rarely makes any local news. Here's how Brett Arends of the Wall Street Journal summarizes the situation:
The federal government is expected to borrow $1.6 trillion this year, or about $15,000 for every household in the country. Over the next 10 years it's expected to borrow a total of $8.5 trillion. And the government was already deeply in debt to begin with. . . Remarkably, the Treasury market has not yet panicked about the deficits: Yields have barely risen this week. Embedded in the market is a long-term inflation forecast of about 2.5 percent. I call that a dangerous complacency.After giving the bad news, Arends gives some advice on how to protect your savings, though he doesn't sound optimistic.
President Obama has recently announced that he will allocate $8 billion ($4 billion each year, over two years) to develop a new system of high-speed passenger rail service. This is an excellent idea. The new rail lines will be created within 10 geographical corridors ranging from 100 to 600 miles long.
Note, however, that the high-speed rail line system will be an extremely expensive project, and that the $8 billion bill will need to be paid by 138 million tax-paying Americans. Dividing the $8 billion cost by the number of taxpayers, we can see that, on average, each taxpayer will pay almost $60 ($30 per year, for two years) to support this massive new high-speed rail service.
Again, this high-speed rail project will cost an immense amount of money. Consider, though, how small this pile of rail money looks when compared to the amount of money we are wasting in the "wars" in Iraq and Afghanistan. For 2009, the United States spent approximately $87 billion for Iraq and $47 billion for Afghanistan. The fiscal 2010 budget requests $65 billion for Afghanistan operations and $61 billion for Iraq. the cost of these two "wars" together is $126 billion for 2010.
Compare these expenditures on a bar chart:
