Against the Stimulus: Examples of Pork

Huge amounts of pork is the main reason I and others are against the stimulus. I have repeatedly said in prior posts that I support a stimulus bill as long as the money is used wisely. There is far too little going into infrastructure and improvements that will net a gain for society in the long term. And the infrastructure spending itself is questionable.

For example,

"For an amount for "Broadband Technology Opportunities Program", $4,700,000,000: Provided, That of the
10 funds provided under this heading, not less than
11 $4,350,000,000 shall be expended pursuant to division B
12 of this Act, of which: not less than $200,000,000 shall
13 be available for competitive grants for e:A.1)anding public
14 computer center capacity, including at community colleges
15 and public libraries; not less than $250,000,000 shall be
16 available for competitive grants for innovative programs
17 to encourage sustainable adoption of broadband service"

"For an amount for "Digital-to-Analog Converter Box
17 ProgTam" , $650,000,000, for additional coupons and re18
lated activities under the program implemented under sec19
tion 3005 of the Digital Television Transition and Public
20 Safety Act of 2005: Provided, That of the amounts pro21
vided under this heading, $90,000,000 may be for edu22
cation and outreach, including grants to organizations for
23 programs to educate vulnerable populations, including sen24
ior citizens, minority communities, people with disabilities,
25 low-income individuals, and people living in rural areas,..."

People should go read the first few pages of the text where i got the above spending from. The link is below, if the rest of the 1000 page bill is as filled with crap as I suspect it is, this does not qualify as a wise use of funds. I skipped over the first few pages which was more subsidies for farmers, and a large amount of spending seems centered on construction of government buildings and improvements to government buildings housing already bloated administrative agencies. Giving government workers a nicer workspace doesn't seem to have much long term value for ordinary citizens. And you see that millions are routinely allocated to "outreach" programs through private sources. In other words, $90 million will be used to advertise that there is money for people who want to get the digital converters. $650 million is allocated to purchasing new digital converters! I haven't mentioned either the billions for more food stamps and WIC which already has so much money that they have to advertise to encourage people to sign up for food stamps so that they can spend all the money they're currently given. Come on people, this is obvious waste.

$250,000,000 for programs that will "encourage sustainable adoption of broadband service"? Let me translate, $250,000,000 will be given away to special interests who will set up some fake program to waste the money that they don't steal. The best way to get more affordable broadband is to encourage competition, allow telephone companies like Verizon to offer DSL wherever they want instead of having to apply for licenses from States and local governments. Of course cable companies are fighting tooth and nail to prevent more competition. I found all of this just within the first few pages..., think of what the rest of the bill contains!!!

http://www.house.gov/billtext/hr1_legtext_cr.pdf

The Road Ahead

The more I dig into this, the more I realize that there is no easy way out. Recapitalizing a worthless bank pretty much guarantees a loss for the taxpayer. The taxpayer will have to eat the losses first just to get the bank back up to $0 book value, then pump more money in to move equity into positive territory. Now the taxpayer could make that money back in the future, but that's far from assured, what's clear is that the taxpayer is "overpaying", which is why private equity doesn't step in right now.

We have to figure out a way for taxpayers to be able to make money through future profits or a future sale. However, we also don't want government to run the bank because government is terrible at running things and politics would enter into the daily operations of the bank. If only we could trust that politicians wouldn't interfere but we know they will by demanding loans to "low income" borrowers (translation: ultra-high risk subprime borrowers) and to forgive outstanding mortgages in default. That means more bad loans will be made and the nationalized bank will face insolvency again a few years down the road, the crisis will be prolonged.

That's why we have very little choice but to use taxpayer money to recapitalize the banks while still making sure they are in private hands. The government can and SHOULD demand changes to the Board, but only qualified bankers should replace those ousted, please no more political hacks like Daschle, maybe someone competent like Warren Buffet would take the job as a service to the country. The Board would decide on a new CEO, again with the sole focus on competency and profitability. That might mean financial sector employees further down the ranks would be promoted or given the CEO job. Again, there will be the usual cries of enriching Wall Street, but only people with banking experience can be expected to run a bank. Those calls will have to be ignored and Obama will have to use his golden voice to explain that to the public. Obama will lose favor with the leftist extremists who are out of touch with reality, and be called just another Bush. He will have to take the criticism for the sake of doing what's best and hopefully he will be able to articulate why only Wall Street people are being given CEO jobs. A tough task lies ahead.

Newspaper Reform

Newspapers should stop devoting resources to cover news conferences on the national level, instead get the wire, the people who call news conferences will never answer any real questions anyway so it’s useless to send a reporter to take notes on a prepared statement. Use that reporter to write an in-depth story that explains the situation in detail. Have the reporter do investigative research, research WILL be necessary!

