Supposedly the President's rally speech wasn’t intended for general consumption – which makes the whole spew even more…well, honest in its attempt to rally support for a nearly $900 billion economic stimulus bill.
Stimulus means spending, starting with the government, the President asserts. Tax cuts, he contends, don’t turn the trick. So the minions in Congress do what they always do with any omnibus opportunity, they sweep the floor for any idea to urinate money on the national economic conflagration. The words attributed to Illinois Senator Everett Dirksen are writ large in this bill: “A billion here, and a billion there, and soon you’re talking real money.”
Yesterday came reports that the government overpaid by tens of billions for those ill-liquid toxic securities that brought on our current economic woes. The government jumped into a market that was working, albeit slowly, as buyer and seller were negotiating price. In this case, the banks wanted to minimize their losses. Buyers wanted margin for the uncertainty these securities presented. “Investors are going to assume a value that will be conservative and then add a risk premium." Slowly, prices were being determined by the private sector, generally about 35 cents on the original dollar on originally AAA-rated investments.
The government couldn’t stand a bargain, and paid $78 billion more than the actual value of the assets at the time, according to the Congressional Oversight Panel. It was such a gap, Senate Banking Chairman Chris Dodd (D-CT) admitted, "No one is expecting perfection between the price you pay and what you think you're getting. But that's a pretty large disparity." That’s a pretty large admission!
The government’s reaction to the entire episode is wholly political. Politicians aren’t generally concerned about the long term effects of their “taking action.” The knuckleheads in Congress and the White House either haven’t a clue, or simply recognize a crisis to exploit. As WHCOS Rahm Emmanuel said after the elections: “Rule one: Never allow a crisis to go to waste. They are opportunities to do big things.”
What this crisis is offering the American people is another “big fleecing” to first save two entities who abused trust: The government and the moneychangers. Had Bush-Paulson allowed the private sector to settle accounts, turning bad investments into well-deserved economic punishments for the entire securities industry, the American economy would have rebounded in time, stronger in the sense that bad business has crummy consequences. Instead the administration created a crisis. It netted a $750 billion TARP fund and a presidential candidate posing as a loon, paving the way to a Democratic victory.
From climate change to energy, education to infrastructure, housing to bird flu epidemics, food safety to environment, terror to healthcare, the American people are perhaps finally getting wise to the crisis manufacturers and false scare mongers. Polls show a drop in public support for the latest “stimulus bill.”
The President meanwhile sees the stimulus as a spending bill. "So then you get the argument, well, 'this is not a stimulus bill, this is a spending bill.' What do you think a stimulus is? That's the whole point," he said Thursday. There’s spending, and there’s spending…and this is spending wastefully and wantonly.
The next stop is a going out of business sale.