Archive for category Stimulus/Bailout
The Dog Doesn’t Mind Being Kicked Now and Then As Long As He’s Well Fed and Housed!
Posted by Tom in Democrats, Politics, Stimulus/Bailout, Wall Street on January 15, 2010
My wife Dede got an email from Vice President Joe Biden today soliciting her support for the proposed Financial Crisis Responsibility Fee on the country’s largest banks. “Barack and I aren’t backing down. But to win, we’ll need the American people to add their voice right away.” He then tells her she can add her name at my.barackobama.com!
Wall Street owns the Democrats but often assumes the role of the pet dog, simply for political reasons. As previously mentioned in my December 12th post, Democrats got 11 of the top 15 aggregate contributions given by Wall Street. As Kevin Williamson reports in his NRO post Paying for the Privilege, Goldman Sachs gave 73% of its campaign cash to the Democrats and the VC guys gave 75%!
“But if the Democrats are gluttons for Wall Street money, Wall Street is a glutton for punishment: The president and his party in Congress are engaging in truly dishonest demagoguery — asNational Review has noted, TARP losses aren’t coming from the banks, but from largely Democratic messes including AIG, the automakers’ bailouts, and Rep. Barney Frank’s beloved foreclosure-prevention program. But even as the Democrats demonize Wall Street and vilify Big Business in general, the pinstripes-and-obscene-bonuses set continues to write big checks to Obama’s party.”
So mean old Joe Biden can posture and puff all he wants in Obama’s charade. Wall Street gets what it wants in good times and bad, the Democrats do Wall Street’s bidding. So the lap dog doesn’t mind being kicked occasionally, after all he is extremely well-fed and well-housed!
I sure hope Dede doesn’t sign Barack’s web page!
Tom Motherway
Get Serious About Serious Materials
Posted by Tom in Environment, Obama Budget & State of the Nation, Stimulus/Bailout on January 14, 2010
John Stossel’s FBN show on “crony capitalism” has a clip that’s too good not to post. Who says you can’t buy influence!
If At First You Don’t Succeed….Change the Damn Rules!
Posted by Tom in Centrally Managed Economy, Deficit, Stimulus/Bailout on January 13, 2010
Old Barack Hussein and his socialists minions Reid and Pelosi don’t like people asking them to account for the stimulus fiasco. It was pure and simple a payoff to leftist causes the Democrats had long championed. To assure that they could never be held accountable for the $787 Billion budget buster, Obama said that it would “create or save” 3.5 million jobs. Any one with an ounce of sense knew that the “save or create” obfuscation would put them beyond accounting. Problem is that they advertised that the unemployment rate would not go beyond 8% and then they set up a website to account for the “save or create” menagerie.
Well, with the lapse of time, the unemployment above 10%, and several funny-paper headlines about jobs created or saved, we saw the administration touting 1 million jobs in October and www.recovery.gov suggesting only 528,916 as of the same month. Silliness aside, the job numbers are terrible. What’s worse is that 2010 is an election year!
What to do, what to do? MSNBC reports January 12th: “White House changes stimulus job accounting” ”New method will make it impossible to track ones saved or created” Henceforth it will only be a matter of counting jobs funded by the stimulus. “Recipients of recovery money no longer have to show that a job would have been lost without stimulus help, and they no longer are require to keep an ongoing tally of jobs saved or created. The new rules allow stimulus recipients to limit the job tally to quarterly reports, making it impossible to avoid double-counting a job that was created in one quarter and continued into the next.” These new rules were quietly published last month in a memorandum to the federal agencies.
The sad part of this is already being seen on the state side of the stimulus. The beggar states like California are in hock up to their eyeballs with nowhere to turn just when the stimulus money is about to run out! More deficit and more debt is becoming unpopular with the voters, especially in an election year when memories are not all that short, so it’s a hot potato for Obama. What may happen is the second part of a double dip recession. And this dip will be caused or greatly exacerbated by the Obama-Reid-Pelosi team.