The entire model has to change. Readers already know what the “news” is, they hear about it or read it online well before the print edition comes out. That means the print edition offers stale “news” that we already heard. What we need is a comprehensive and detailed analysis that can’t be offered by online sites and radio news summaries. The routine stuff like Obama says “x” should be printed from a wire service or a pool of reporters. No way should a reporter from every paper be sent to take dictation.

Local is important, but again, it has to be investigative or in-depth. No more blurbs or summaries, those are already available for free and if newspapers want to publish that, then just get it from a wire service, there’s no need to assign a writer to summarize what we already know.

Stop the obvious biased slant. In other industries, the customer is always right. It doesn’t matter if you think you’re biased or not, if the reader thinks so then you have to change. The readers’ opinion is all that matters so it’s time to change the writing/writers until the readers feel the paper is no longer biased. Many say the biases are cultural and ingrained within the newroom. If so, then perhaps the entire staff has to be fired and replaced over time. Because we all tend to hire people who are similar to ourselves or who we can identify with, this may not be possible without firing all the staff at one time and starting over. Yikes.

Obama Offers Conservatives Hope

Does it seem disquieting to anyone that Obama seems to be "staying the course" with respect to overall foreign and domestic policy? I commend Obama for using his brain and continuing the policies that make sense and are best for America.

Look at Obama's choices on the economic front. Romer, Summers, Geithner, and Bernanke to continue in his current role. These are incredibly sensible and wise choices that have to make any liberal angry. If Republicans had to choose among Democrats, they would not be able to come up with a better slate. Volker is also well liked among Republicans and he will continue to advise Obama. This is the sort of change that will make Obama into a good president, changing the Democrats into a party that focuses on efficiency and regulations that work without imposing massive burdens.

On the foreign policy front, Clinton is a hawk within the Democratic party and Obama even more hawkish. I can't distinguish Obama's foreign policy from that of McCain, other than Obama seems willing to invade and bomb Pakistan while McCain is more dovish.

Again, it seems that the image Democrats have of Obama is different than the one I'm seeing. There hasn't been any indication that Obama would be the radical that destroys America as we know it. He seems smart enough to pursue wise policies and has done a great job in recruiting smart, experienced Cabinet members that will continue the good policies of the past.

Bush was an incompetent manager. It wasn't that all his policies were bad, especially on the foreign policy frong, it was that they were all badly executed. With a competent person behind it all, we could see great gains. We needed a change in quarterbacks, not gameplans. The gameplan remains solid as ever, but the right quarterback can make the difference between a pitiful looking team and a Superbowl winning team.

So when Krugman looks out and sees a radical change, he's imaging things again. Yes the outcome can be very different when incompetence is replaced; a football play can look ugly if executed badly, yet be a thing of beauty when executed as planned. Obama could be the perfect quarterback for our Run N' Shoot offense.

Regulations Caused This Crisis

If there is one thing we should learn from this crisis it is the danger of bad regulations and the unseen danger of unintended consequences. The Basel II regulations put a lot of power in the hands of the ratings agencies. These agencies are the only ones allowed "in the game" by law, I'm talking about S&P, Moody's, etc. Go to the link below for the full list of ten.

A Nationally Recognized Statistical Rating Organization (or "NRSRO") is a credit rating agency which issues credit ratings that the U.S. Securities and Exchange Commission (SEC) permits other financial firms to use for certain regulatory purposes.

http://en.wikipedia.org/wiki/Nationally_Recognized_Statistical_Rating_Organizations

Thanks to the REGULATIONS we ALREADY HAD, financial institutions were eager to separate their subprime debt into AAA securities and left over toxic waste. Unfortunately, those AAA securities weren't as safe as the ratings agencies said they were and became toxic themselves.

Regulations made a protected cabal of agencies free from other competition. Regulations allowed these agencies to affect the capital requirements of large financial institutions. AAA securities count toward capital more than BBB securities under Basel II.

Regulations caused this financial mess, they set the stage and regulators who were supposed to watch over the system failed to do their jobs.

Let's not pretend there were no regulations. The regulations we had didn't work. Government plans and wise thinking failed and turned out to be very stupid instead of wise. This is just another example of government failure and why we should not put our faith in government. Anyone who looks at the facts and past history can see that the government's record is incredibly poor, the government is incredibly incompetent no matter what party is in power. And for those who believe in the superiority of international regulators, Basel II was push upon us by "the international community". Below is an article with links to other articles.

http://www.allbusiness.com/government/government-procedure-lawmaking/7503196-1.html

The long-awaited implementation of the Basel II capital adequacy accord has been further threatened by US concerns over the results of the recently completed quantitative impact study (QIS4). The four US federal banking agencies (OCC, Federal Reserve, FDIC and OTS) have called for a delay in publishing an important notice of proposed rulemaking (NPR), from the summer to the autumn this year, to allow for further study.