Local Porkulus Fabulousness

The U-T watchdog reports today on a Chula Vista charity that has difficulties with accounting for how stimulus cash was spent. The State Inspector General found the following about the Metropolitan Area Advisory Committee (MAAC).

The report showed that the Chula Vista nonprofit altered records, such as dates on applications, and may have provided benefits to people who were not eligible.
. . .
Her audit found that MAAC commingled stimulus funds with other agency revenue, failed to account for $888 in travel costs, under-calculated the number of jobs created and performed oversight work after delivering services to clients instead of in advance.

The MAAC, of course, denies any wrong doing. And why do we care, it's only a million?

More Good News - Thank Your Neighborhood Tea Partyer

Harry Reid pulled the pork laden, earmarked to glory "omnibus" spending bill today. W.C. calls out the Tea Party for saving the nation from bipartisan pork (supposedly the tastiest treat in D.C.). Note the manner in which senior Republicans were outed for their free spending ways. This is why primary challenges to the likes of Mike Castle were important, they make very credible the threat of primary challenges and move the nation towards fiscal sanity.

Gotta love the Drudge headline and the little blurb about McConnell's one page bill.

TARP Losses ONLY $117 Billion

According to the Treasury Department spokesman, Andrew Williams, projected losses for the Trouble Asset Relief Program (TARP) are only going to be $117 billion not the $341 billion earlier projected. What a relief. When this program was first debated, and tea party types objected, we were told this isn't government spending, it's just a loan; it won't add to the national debt; it will all get paid back. Right. It galls me that the so called elites don't think the average person can understand the workings of finance and financial regulation. (Meanwhile Fannie and Freddie unlimited bailout cash doesn't even make the TARP books, so even this figure is an underestimated lie.) Screw ups like TARP are predictable by everyone except these elites. And to remind every Republican running for office, this donkey of a program was initiated with Republican votes under a Republican administration. If you jackasses want any Tea Party votes, you better start doing some serious work in cutting spending.

Not supporting Jim Bunning isn't such a good start either. Get with the program, I know you can't shut down everything, but one Senator showed some principle in demanding some offsets to deficit expanding extension of unemployment benefits. No matter how popular the programs being halted, unless the Republicans can show some fortitude on deficit reduction, they aren't really catching the mood of the country. Bravo to Scott Brown for applauding Bunning's stand. I know Bunning has issues, but the leadership in the Senate should have gotten their caucus together and made a principled stand on the long avoided promise that all programs will be offset to ensure they don't increase the deficit.

Lost Decade

And I don't mean the one that just ended, bad as it was in some ways. My concern is for the next decade, as the current bubble is wound down, or not. The Economist reports on the economic history of the last twenty years in Japan, subtitled: Twenty years on Japan is still paying its bubble-era bills.

Graphic shows how Japanese investors have fled stocks to bonds as deflationary expectations and lack of business vitality put the economy into a long decline.

The most pernicious effects of the bust, economists say, have been transmitted via banks and businesses. Banks found themselves loaded down with non-performing loans. Belatedly they faced up to many of their losses, restructured and consolidated. But according to Takuji Aida, an economist at UBS in Japan, long-term yields remained very low because of deflationary expectations, thereby flattening the yield curve (the difference between short- and long-term interest rates). That prevented banks from earning their way out of crisis, so lending remains weak.

Companies, meanwhile, have been focused on paying down debt, as well as coping with deflation in the domestic economy and competition from cut-price imports. Large exporters were forced to restructure and enjoyed a long boom from 2002 to 2007. But firms in more protected areas of the domestic economy have fared badly: profitability, wages and investment have declined in the past decade.

As Reason magazine pointed out last year, Obama is following the same failed policies that Japan followed in the 1990s in their efforts to revitalize their economy.

But that stimulus did not save the Japanese economy in the 1990s; far from it. The ensuing period came to be known as the Lost Decade, characterized by multiple recessions, an annual average growth rate of less than 1 percent, and a two-decade decline in stock prices and corporate profits.

The Japanese government’s easing of credit rates, instead of spurring real demand, created artificial demand. Federal loans and stimulus spending were not economically productive, and they vastly increased the nation’s debt and prolonged the economic malaise. Worse, businesses spent critical time on the sidelines, waiting for government bailouts and other centralized actions, instead of speedily consolidating their losses, clearing their balance sheets of bad investments, and reorganizing.

I am optimistic about America, and always have been, but it is a long term optimism based on the character of our people and the genius of our constitution. In the short term, we are not immune to losing a decade either, the 1930s come immediately to mind, for example, and government actions, such as higher tariffs, intended to help the economy actually delayed recovery then as well.

I also blame Republicans, as much as Democrats for this. Bush and Paulson initiated the first bail out, with Republicans in Congress along for the ride. John McCain could have won the last election; the turning point came near the second debate, which he had proposed to postpone to deal with the mounting banking and AIG crisis. His failure to break with Bush and the Democrats and oppose the first bail out package signaled the end of his maverick image. In hindsight, had he been able to stop the bail out we would have all been better off, and McCain might be President.