Bottom line: the quiet change of the stimulus jobs accounting rules really shows these leftists to be the despicable charlatans that they are.
Tom Motherway
Dual Bankruptcies–Federal and State
Posted by Tom in Deficit, Economics, Financial Policy, Nationalized Health Care, State Finances, Stimulus/Bailout on January 5, 2010
The nation faces simultaneous “bankruptcies” at both the state and federal levels. While it is true that there are no provisions for bankruptcy of either governmental entities, the conditions for bankruptcy do exist, namely insolvency, the inability to pay obligations as they become due, at both the state and federal level.
We are well aware of the $1.42 Trillion 2009 federal deficit and the $12.3 Trillion national debt growing at over a Trillion a year. But not counted in these numbers are the unfunded liabilities for social security and medicare estimated in June of 2009 at $107 Trillion!
At the state level the estimated 2010-11 aggregate deficits of 48 states are $350 Billion, bonded debt has soared to $1.9 Trillion. But the unfunded pension and health care liabilities are estimated by Cato at some $1.4 Trillion nationwide. Cato recently analyzed state and local compensation, fully half the respective budgets, and found that they greatly exceed private compensation, are dramatically excessive in terms of pensions, healthcare, and paid leave and are greatly influenced by public employee unions!
So while Barack Hussein Obama and his “Keystone Cops” are piling on deficits in terms of Obamacare, non-stimulus, and earmarks, unemployment is at 10%, the banks would rather invest in Treasury notes than lend to small businesses, and government revenue is sinking at both the federal and state levels. On top of all this, our largest creditors, like China, are questioning our ability to repay our debts! What does Obama do? He goes to Copenhagen and with Clinton pledges $100 Billion a year to the developing nations!
I keep thinking I’m having a bad dream. How can these droids do what they are doing? If you are already wounded, why would you continue shooting yourself in the foot? California, the spend and spend poster child, will ask Obama for assistance with its $21 Billion current deficit without getting its fiscal house in order. I’m just waiting for Obama to ask California for assistance with the nation’s $1.42 Trillion current deficit without getting its fiscal house in order!
If we were to properly account for the unfunded liabilities and add proper provisions for them on a current basis, then add that to the current operating costs along with any legally obligated amortization of the term debt, neither would the combined governments be able to generate enough tax revenue to service current expenses, nor would they be able to borrow sufficient sums to cover those expenses. Simply stated, they are poor credit risks. China has stated as much!
There you have it. Technically no bankruptcy, nonetheless both the federal government and the state governments are bankrupt! Our children, grandchildren and great-grandchildren will pay the price for this immorality.
Tom Motherway
Democratic Drug Pushers Addict the States!
Posted by Tom in Constitution, National Character, Stimulus/Bailout on January 3, 2010
Democrats long ago learned the techniques of suppression as the basis of their entrenched power–make the poor masses dependent and they will become compliant and vote as directed. Examples abound, Curley in Boston, Tammany Hall in New York, the Daily Machine in Chicago, Pendergast in Kansas City. But all of these addicted people, the voters, to welfare, to the “dole,” and to political patronage. This tough ward politics assured them continuity in office. It relied on dependency and military obedience and was as effective as the Stasi at its height in East Germany.
Barack Hussein Obama has taken this addiction-dependency technique to a new level, he has addicted the states! A lesson in drug pushing is in order here: first, the drug pusher always purports to solve problems and make people happy; next, the drug pusher always gives a few free samples, small at first but growing in dosage; finally, the pusher has his mark dependent and the price becomes exorbitant. Now, the drug pusher is merely a capitalists, taking a risk to sell a limited commodity to a market he has created. His motivation is merely money.
The Democrats from Roosevelt on have charged a much higher price than mere money, they have demanded the voters’ freedom. They give welfare in exchange for votes and compliance. The masses do what they are told lest they lose the largess!
Obama has addicted the states with his non-stimulus stimulus, $200 billion was to go to the states to solve the common mess generated by their overspending. Rather than clean up the spendthrift ways they added new programs. There were also federal strings attached that required matching state funds or prohibitions against cutting spending on programs funded with stimulus money.
