The Second Coming (of bailouts)

[jinx]

Seems like the more 'help' that is doled out to constituents, the more people expect to have done for them, and the less they can imagine anyone possibly taking care of themselves. How helpful is that?

[xoxoxoBruce]

So what do you do with tens of millions of people that are unemployed and now homeless. Homeless people at like neglected cats and dogs, they'll amuse themselves and you won't like how they do it.

[classicman]

On the whole I agree with Jinx, but it still leaves the issue of how much help is too much.

[xoxoxoBruce]

Principles of economics and behavior theory are interesting discussions, and the welfare system proved it can be harmful. But that was a creeping, systematic, fuck up.

Right here, right now, what do you do with tens of millions of people, probably half of them children, that are suddenly homeless and without income or food?

[TheMercenary]

Well for one you can stop throwing good money at bad programs and start to provide some help for the families through well defined temporary bridge programs to get them into some other type of housing that is appropriate for their budgets. Hell, take the money and buy down their loans but that does not fix the overall problems of shady lenders and shady buyers getting away with tax payer money for bad personal behavior and decisions. I know that the longer we prop them up the longer it is going to take for a correction to occur. A number of economists are talking about how we are doing nothing more than delaying the inevitable for many of these people and lenders.

[TheMercenary]

An opinion piece by economists from the University of Chicago...

Uncertainty and the Slow Recovery

The second factor is less obvious, but possibly also of great importance. Liberal Democrats won a major victory in the 2008 elections, winning the presidency and large majorities in both the House and Senate. They interpreted this as evidence that a large majority of Americans want major reforms in the economy, health-care and many other areas. So in addition to continuing and extending the Bush-initiated bailout of banks, AIG, General Motors, Chrysler and other companies, Congress and President Obama signaled their intentions to introduce major changes in taxes, government spending and regulations—changes that could radically transform the American economy.

The efforts to transform the economy began with a fiscal stimulus package of nearly $800 billion. While some elements served the package's stated purpose and helped to soften the recession's impact, the overall package was not well designed to foster a speedy recovery or set the stage for long-term growth. Instead, the "stimulus" was oriented to sectors that liberal Democrats believe are deserving of much greater federal help. This explains why much of the stimulus money is going toward education, health, energy conservation, and other activities that would do little to soak up unemployed resources and stimulate the economy.

Government statistics tell a similar story. Business investment in the third quarter of 2009 is down 20% from the low levels a year earlier. Job openings are at the lowest level since the government began measuring the concept in 2000. The pace of new job creation by expanding businesses is slower than at any time in the past two decades and, though older data are not as reliable, likely slower than at any time in the past half-century. While layoffs and new claims for unemployment benefits have declined in recent months, job prospects for unemployed workers have continued to deteriorate. The exit rate from unemployment is lower now than any time on record, dating back to 1967.

http://online.wsj.com/article/SB1000...732528426.html

[classicman]

So, whats your point? Its all Bush's fault.

[TheMercenary]

No, not at all. Just that what ever the current Congress thought they were fixing they are not and there is no promise that throwing more money at it will fix it either. They are prolonging the pain and artifically proping up the economy. Somewhere this all this whorish spending needs to stop.

[TheMercenary]

Derivatives and what may have been a better approach...

Time to put the brakes on big business bailouts

By one estimate, nearly half of derivative transactions could still remain outside public exchanges — unrestrained by the rules such exchanges would impose.

That was a setback, and it wasn’t the only one. House members approved provisions that would provide government backing for bank debt — an implicit pledge of future bailouts — if a “liquidity event” threatens to “destabilize the financial system.”

This pledge could encourage large institutions to take more risks in the belief their obligations would be backed up by the taxpayer. That’s not the direction financial reform should take.

In fact, the bailout mentality that infects Washington seems unabated. As Congress debates financial reform, the rest of the government is taking steps that will substantially increase taxpayer liability.

The Treasury recently eliminated the $400 billion cap on how much tax money could be shoveled into Fannie Mae and Freddie Mac. Meanwhile, the Federal Housing Administration is extending taxpayer guarantees to dubious, low-down-payment loans, increasing the risk that this agency, like Fannie and Freddie, will also be forced to seek a bailout.

Regulatory agencies have a role to play in assessing risk, but tougher borrowing standards should be woven more deeply into the regulatory reform effort. Risk assessment will always be imperfect, but a system with less debt and more capital will be better prepared to weather a crisis.

http://www.kansascity.com/340/story/1662381.html

[classicman]

Originally Posted by TheMercenary

They are prolonging the pain and artificially propping up the economy. Somewhere this all this whorish spending needs to stop.

Perhaps they are spreading the pain out instead of taking a major hit all at once that would have worse repercussions.
Just guessing here.

[TheMercenary]

From my reading of the above article it seems to me that there are still some back door deals being done and that the barn door remains partially open. But in the name of spending we are going to "fix" the problem, and create jobs. It seems neither goal has been achieved and people still are feeling the pain.

[TheMercenary]

Follow the money... to where?

As much as $9.5 million in federal stimulus dollars went to 14 zip codes in Virginia that don’t exist or are in other states, Old Dominion Watchdog (http://virginia.watchdog.org) reports. The fake zip codes were listed on Recovery.gov, the federal Web site that is supposed to track how the stimulus money is being used.

http://www.washingtonexaminer.com/op...-80795072.html

The phony zip codes are a new wrinkle in Recovery.gov’s increasingly tattered credibility. In November, Ed Pound, director of communications for the Recovery Accountability and Transparency Board, said a rash of phantom congressional districts found on the website were the result of confusion by fund recipients, who apparently didn’t know who their congressman was.

But who would give millions of dollars to somebody who doesn’t even know their own zip code?

More fake zip codes here

UPDATE: Even with a real zip code, it takes seven hours for one firm to report back to Recovery.gov on its $2,000 stimulus contract.[

Phony zip codes?

More likely, data entry errors, as most of the independent watchdog groups suggested and which is to be expected to some small degree with any large data base that relies on information from external sources.

But absolutely the Oversight Board needs to fix the data-base to deal with the small number of self-reporting errors by the more than 100,000 grant/contract recipients.

[TheMercenary]

Originally Posted by Redux

Phony zip codes?

More likely, data entry errors, as most of the independent watchdog groups suggested and which is to be expected to some small degree with any large data base that relies on information from external sources.

So where's the money? More importantly, where are the Millions of "Shovel Ready Jobs"?

Originally Posted by TheMercenary

So where's the money? More importantly, where are the Millions of "Shovel Ready Jobs"?

Been there and done that...two or three times already.

I'm not going to convince you that the recovery program has created and/or saved hundreds of thousands of jobs to-date while spending or obligating only about 1/3 of the total funds to-date and, in the opinion of many economists across the spectrum,. has contributed to preventing the economy from continuing on a unsustainable downward spiral.

And you're not going to convince me it has failed, particularly since it was envisioned as a 18-24 month program and we just passed the nine month mark.

So what's the point of further discussion?