This is why the Tea Party movement is so valuable, because we recognize that the key problems facing America have to do with the size of the debt and expansion of the federal government into the private sector. This expansion is guaranteed to slow the unwinding of failed investments needed for a healthy recovery. We have already seen various examples of this skulduggery, Congress intervening to prevent Government Motors from closing dealerships, and shading dealings by the Fed to get Bank of America to buy Merrill Lynch, to name two.

McCain was right to try to rebrand the GOP as the party of reform, but reform and reduced government go hand in hand. Time to step up our demands to end porkulus and bail outs.

Pay Go? Pay Gone!

Today's Drudge Headline:

WHITE HOUSE MASTER TO SLASH EXEC PAY

For the second time this week, I find myself agreeing with the Obama administration, but I will impugn their motives anyway. First, why do I agree? This headline reminds me of what the very prescient George Will said in an April 2008 commentary about what was going on at the Fed, which was bailing out Bear Sterns at the time:

Congress could pass a law saying: No company benefiting from a substantial federal subvention (which would now include Morgan) may pay any executive more than the highest pay of a federal civil servant ($124,010). That would dampen Wall Street's enthusiasm for measures that socialize losses while keeping profits private.

Amen, brother. (Small error, the top pay is more like $196,700 but that's still chump change to these bankers.) These guys loaded up on risk like there was no tomorrow and expected the Fed and the Congress to bail them out, which institutions promptly obliged. Where are the consequences that will change future behavior? Further, I hope this accelerates the pay back of the TARP/porkulus money, and stops further bleeding from the Treasury on this front. This is predatory government, when big special interests capture the government institutions that supposedly regulate them. This is the kind of thing that animates the left, and you can understand why. (I am thinking about a post to help you lib/cons understand the left.)

On to impugning motives. The administration's action comes not out of any sense of preventing future calamity, but out of the leftist emotion of rage at those making more money than themselves. It's all just populism to compete with Glenn Beck, who has been kicking their tails of late. Fortunately, for the American tax paying public, Team Barry has not thought this through and will probably be outraged when these firms find ways to return the filthy lucre that got their execs pay cut in the first place.

Kenneth Feinberg, Treasury Official in charge of Executive Compensation:
"We're cutting your pay, even if it increases the deficit."

Define Insanity

Dems Plot New Stimulus

So says the Drudge headline. However, only about one-fourth of the money from this year's $787-billion stimulus package has been spent and that was the second stimulus package. Remember Bush passed one too. (Yet another way in which Obama has imitated Bush, certainly an indictment of both.) See the LA Times article for more discussion. And yet unemployment remains stubbornly high, so certainly the third time is the charm, n'est-ce pas?

It is claimed that Einstein said that insanity is doing the same thing over and over again and expecting different results. So how does the stimulus differ? If this proposal doesn't scare America, what will?

Meanwhile, our super secret Liberator camera crew captures Nancy Pelosi's reaction after her aids tell her that fellow Democrats are hankering for another porkulus package.



Now that's insane.

Gore Motors

Because Cash for Clunker Didn't Waste Enough of Your Tax Dollars

A tiny car company backed by former Vice President Al Gore has just gotten a $529 million U.S. government loan to help build a hybrid sports car in Finland that will sell for about $89,000.

Just let that sink in for a moment and consider all that is hypocritical and just plain wrong. H/T to the WSJ for highlighting this travesty, even if buried in the corporate news section of the print edition.

1. The car will be built in Finland. What hypocrisy considering the hue and cry to include "Buy American" in the porkulus.

2. It will subsidize development of an $89,000 vehicle, so some rich lefty can gorge him or herself on recycled self-righteousness. While the left complains of how corporations are raping America.

3. Backed by former Vice President Al Gore. Do you think this would have gotten off the ground without the blessing of the Goracle? What does Al Gore get from Fisker Automotive? How much is he paid? What expertise does he bring? Well, we know the answer to that. (Of course we also saw this with the selection of the GM CEO.)

And the business model? Automotive analyst, Aaron Bragman at IHS Global Insight had this to say (only in the print edition, curiously):

It's a bit controversial to give half a billion to what is basically a start-up company that's never produced a car. Who is going to buy an unknown brand in a questionable dealer network?

But here's the money quote, literally as it turns out:

Fisker's top investors include Kleiner Perkins Caufield & Byers, a veteran Silicon Valley venture-capital firm of which Gore is a partner. Employees of KPCB have donated more than $2.2 million to political campaigns, mostly for Democrats, including President Barack Obama and Hillary Clinton, according to the Center for Responsive Politics, a nonpartisan group that tracks campaign contributions.

Sweeeeeet! For those who don't like to do math in public, that is a sweet 21,100% return on investment, more or less. Beat that with good stock picking, suckers. Although she might be able to beat that in cattle futures.