So with 10% unemployment, falling property values, and concomitant declining sales taxes, income taxes and property taxes, the states face deficits estimated at $260 Billion for 2010-2011, without accounting for the unfunded pension liabilities. California is the poster child, now bankrupt and facing a $21 Billion deficit; its Governor Schwarzenegger will now go hat in hand to Barack Hussein Obama begging for another fix; lucky he’s a RINO and lucky Comrade Pelosi is running the House. But there are ten other states relatively close to California’s fiscal demise. It’s fair to say that 20% of the states are seriously addicted to federal dependency.
Kudos go to two states that refused the drug pusher. “Just Say No Awards” go to Mitch Daniels of Indiana and Rick Perry of Texas who had the foresight to turn down their share of the $7 Billion for unemployment insurance which came with continuity strings attached. The weekend WSJ editorial states the case well.
So what have pusher Obama and his Democratic minions wrought? Has he destroyed our federal system? The US Constitution limits federal powers to those specifically delegated with all others reserved to the states or the people. When he’s finished, will there be any reason to have state governments?
Tom Motherway
Smart Parasites Don’t Kill Their Hosts…Someone Tell Obama
Posted by Tom in Deficit, Economics, Stimulus/Bailout, Taxation on November 30, 2009
Obama and his apparatchiks Pelosi and Reid fail to understand that the fundamental relationship between government and the economy is that of parasite to host. Aside from essential governmental functions of adjudication of civil disputes, law enforcement and defense, the governmental social functions like Medicare, Social Security and welfare are a redistribution of wealth. They are uneconomic. They do not create wealth. The simple truth is that government cannot create wealth. It can consume wealth, as in the case of the court system or military defense, and it can redistribute it as in the case of welfare or cash for clunkers; but, it cannot create wealth! To the extent it that it engages in social functions and redistribution functions it is a parasite. It only has what it takes from the creators of wealth, the innovators, the producers and the sellers, the real economy.
Jack Kelly incisively states the case in his November 30th post in Real Clear Politics, Note to Obama: Only Private Sector Creates Wealth, Jobs. A healthy host can support a lot of parasites; a sickly host cannot, so try to keep the host healthy.
Yet Obama is hell bent for leather to milk the host dry: phony stimulus, bondholder bailout, Obamacare, cap and trade, mortgage subsidies, ad infinitum.
The unemployment rate reached 10.2 percent this month, more than two percentage points higher than Mr. Obama’s economic advisers predicted it would if his $786 billion stimulus bill were passed. The Associated Press, in reporting Tuesday on disappointing third-quarter economic numbers, noted some economists expect it to reach 11 percent by next summer. That would be the highest since the Great Depression.
The stimulus failed chiefly because it was designed more to reward the president’s political allies than to fight the recession. But the stimulus failed also because stimulus funds were used to preserve jobs state and local governments could no longer afford because of falling tax revenues. The private sector has borne more than 100 percent of the job loss because state and local governments have added 110,000 jobs, according to an August report by the Nelson A. Rockefeller Institute of Government.
A job’s a job, right?
Not exactly. Preserving government jobs may deepen the recession because government workers are not engaged in wealth creation and their salaries must be paid by people in the private sector who are.
So we have Obama, Reid and Pelosi with the Democratic left taking the country 180 Degrees off course-expanding government. For the economy to grow, government must shrink. Will someone please tell Obama to stop killing the host!
