10/25/08

Krugman Says Bailout About $1 Trillion Short!

Big rescue money

Via Yves Smith, an important article in FT Alphaville about the inadequacy of the bailout so far: despite the big-sounding numbers, financial institutions are losing capital faster than governments are putting it in.

I’d add a couple more data points: Japan’s bank bailout in 1998 was more than $500 billion, in an economy whose dollar GDP was only about 1/4 that of the United States today. Do the math. And the just-announced IMF loan to Iceland is $2.1 billion — that’s for a country with only 300,000 people. Both of these numbers seem to suggest that an eventual outlay of $2 trillion is in the realm of possibility.

Just saying.

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