Prediction: California is the Next Bailout

Sure the Obama administration claims that it isn't going to bailout California. I beg to differ. The cuts required to balance California's budget are draconian enough to set off unrest among the populace. California's economy is the 8th biggest in the world. If it goes off the edge of the precipice, where do you think the U.S. economy is going to be? If you're the president do you think you're going to allow this to happen on your watch? Nope. You're going to bail them out.

Who Loses Most in the TARP Bailout? Taxpayers

Glad to see that the government feels fine turning a 1.2 trillion! bailout into a huge and growing loss for taxpayers while banks and private investors make boatloads of money.

What cannot be disputed, however, is the financial bailout's biggest loser: the American taxpayer. The US government, led by the Treasury Department, has done little, if anything, to maximize returns on its trillion-dollar, taxpayer-funded investment. So far, the bailout has favored rescued financial institutions by subsidizing their losses to the tune of $356 billion.

Latest Bailout: Insurers

Your investments stink and you lose a lot of money. If you are the average individual, you are out of luck. If you are an insurer, the government makes it good for you. No moral hazard there.

How the Fed Bypasses Congress

Interesting short article from Bloomberg explaining exactly how the Fed is doing an end run around democracy. This will not end well.

Congress: We Will Have Strong Oversight of Bailout Money

Rats! We forgot to ask what they meant by "strong oversight!" Pretty much means following the money on Google. Hilarious and sad all at the same moment. If it weren't Congress, I wouldn't believe it.

On February 14, with the passage of the American Recovery and Reinvestment Act, Congress shoveled $787 billion of stimulus money out the door. Now they're using Google to find out where it went.

Gaming the Government Bailout

This is a fascinating, must read article. Do you think the banks are going to do what is best for the country or what is best for themselves? Yeah, me too. This article discusses how they can do so.

Latest Trillion Dollar Plan-of-the-Week

This would be hilarious if it weren't sending us all down the road to serfdom.  The latest "bank bailout plan" is Monday's "Trillion Dollar Plan of the Week to Save the Economy."  No doubt sufficient bonuses are included so that the merry men who brought down our economy will be saved from ruin.  Too bad for the rest of us.

Bailout-of-the-Day

Today's bailout is of the auto parts industry. $5 billion. I'm wondering if that is for bonuses or what? They are "critical" to the auto industry, which is "critical" to the nation, or so the theory goes. I'm just wondering whom the government will bailout tomorrow. I can hardly wait to see. Perhaps me!

AIG: Thanks for the Bailout...Now for Our Bonuses

I have GOT to get a job in the financial industry. Where else can you be so incompetent that you threaten to bring the economy down, then get bailed out by the government, and then award yourselves millions of dollars in bonuses for your incompetence?!? Although to be honest, I'm not sure I could be as incompetent as these guys.

30 Billion AIG Bailout of the Week

AIG is up to $180 billion from the government and counting (perhaps $100 billion more to go). Joe Nocera has the best summary of what AIG (abetted by lax regulation from the SEC) was up to. Short answer: Gaming the system for billions while assuming assets would never drop in price. Nice of us to hand them even more money.

AIG Gains Deck Chair on Titanic!

Wow, I have to say I am so shocked, shocked! that the truth is coming out about AIG (hint: that $150 billion investment, most likely a total loss for taxpayers).  I really believed the Feds when they said it was an "investment" (hahahahahahahahah, oh, so sorry, that just slipped out).  

AIG Vaporizes (Even More) Money

Reading between the lines this news report, I'm assuming that AIG has blown through $150 billion dollars and is out of airspeed, out of ideas. What to do? Head to the Fed for more cash.

You Don't Think States Would "Game" the Bailout? Do You?

Surely the states won't "game" the bailout in order to get even more buckets of money from the Feds. Washington state has taken the lead sending out $1 checks to 250,000 people which triggers $43 million more from the government. Got to love that investment. Glad to see everyone is acting fiscally responsible here.

Federal Government Turns into California

Leave it to Jennifer Rubin to speak the truth (must read). We've got two ways (actually three) to pay for the idiotic bill that just passed the inept, cringing, cowardly Congress. We can raise taxes ($8500 per year to cover a one trillion deficit), or we can cut spending (yeah, like that is going to happen). The only other way out is to print money to pay for it. Who knew any political entity could be as equally fiscally irresponsible as California?