The News Is Numbing…and Unfortunately Predictable
Posted by Tom in Centrally Managed Economy, Congress, Foreign Policy, Stimulus/Bailout on October 29, 2009
I haven’t posted in a while because it’s been difficult to find a new theme. I fall back on “power, lies, ignorance, naiveté and just plain bumbling”–as in keystone cops! Obama and his Democratic minions Reid and Pelosi are like kids in the candy store; they lie, cheat, steal with no regard for thoughtfulness or consequences. They buy on credit without regard to prudent limits and in the process burden us, our children, our grandchildren, and our great-grandchildren with debt that will end us up well down the road to serfdom. They have long ago foregone the values that made this country great, in fact, they apologize for them, for the sons we have lost and the blood we have shed; Obama calls it arrogance! Iran, North Korea, Eastern Europe and our Western allies realize that Obama and his minions are weak, bush-leaguers and will take advantage at every turn of the screw. But never fear, Obama and his minions are, and strive to be, statists of the first order! Some examples:
GMAC is asking and will get federal bailout funds in addition to the $12.5 Billion already funded. This reasonable request for your additional hard-earned money is necessary to support the sales from government motors. But be assured that your Congress, all 535 members thereof, are acting as the new GM board, ON AN INDIVIDUAL BASIS! See the Thursday WSJ. Now be sure to make your next car buy a Government Motors product, your money is heavily invested it it so you may as well enjoy the superior products it produces!
But hey, the first-time-home-buyer tax credit is working well and growing our economy; perhaps a bit too well. Seems that Treasury’s Inspector General has turned up 19,000 frauds and 74,000 additional frauds, one a four year old, taking advantage of your money again. Yep, you work hard and a four year old (via his parents) cheats to take it in the form of a tax credit you and your descendants will pay for! But don’t worry; the $15 Billion annual scam of your money is being well managed by the oversight of the same 535 members of Congress that is acting as the new Government Motors board of directors! To paraphrase Thursday’s WSJ, after two years of Fannie-Freddie generated trillion dollar taxpayer losses, “leave it to Congress to design a program that even a four-year old can scam.!”
When will the American voters wake up!
Tom Motherway
Finally—Sleeping Giant Awakens–We Hope!
Posted by Tom in Centrally Managed Economy, Constitution, Deficit, Government Regulation, National Character, Obama Budget & State of the Nation, Politics, Stimulus/Bailout on September 20, 2009
The following is from Cash Hamrick, basically unreported by the MSM.
This is the first great conservative anti-statist manifestation in American history. The conservative movement, which developed in the post-WWII, Cold War environment has now fully matured into the most significant political movement of the 21st century. I believe that this day could be referred to in the not too distant future as the day that changed America. This was the day the great silent conservative majority finally found its voice. Many of the attendees were quite meek and timid and were unsure of exactly what to expect, this being the first time in their lives they’d been involved in a protest movement. Their fears evaporated early in the day and I saw people reveling in the camaraderie , the joy and sheer civility that was exhibited at the entire event. Chants of “Freedom, freedom, freedom”, “No more czars! No more czars!” carried through the air without the slightest hint of rancor or incivility which is the norm at the leftist rallies I have photographed over the years.
![mime-attachment[24]](http://renohayek.com/wp-content/uploads/2009/09/mime-attachment24-300x184.jpg "mime-attachment[24]")
Protesters came from every state in the union. One man came from San Antonio, TX. He said that he was really sorry he hadn’t brought his family. He stated that being a black conservative he was afraid to expose his children to what he expected would be a lot of liberal abuse. He was thrilled with the tenor of the event and the fact that no liberals were present to harass him. He spoke about how incredibly intolerant the left is to black individuals who don’t bow to the party line.
![mime-attachment[67]](http://renohayek.com/wp-content/uploads/2009/09/mime-attachment67-300x200.jpg "mime-attachment[67]")
San Diego radio host Mason Weaver said from the podium: “I came here because I thought you might want to hear a black man speak without a teleprompter. This government is trying to make a nation of dependent people. Americans have always been independent people. ¦This is not a Republican thing, it’s not a Democrat thing. It’s not a black thing or a white thing. It’s an American thing. We the people are telling them ‘No more! We’ve had enough!’
![mime-attachment[15]](http://renohayek.com/wp-content/uploads/2009/09/mime-attachment151-300x246.jpg "mime-attachment[15]")
A follow up to Cash’s contribution is an article by Robert Tracinski in Real Clear Politics, It’s the Liberty Stupid. In it he links a number of other pictures which show the multi-facated nature of the Washington demonstration; these are well worth the peek! I particularly like the Ayn Rand reference, Atlas Shrugged. Pray that we are not already there!
