Only time will tell how much it will cost

$ 700 billion, or 5 of U.S. GDP. The magnitude of the sums committed by the rescue plan that the Bush administration submitted to Congress has what give cold sweats to all MPs and senators. As much as 200 billion for the release under supervision of Fannie Mae and Freddie Mac, the nationalization Giants add to 85 billion the first us insurer AIG, one of Bear Stearns and massive interventions the Fed, the mobilization of the public finances of the country to prevent the banking system from collapsing approach 8 to 10 points of GDP... The first economy of the world have kidneys strong enough to withstand puncture such Certainly, as George Bush says, "this plan is solid because the problem is massive. But with a deficit budget American exceeding 2 points of GDP and public debt already representing more than a third of GDP, the margins of manoeuvre are reduced.

Jean-François Jamet, Economist and consultant to the World Bank, "the most serious risk, it is that for the"rotten"assets of banks is the quality of American debt." If that were the case, the State should borrow at higher rates and the escalation of the cost of the debt would fall in a downward spiral. Where the pressure on the rating agencies so that they degrade not the note of us debt. Where also the prudence of the Treasury, who preferred to leave collapse Lehman Brothers instead guarantee its too risky to come to the rescue of AIG, which the bankruptcy assets would have been more dangerous for the system. "The objective is to stop the game of dominoes." "When a domino falls (Lehman) the most urgent is to exclude enough the following (AIG)", summarizes Jean-François Jamet.

For now, the confidence in US Treasury Bills seems intact; regarded as a safe haven, they exchanged these days at rates near zero. "It is the sign of investor confidence in the ability of the authorities to restore the situation," said Benjamin cardboard, economist with CEPII. An essential element for the future success of the plan and which should help the dollar to resist in the turmoil.

The bet is of size

On the other hand, he says, the committed amounts are essentially of depreciated assets guarantees, that the State will buy and remain in an ad hoc structure. The hope of the Government is therefore recover much of the development, when the economy and especially the real estate market to be restated, current 2009 or, at worst, in 2010. However, the bet is size. "It is not clear that banks participate in the structure, observes John Carey, Executive Vice President of the Fund Pioneer Investments." Only time will tell how much it will cost. The national debt will increase, but everything will depend on the speed and the way in which the Government will sell its assets.

Most welcome in any case the speed and the strength of reaction of the authorities, as the presidential election is close. "Between November and January, the change of administration would have made it impossible to a decision of this magnitude," said Jean-François Jamet. In addition, the danger posed by this financial rescue megaplan is to put into perspective, Benjamin cardboard, "when compared to other more structural risks." Other words, to runaway programmed health and retirement systems Medicare and Medicaid, according to official projections, the cost could reach by 2030 some 100 points of GDP in public aid if no action is taken. This yardstick, the Bush plan to save the financial system seems certainly less huge... even if this reasoning is not reassuring.