Friday, January 16, 2009

The Orwellian "Stimuli"... and the BofA Bailout

Cartoon by Glenn McCoy (click to enlarge)

George Orwell originally coined the word "doublethink" as describing someone who has "...simultaneously two opinions which canceled out, knowing them to be contradictory and believing in both of them..."; this in turn led to the term "doublespeak".

If ever there were a time in our history where the purposeful misleading of huge masses of people by its elected representatives--using doublespeak language to mask the truth--was virulent, now is that time.

Anyone with an understanding of Basic Economics knows that tax cuts "stimulate", whereas spending money on inefficient Government programs puts an enormous negative burden on the economy. Today, with the House's passage of the proposed "stimulus" package by Nancy Pelosi (with NO input from one Republican) a stunned House Minority Leader could only muster: "Oh my God!"

That was more printable than was my reaction...

Thus, the latest column from Victor Davis Hanson carries a particularly bitter irony (emphasis mine):
Printing trillions more dollars and growing government to cover new debts isn’t so bad if we call it “stimulus.” That is far smarter than saying something honest like, “I propose a new $1 trillion debt program.”

The old-fashioned spendthrift policies we used to ridicule as congressional pork and “earmarks” are now justified under that ubiquitous, nice word “stimulus.” If funding another questionable museum in your district was once congressional pork barreling, it will now be a patriotic act to get the national economy moving again.

Yet much of what is driving this national hysteria in our reaction to the current economic downturn is psychological. After all, no plagues, wars, or earthquakes have killed our workforce, destroyed our infrastructure, or wiped out our computer banks.

Instead, for years now we have overspent and over-borrowed—and must naturally pay up. And like any chastised debtor, panicked Americans logically have temporarily clammed up and are holding on to what money they have left.

In response, the government apparently doesn’t only want to free up credit to get us back to our profligate habits of borrowing what we don’t have so we can buy what we don’t need. It also would like to create new programs to build infrastructure; guarantee new loans; and offer additional credits, bailouts and entitlements.

Or in the words of incoming White House Chief of Staff Rahm Emanuel, “You never want a serious crisis to go to waste.”

Traditional conservative custodians of the budget can’t say much. They are largely discredited on matters of finance. During the last eight years of Republican prominence in Congress and the White House, the government borrowed as never before.

Liberals in turn have suddenly rewritten their own economic history. They used to claim the great surge in government under Pres. Franklin Delano Roosevelt got us out of the Great Depression with deficit spending and federal jobs programs.

But many historians have argued instead that unemployment and slow growth remained high throughout Roosevelt’s first two terms—until the Second World War scared us all into a fit of national mobilization that alone ended the ongoing 13-year depression between 1929 and 1941.

Now here’s the irony: Liberals suddenly agree that only the Second World War stopped the Depression, after all! So they now argue that we need a new New Deal far greater than the old New Deal. In other words, they want to re-create the urgency of World War II to get government to grow and spend big-time.
And you know what... I think that is exactly what will happen. My MD recently opined that it is going to take another World War to pull America out of this funk--and it just might...

Read the whole thing.

UPDATE: A laundry list of some of the goodies in the latest "Stimulus" abomination, via Ace:

Read it and weep. Or drink. Or drink, then weep.

-$6 billion to weatherize "modest income homes."

-$6 billion to provide internet in "underserved" areas

-$6 billion for "higher education modernization."

-$20 billion in health information technology to "prevent medical mistakes."

-$20 billion to increase food stamp funding

-$87 billion to provide a "temporary" increase in Medicaid funding

-$300 million to provide rebates for people who purchase Energy Star products

-$600 million for the federal government to buy brand new energy efficient cars

-$400 million for state and local governments to buy brand new energy efficient cars

-$2.4 billion for carbon capture demonstration programs

-$350 million to research using energy efficient technology on military bases

-$300 million for grants and loans to state and local governments for projects that reduce diesel emissions, "benefiting public health and reducing global warming"

-$500 million for energy efficient manufacturing demonstration projects.

-$400 million to build major research facilities "that perform cutting edge science"

-$1.5 billion for expanding "good jobs in biomedical research"

Etc., etc., etc.

UPDATE: Gerald over at The Internet Anthropologist sums up the situation--specifically the Bank of America Bailout II--(and my own anger about all of the above) quite nicely:
The regulators, Yes men.
First Madoff gets to run a 50 BILLION SCAM.