Tom Motherway
Cargill on Crisis–September Meeting Notes
Posted by Tom in Centrally Managed Economy, Monetary Policy, Stimulus/Bailout on September 16, 2009
Our thanks to Tom Cargill, Ph.D. for his excellent presentation at last evening’s Reno Hayek Dinner. His background is impressive indeed: Following his degree at Davis he conducted research and published a number of books and articles in economics with emphasis on financial and central banking issues. He has consulted with governmental agencies in the US, Japan and Korea and presented lectures in China, Hungry, Australia and Indonesia.
And he did bring that background to bear in last night’s discussion on our current financial crisis. This classic bubble build and bust began in 2001 and its effects are now and will continue to be upon us. While significant, it is not as bad as the Great Depression or Japan’s decade of deflation although both provide valuable lessons today which bailout oriented policy makers seem to ignore. With cheap liquidity flooding the market for too long a time and a government policy mandating loans to deadbeat borrowers, real estate prices outstripped fundamentals. With government assistance and off balance sheet securitizations the US exported the bubble to overseas investors so the explosion resounded beyond our shores. With the implied guarantee of our two GSEs the investments were viewed as risk free.
The explosion took effect and unlike past explosions the central banks acted quickly and concertedly with “a hair of the dog” remedy, easy money. Governments joined in with Keynesian fiscal “stimulus,” which really doesn’t have the advertised multiplier effect; that real effect is in fact negative. Governments also added “bailouts” as weapons in the war against its crisis. These were added without regard to moral hazard and we now have the vagary of “systemic risk” and companies that are “too big to fail!”
So the “government or market” causation question for our current financial problems, probably deserves the answer, both. But were it not for the government policies of Government Sponsored Entities, easy money, and home ownership by people unable to handle that ownership, the crisis would never have occurred. Crystal balling outcomes is indeed difficult but it seems to be a better bet that we will have inflation instead of deflation and that it will be politically difficult for the central banks to tighten monetary policy and fiscal authorities to withdraw stimulus. The major deficits and unprecedented debt will be an effective drag on our future economy and new taxes, especially the VAT will most likely be needed to approach some sanity.
The proof of a good meeting is its interest and duration; last evening, no one wanted to leave and we ran a half hour over schedule! Our thanks to Professor Cargill for the excellent meeting.
Tom Motherway, tom@renohayek.com
Here We Go Again, “Creating or Saving!”
Posted by Tom in Stimulus/Bailout on June 8, 2009
Bloomberg reports that President is putting his “creating or saving” program in high gear. He intends to “create or save” more than four times the number of jobs he has already created or saved, 600,000 of them!
June 8 (Bloomberg) — President Barack Obama, trying to bolster an economy he says still has a “long way to go,” announced 10 projects aimed at creating or saving more than 600,000 jobs, according to the administration.
The plans are meant to boost the effectiveness of a $787 billion stimulus measure sought by Obama and approved by Congress in February. The projects will be a key focus of recovery efforts during the next three months and create or save four times more jobs than during the first 100 days since the rescue bill became law, according to a White House news release……..
The new projects are being framed as the beginning of a “summer of accelerated Recovery Act activity” by the administration and include new services at health centers in 50 states, work on 107 national parks, improvements at airports, highway locations and veterans’ medical facilities. They will also provide funding for schools to hire more teachers.
via Obama Unveils New Projects, Says Economy Has ‘Long Way to Go’ – Bloomberg.com.
Apparently no consideration is given to the economic value or sustainability of these government jobs funded at taxpayer expense much less the economic loss and jobs lost by virtue of the excessive government spending. Hiring more teachers as part of the summer of accelerated Recovery Act activity, now that’s a plan. Seems this administration may be confusing activity with progress!
Tom Motherway, tom@renohayek.com