Should a trillion dollars be enough? How about three or more, depending on how you look at the bailouts being thrown around?

Mint.com and WallStats.com have some stunning visual expressions of what a Trillion Dollars represents.

One trillion dollars; it’s a number that few people can
comprehend, let alone your standard nine digit calculator. There have been attempts to put this number into perspective before. A trillion dollar bills laid end to end would reach the sun or you spend a dollar per second for 32,000 years or one trillion dollars in pennies would weigh as much as 2,755,778 Argentinosauruses (the largest known dinosaur).

Um… why is the Fed pushing this view right now? This sounds a little like a pilot getting on the PA to explain how airplane crashes are good things, “because they reduce airport congestion in the long run… please place your seats in the upright position, stow your belongings, and place your head between your knees…”

Historical evidence doesn’t support the commonly held view that currency crashes are harmful to big economies, according to a Federal Reserve paper.

In fact, as long as they’re not triggered by an outbreak of inflation, crashes can actually have positive economic outcomes including stronger gross domestic product growth, lower bond yields and rising equity prices.

“Sharp exchange rate depreciations, or currency crashes, are associated with poor economic outcomes in industrial countries only when they are caused by inflationary macroeconomic policies,” wrote Joseph Gagnon, visiting associate director of the Fed’s monetary affairs division.

“On the other hand, crashes caused by rising unemployment or external deficits have always had good economic consequences with stable or falling inflation rates,” he wrote in the paper, which had the provocative title: “Currency Crashes in Industrial Countries: Much Ado About Nothing?”

The paper was posted on the Fed’s Web site Tuesday.

Gulp. Batton down the hatches!

via Fed Paper: Currency Crashes Can Have Good Economic Effects – Real Time Economics – WSJ.

Dr. Doom is freaked out more than he was earlier!

A year ago Roubini was forecasting an 18-month recession with a U-shaped recovery; now, hes now expecting the downturn to last at least 24 months and possibly 36-months. He also sees rising risks of a Japanese-style L-shaped stagnation, i.e. a prolonged period with little or no economic growth.

“I was one of most bearish people [but] the economy has surprised the bears on the downside,” says Roubini of NYUs Stern School and RGE Monitor. “Whats happening in the world now is scary.”

via Even Dr. Doom Is Scared Economy Much Worse Than Roubini Predicted: Tech Ticker, Yahoo Finance.

EJ is absolutely brilliant! Reprinting in full here…

As Paul Volcker pointed out over the weekend, the global financial system has disintegrated and no one has any idea how to fix it. Lots of good ideas about how to fix the banking system, but as weve explained, even if any of these things are done — and we are not holding our breath — its the endogenous credit system thats the real problem, the one that used to magically allow consumers to lend new money into existence by taking out a car loan or charging dinner on their Visa card, the one that depended on the now defunct securitized debt market.

Most reasonably aware North Americans have, like me, watched this mess develop for over 20 years. Credit was substituted for savings. Two incomes were substituted for one. Other peoples savings were substituted for our own.

These past 20 years have been like a long bus ride into the middle of a desert without food or water, with the driver all along telling us that, no, we are not heading into a desert but traveling along a long stretch of beach that leads to an ocean with palm trees and swimming pools, we just cant see the water yet.

All along the way the skeptics look out the window and say, “Were going the wrong way,” and, “Shouldnt we turn around or at least stop to pick up drinking water in case youre wrong?”

“Stop being so negative,” yells the driver over his shoulder. “You dont understand neo-classical geography.”

Meanwhile, the rest of the passengers in the bus sit watching Survivor on portable DVD players or reading about Britney Spearss hairstylist in The National Enquirer.

One day the bus runs out of gas. The driver gets out, looks around and says, “How about that. Here we are in the middle of the desert without food or water. Who could have known?”

He pulls out a cell phone and shortly a helicopter rescues him and his friends, leaving everyone else behind to fend for themselves.

The End

Postscript: Our leaders have driven our economy to the place economies eventually wind up that run on credit, discourage savings, and sold off productive capacity needed to generate new savings. Our readers have not listened to them but have saved their own food and water, metaphorically speaking, by staying out of debt and increasing their savings, even if this was not what everyone else was doing. Good for you. On the other hand, readers who are expecting a Mad Max world need to get a grip and re-read Are You a Doomer? Law abiding citizens do not turn into criminals overnight. Your town will not be run by warlords. There will be no wandering hoards of looters or ox-drawn Rolls Royces. Thats Y2K stuff. Try to keep it in perspective, folks. Everything is going to get really, really slow for a while.

via What just happened? – iTulip.com.