But the options are clear: radically cut benefits or radically raise taxes. There is no mysterious solution to “assuring” social security’s future or to narrowing the budget gap. The problem was daunting before and we have now made it much worse, because we have widened the chasm between receipts and spending and because the large stimulus bill and increased debt, as CBO predicted, will likely slow economic growth.

Watch for politicians to be shocked, shocked! when their policies further slow/depress the economy, and then watch as they turn to a hodge-podge of regulations (price controls) to attempt to change things (all the while making them worse). The rest of my working life (if not the rest of my life) is going to be VERY interesting as we march down The Road to Serfdom.

Huckabee on the (anti-religious) Stimulus Bill

I am a big supporter of Mike Huckabee. He is not given to fear-mongering, so when he calls the stimulus bill "anti-religious," I take it pretty seriously. He's right.

About That Bank Bailout

You know that 350 billion...no 700 billion...no 2 trillion dollar bailout. The new Treasury secretary is going to supply money without end. Should keep the boys on Wall Street in bonuses for years to come. Hope someone wants to borrow the money.

All the King's Horses and All the King's Men

One thing that has been nagging at me for some time is what I would describe as the "Emperor's New Clothes" question in regards to the economy. The government is acting under the assumption that the reason people aren't borrowing money is because the banks won't lend. Solution: Force banks to lend. My question is this: "What if people don't want to borrow money?"

Zero Hedge has a good, short discussion of the issue. Suffice to say that if the government's assumption is wrong, then their whole approach to the issue is a disaster and will be counter-productive (which is pretty much what I believe).

Oink, Oink, Goes Senator Reid

The pigs are running to the trough siphoning off funds from the 500—no, 700—no, 850—n0, 1 trillion dollar "stimulus package." Harry Reid, Senate Majority leader, is going to get his share because he can. Naturally, Las Vegas is going to use it up...I mean, use it wisely.

"All economists agree that one way to alleviate the pain of this deep recession is to create jobs. We have jobs that are ready to go forward in a matter of weeks."

What Harry means to say, is that, here is another huge bill we can pass on to our kids and grandkids so that we won't have to take the pain of living through what we've created. I'll bet his grandkids are very thankful!

Ben Stein is a Nitwit!

I'm sorry, but Ben Stein is an idiot when it comes to economics. His solution for problems created by too easy credit? Give out more easy credit!
There is only one place it can come from now: the federal government, which has to guarantee loans made by lenders, completely restock the banks’ coffers, flood the society with liquidity and create so much of it that it will have to be lent out. Of course, this will have the makings of the next credit bubble. But that cannot be helped.

I'm not sure where to start with such nitwittery. He is saying that, in order to solve the world's greatest credit bubble, we should make an even greater bubble!?! You probably need to go back to the drawing boards, Ben!

Just to demonstrate how much he knows, here is a column from a year ago in which he claims that everything is just hunky dory and we should all quit worrying. Wow, glad you saw this coming, Ben! He writes:

Newspapers (which often sell on fear, not on fact) talk frequently about a mortgage freeze. However, for all but the least qualified buyers, mortgage money is plentiful, and in fact the potential borrower is bombarded with offers.

Just so, Ben. The problem was that banks were handing out free money to whoever wanted it, too bad you missed that.

The large banks and investment banks are committed to lend hundreds of billions of dollars for deals that looked sweet when deal guys were playing musical chairs but look dicey now that the music has stopped. Some people think that the game won’t start again for a while (although I happen to think it will restart very, very soon — the fees are just too good for this game to stop).

Ooo, nice prediction there, Ben. The "game" as you call it, has yet to restart by the end of 2008 and will most likely not restart in our lifetime. You sure know what you're talking about.

NOW, let me go back to my role as Little Benjy Sunshine. None of this will sink our glorious economy. The losses are nothing compared with the losses in the tech debacle. They will be nothing like the numbers bandied about in the fear-mongering media. If there is a questionable $200 billion pool of loans, that means a small percent will be lost, not all of it. This big, strong economy will sail on through.

Hahahahahaha, let's see, we're at the Fed pouring in 2 trillion dollars and counting in order to stop a few billion dollars of losses. Glad to see your "big, strong economy will sail through" [into the dumpster.] Where did you learn economics, Benjy Sunshine?

Bush: I was against the Bailout...before I was for it!

Got to love El Presidente. "First I was for the bailout, but now that I think about it, I'm dumping my free market principles (yet again) and bailing out the auto companies without congressional approval, because I am the King of America...well, Hank Paulson is the King anyway."