Let's Visualize Our Powerball Dreams!

So...

How bad are the odds of winning a half billion dollars tonight?

Pretty bad.

How bad?

Let's try some creative visualization.

Now, the odds of winning that 500 million dollars are about 176 million to one.

We can visualize that winning lottery ticket as a single playing card in a very tall stack.

How tall is the stack?

If a deck of fifty playing cards is one half inch thick (take out the jokers) then a stack one foot tall has 1200 cards in it. From this we can then extrapolate the height of the stack of cards that single ticket is hiding in.

That stack ends up being about twenty seven point seven miles high, give or take a few thousand feet.

That's five times as tall as Mt. Everest.

That's somewhere in that magical place in our atmosphere between the ozone layer and the ionosphere, where the aurora borealis dance in our polar latitudes.

One card. Twenty seven mile high stack.

But hey, the ticket money goes to the schools, right?

Something to think about...

I need to take a moment to look at the Bank Bailout in light of what could have been an alternate answer to regaining economic momentum.  What examples from our nation’s history might offer possible strategies for relieving the pressures of high unemployment and stagnation today?

During the depression FDR instituted a number of programs with his New Deal Agency.  The WPA was one of those programs. Here is a snapshot of the Works Progress Administration as it existed from 1935 to 1943.

The Works Progress Administration (renamed during 1939 as the Works Project Administration; WPA) was the largest and most ambitious New Deal agency, employing millions of unskilled workers to carry out public works projects,[1] including the construction of public buildings and roads.

At its peak in 1938, it provided paid jobs for three million unemployed men (and some women), as well as youth in a separate division, the National Youth Administration. 

Between 1935 and 1943, the WPA provided almost eight million jobs.[3] Full employment, which emerged as a national goal around 1944, was not the WPA goal. It tried to provide one paid job for all families in which the breadwinner suffered long-term unemployment.[4]

The WPA's initial appropriation in 1935 was for $4.9 billion (about 6.7 percent of the 1935 GDP), and in total it spent $13.4 billion. (13.4 billion is about 18.3% of the 1935 GDP)

In the wake of our own recession we implemented the TARP program which allowed for massive deficit spending in order to help our financial systems to remain solvent. I will not include a breakdown of just how the spending was spread out among the various institutions. Instead I will provide a simple set of totals for both immediate expenditures and long term investments made by the US government. 

Beyond the $700 billion bailout known as TARP, which has been used to prop up banks and car companies, the government has created an array of other programs to provide support to the struggling financial system. Through April 30, the government has made commitments of about $12.2 trillion and spent $2.5 trillion — but also has collected more than $10 billion in dividends and fees. 

That’s 2.5 trillion in initial investment with 10 billion to follow.  Remember those numbers.

The Gross Domestic Product (GDP) in the United States was worth 15094.00 billion US dollars in 2011.

It happens to be the case that 6.7% of 15.1 trillion is about one trillion dollars, furthermore, 18.3% of 15.1 trillion is about 2.76 trillion dollars.

For a fraction of our initial investment in the financial system we could have initiated a program that would have put millions of Americans to work.  If such a program had been designed with the WPA as its model, then the task of this workforce would have been the repair and further construction of our nation’s infrastructure.  Maintenance of that program, had it been as successful as the WPA, would have cost the taxpayers less that a third of what we have already promised our banks and financial institutions.  

That kind of program would have translated into millions of jobs for the very trades hit hardest by the housing and construction bubble that led to the recession. 

But do we have a need for that kind of infrastructural investment? 

Usually built to last 50 years, the average bridge in our country is now 43 years old. In 2008 approximately one in four rural bridges were deficient, while one in three urban bridges were deficient. The urban impact is quite significant given the higher level of passenger and freight traffic.

To address bridge needs, states use federal as well as state and local funds. According to the American Association of State Highway and Transportation Officials (AASHTO), a total of $10.5 billion was spent on bridge improvements by all levels of government in 2004. Nearly half, or $5.1 billion, was funded by the Federal Highway Bridge Program—$3.9 billion from state and local budgets and an additional $1.5 billion in other federal highway aid.¹ AASHTO estimated in 2008 that it would cost roughly $140 billion to repair every deficient bridge in the country—about $48 billion to repair structurally deficient bridges and $91 billion to improve functionally obsolete bridges.¹

Simply maintaining the current overall level of bridge conditions—that is, not allowing the backlog of deficient bridges to grow—would require a combined investment from the public and private sectors of $650 billion over 50 years, according to AASHTO, for an average annual investment level of $13 billion. The cost of eliminating all existing bridge deficiencies as they arise over the next 50 years is estimated at $850 billion in 2006 dollars, equating to an average annual investment of $17 billion.³

Yes we do, and we could have created jobs, fixed our bridges, our highways, our failing electrical grid, etc, all for a fraction of what we spent keeping afloat the very lenders who created the problem to begin with.

This entry is meant as a thought exercise. What is done is, quite obviously, done.  Furthermore, the welfare and the will of the people, is not theirs to direct. We have conceded these decisions to our elected officials.

I am bringing the example of the WPA up because we are facing a second debt crisis. It has been called the ‘debt cliff’, and it may well lead to a second wave of global financial instability that will radiate from the inept epicenter of our nation’s capital.  

Should we see a second worldwide wave of recession, we will need better models than merely creating more debt to cover our debt.  Seriously, when is paying your mortgage with your credit card a good idea? 

This is the first of a series of what will be very dry, very boring posts.

More fun stuff will come later.