Just last week, the Senate cleared the way for the release of $350 billion in bailout funds. A senior Obama administration official refused to speculate Monday on a future request, saying the first priority is to use the new money to “get ahead of the game and lay out a statement of principles from which to go forward.”
But persons close to the situation in Congress told Politico that the deteriorating economic situation leaves little breathing room. Bank losses are up and auto sales down. A top Hill staffer predicted Obama could be forced to seek more money even before the President’s Day recess in mid-February.
So, if you are counting, the first TARP program cost about $750 billion. The stimulus will be between $800 billion and just over $1 trillion. The next TARP program will likely be at least as large as the first. That is $2.5 trillion in new government spending to try and revive the economy.
Beyond the sheer size of the spending, the main concern should be just how targeted it is. In other words, either you are a major recipient of the new TARP, or it's likely you are going to be the one to pay for it. Talk about a redistribution of wealth...this is a massive government program that picks winners and losers.
Some of the biggest winners include banks, struggling homeowners, alternative energy providers, struggling states, auto makers, folks on food stamps, students, providers of infrastructure, providers of internet broadband. The losers are anyone not a winner.
Just imagine you have some money and you want to start buying up foreclosed properties. Here is a business that ought be thriving. Yet, the government will do all it can to make sure you don't make one red cent. Imagine you are a financial services company that largely stayed out of the mortgage mess. Your balance sheet is good enough to weather the economic storm. You are likely to be left out in the cold as far as any TARP money. Yet, all your competitors that weren't as wise will be flushed with government cash. In fact, there is even renewed talk of buying up so called "toxic assets" again. Put yourself in the position of a company like Berkshire Hathaway. You have taken some losses because everyone has. Yet, you didn't overextend yourself into mortgages. You are now looking up at the landscape and you see opportunity. Most of your competitors are about to go belly up. Talk about an opportunity. Not so fast, the government will eliminate that opportunity and hand you nothing.
What if you are Circuit City? The economy has hit you hard. You have to be liquidated. Yet, your business is not deemed worthy of saving so while the automakers will continue to get lifelines until they figure it out, you will have to be chopped up for parts. If you are Microsoft, you will have to lay people off because you are in good enough financial shape not to require a bailout. WalMart's profits are down, but not nearly enough to earn government money. So, if you are a retailer, software developer, or electronics outlet, you are not deemed worthy of government money. You are deemed one of the losers and will wind up paying for the stimulus.
Yet, struggling cities, car makers, homeowners, and banks will get free government money. Who is the most left out in the cold? Let's say you are not only a successful but financially wise individual that makes in excess of $250,000. Now, you get nothing. None of the tax cuts are for you. You get no bailout. In fact, others get a bailout. You get nothing.
It's frankly more than that. The government is determined to see certain things thrive. Automobiles, alternative energy, broadband, and infrastructure are just a few. Government interference of this sort combined with market forces only work in one way. What you will see is a rush to these markets. The government will succeed. What you will see is an explosion of activity in all markets the government deems worthy. Of course, it won't happen because they are worthy. It will happen because government money is there.
For instance, the easiest way to help struggling homeowners is by propping up loan modifications. So, with more government influence in this process, you will see all sorts of folks rushing to become loan modifiers. There is word that rules for mortgage brokers will get tighter. It's not hard to do the math on that. If being a mortgage broker will be more difficult and being a loan modifier easier, guess where more and more mortgage brokers will go.
What this stimulus plan will really do is transform our economy. It won't transform it based on any market forces. Rather it will be transformed based on the perception of President Barack Obama and the Democrats because they are picking winners and losers.
They are trying to create winners and losers. Honest, smart, hardworking people are being assaulted on behalf of the dishonest, incompetent. History demonstrates that whenever someone who has not earned or created wealth is in the position to disburse it squanders most of it. The incompetents will all be unburdened of that wealth within months, and they will whine for more, and there won't be any.
2010 will bring real change because all of these efforts will contribute to chronic deterioration of our economy.
Do all our Congressmen and Congresswomen own bank stock? Nancy Pelosi wants more TARP money than the 700 billion already wasted
This is not intended to be a slam on Berkshire Hathaway, or even an indication of an envy of their successes, however the rent seeking tactics of the larger organizations as such employ many of the lobbying elements which lay waste to enterprise which merely operates on a legitimate competitive basis.
The continued exercise of government influence over ANY aspect of business is conducive only to the corruption, waste and total failure we are seeing now. I hardly pity the large corporations which have long supported government controls in an effort to limit new endeavors from challenging them in the marketplace.
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