And now the Federal Reserve turns into YES MEN.

The tax payers thru their Representatives
authorize $800 Billion USD to buy up
bad sub prime paper.

Bad paper knowingly loaned by the Banks.
And the Federal Reserve DOES NOT
buy up the the bad paper, but just
give $400 Billion to the criminal Banks.

Bank of America did their "due diligence "
And the pigs are back for MORE.
$20 Billion more.
If they made a mistake
they can eat it.

Merrill Lynch never gave me money
when I made an Investment error.

Why am I giving money to BANK
of America when they make an Investment error.

What is the head of the Federal Reserve Thinking,
What did the lobbyists tell him?

Why is he listening to the to the Lobbyists?

The Bank Corps write billions of bad/default
sub-prime paper and sell it to the market
and Fannie and Freddie.

Then they get $800 Billion gift and
a kicker $2 trillion from the Feds without

And one is back for $20 Billion more.

The same criminal Banks charging usury
rates in 47 states.

And allow the terrorist to steal American ID.

The same Banks that give credit cards
to those they know will default.
And turn $800 charges into $2,300
with late charges and fees.

Which they then sell to collection agencies.
Because of the changes in Bankruptcy laws
which the Banks drafted,

Allow the collection agencies to charge interest
until the victim dies then collect $15,000
from the victims estate from 15 yrs of interest.

All from loaning $800 to someone they knew
would default.

The Feds are willing to give these guys $20 Billion
more because they had the balls to ask for it,

Series 7 & 13

The Fed was given a charter to buy up this toxic sub prime paper.
The loans that poisoned the money markets.
And they bought NONE.
They gave the money to the Banks.
This bad sub-prime paper is an cancer
infecting the markets, it has been covered up
with the gifts to the Banks.
The sub-prime paper is still festering.
Spreading infection, waiting to break out.

Mark this toxic mess to market,
the market will fix it.
And its going to HURT.
The longer they wait the more its going HURT.
Obama is being handed a time bomb.
UPDATE: More from Ed Morrissey at Hot Air:

Bank of America’s stock lost 40 percent of its value during the past 10 days — shares closed on Thursday in single digits for the first time in 18 years — and the taxpayer money will be used to ameliorate the losses from its acquisition of Merrill Lynch. Chief Executive Ken Lewis called it “deal of a lifetime” when it was announced.

People familiar with the unfolding events, requesting anonymity to speak freely, said Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, with the knowledge of President-elect Barack Obama’s transition team, pressured the bank to stick to its purchase of Merrill Lynch.

Uh-huh. In other words, had Paulson not forced the bank to buy up a failing business with a horrible balance sheet, BofA would have been stable and we wouldn’t be spending $20 billion to stabilize it. “Deal of a lifetime,” indeed. Everyone involved in that transaction should be fired, starting with Paulson and Bernanke, except of course that Paulson’s out of a job on Tuesday, anyway. BofA already received $25 billion in bailout money when they bought ML last year, and now they’ll get another $20 billion while they shed 35,000 jobs. What a deal for taxpayers, right?

But wait — there’s more! Since BofA apparently called Operator #5 before midnight, they get the extra bonus of what amounts to a $118 billion line of credit to help backstop their assets, primarily real-estate loans, so that investors can feel secure despite their drop in value. Where did they get those loans? They bought them when they bought Merrill Lynch. I wonder if they get a set of Sham-Wows with that …

Of course, had Paulson actually followed the plan that he begged Congress to pass last October, the TARP funds would have gone to purchasing those toxic mortgage-backed securities and would have stabilized the real-estate loan market. It might have made the entire series of bailouts unnecessary. Now it looks like Paulson will wind up doing both TARP and the bailouts but backwards, and while almost destroying other financial institutions along the way.

This is government doing what it does naturally to markets — they screw them up. One would have thought they’d have learned this lesson from the housing bubble. Instead, we’re going to get a steady dose of the hair of the dog for the next four years, and we can expect more nonexistent money to chase after bad results.


Reliapundit said...


Bluegrass Pundit said...

The Bail Out Game
There is is new web based game called the "Bail Out Game." It has you driving a truck load of money around a Monopoly like board while you make decisions about what companies to bail out. Economic events like stock market drops often occur. This would be hilarious if it didn't so closely resemble reality. You can play it here. Have fun while the money lasts