I’ll give you an example of how this is working. Here in Texas, we almost had to cut the budget back in 2009. It was going to be a pretty dramatic budget cut. But then a ton of stimulus money rained on us, so we were able to avoid laying off government employees (mostly teachers). Well 2011 has rolled around and money failed to fall from the heavens on us, so we either had to raise taxes or cut the budget. So obviously we cut the budget. The actual amount of budget cutting ($4 billion – that’s not a per capita budget cut, but an actual decrease in the amount of money we’re spending) matches up almost perfectly with the amount of stimulus money we got two years ago.
So now tens of thousands of government employees (mostly teachers) are getting laid off. Considering that the main purpose of the stimulus was to give state and local governments money to avoid laying off government workers, I have to presume a similar phenomenon is taking place in jurisdictions across the country this year.
In the end, the number of jobs “saved” by the stimulus will continue to shrink. The relevant statistic will not be how many “jobs” were saved, but rather how many “job-years” were saved. Because the effects of a temporary stimulus are, shockingly enough, temporary.
P.S. +5 internets to the first Democrat who suggests that the tailing off of the stimulus’s impact means we need a “permanent stimulus.” A super bonus of 10 additional internets will be awarded if that same Democrat suggests the 14th Amendment allows the president to borrow money for a stimulus without Congressional approval (“Without a permanent stimulus, our unemployment rate will, eventually, rise to 100%, which will bring into question the validity of our debt in violation of the 14th Amendment. The president has to see that the laws are faithfully enforced, so it’s a no-brainer that he has the power to borrow this money.”)
1. I find it amazing that well over a year after the Tea Parties started, even journalists who do stories about Tea Partiers have absolutely no clue what the Tea Party is about. Here, the journalists just keep rambling about whether Bennett is “conservative,” as ranked by a bunch of groups that the Tea Party doesn’t care about. The founder of the Utah Tea Party tries to set the journalists straight:
I don’t think it’s a question of conservative, I think it’s a question of responsible. He was not responsible when he voted for bailouts. It was not a responsible vote to save companies that had literally destroyed themselves.
By God. The primary issue with our government – its preposterous deficit spending, its crony capitalism, its inability to run a competent security apparatus, its gross overpayment of government workers, its refusal to secure the border and enforce immigration laws – is irresponsibility. For too long, no one has been responsible for anything. Now it’s time to hold them all responsible for everything.
2. Bennett summarizes the Tea Party’s attitude – “They just want everybody in Washington out. Throw them all out, and we’ll start afresh” – like it’s a bad thing. I find it difficult to believe that 535 randomly selected citizens would be more corrupt, more irresponsible, less responsive to the public, or less competent than the current Congress. For God’s sake, they spend their time passing laws with thousands of pages in them, containing clauses that no one understands until after the law is passed. Right now, Bennett’s best defense is that he’s got experience; this is the defense of the incompetent government employee who’s held a job for too long. Yes, he’s got experience, but his experience involves being part of a failed organization.
I’ll say this of the throw-them-all-out attitude: We couldn’t elect a worse Congress if we tried. I’m increasingly becoming a fan of the old Athenian system of choosing our officials by lottery. We couldn’t do worse than what we have now.
3. Notice after the interview with the Utah Tea Party Founder – who makes custom sports cars; how awesome is that? – the journalists go right back to the old, tired conservative/liberal talk, completely ignoring what the guy said. The clueless journalists seem to think Tea Partiers ar POed at Bennett for voting with Democrats.
If one journalist anywhere spent three hours on a Saturday afternoon reading about the Tea Parties, that journalist would know more than all of the rest of media combined. And that journalist would know that Tea Partiers don’t give a crap about party, they give a crap about responsibility. Note: They’re complaining about the bailouts that were passed under W., a Republican. When Bennett voted for that, he was voting for a Republican initiative. Yet it’s the number one thing the Tea Partiers list about Bennett. The journalists seem completely ignorant of this flamingly obvious fact. They think the Tea Partiers are just a bunch of partisan Republicans who are grumpy because Bennett’s too bipartisan. CNN should replace these people with yipping dogs, who would be less annoying and at least wouldn’t pass along their willful ignorance to others.
It’s not about party, it’s not about liberal, it’s not about conservative, it’s about being responsible by not spending money we don’t have, and not using taxpayer dollars to save companies that are going bankrupt because of their own irresponsibility. That no one at CNN can see this is at least part of why their ratings are in the gutter.
Dodge, showing an impressive lack of self-awareness, seems to think this is a rhetorical question:
While wiseasses across America have already answered this question in ways that leave them snickering at Dodge, the real suckers here are American taxpayers. Every crappy car, idiotic commercial, and disgruntled buyer they produce is subsidized by us. A company this bad should go away.
This. Ten months ago, two out of every three words out of Obama’s mouth were “shovel” and “ready.” Now: “The term ‘shovel-ready’ — let’s be honest, it doesn’t always live up to its billing.”
Let’s be honest! In a sentence where he admits that the catch phrase he used to sell the most expensive legislation in America’s history “doesn’t always live up to its billing,” he says, “let’s be honest.” LET’S BE HONEST!
Also of note in the story is this:
Obama also scoffed at the notion that the Chinese are trouncing the United States [at building infrastructure] with their own, more rapid and more extensive infrastructure work. He had seen the fruits of that work on his trip to China, he said, but China was a different place.
“The Chinese don’t have this thing called democracy we have to deal with — they’re shoveling out a whole lot of money, they’re tearing down what’s there, conscripting people to do the work,” he said.
Let’s jump in the wayback machine and visit a time in the distant past, when dinosaurs roamed the earth and presidential candidates gave stump speeches calling for change. Direct from the paleontology department here at my university, I’ve acquired this fossilized youtube clip:
In case you can’t understand the Olde Englishe spoken by our distant ancestors, here’s a transcription:
Everybody’s watching what’s going on in Beijing right now with the Olympics. Think about the amount of money that China has spent on infrastructure. Their ports, their train systems, their airports are all vastly the superior to us now, which means if you’re a corporation deciding where to do business you’re starting to think, “Beijing looks like a pretty good option.” Why aren’t we doing the same thing?
Let’s be honest, he’s just making things up as he goes along.
So the wife and I are at a point in our lives where we can consider some of life’s major purchases: a first home, if prices dipped low enough, or, barring that, a new car.
And what a deal for us, right, being in the buying market at just the time that the government is throwing piles of stimulus money at anyone willing to open up their wallet? As first time homebuyers, we would get $8,000 of stimulus money; and, of course, everyone is going nuts trading in their “clunkers.” But if my hunch is correct, this may actually be a terrible time for us to make a major purchase.
Houses
1. Government interference screws with pricing in direct ways. It’s not like home sellers are unaware that first time home buyers get $8,000 for buying a house. Virtually every ad I’ve seen has mentioned this incentive. While not every home buyer is a first time home buyer, enough of them are that this has to artificially increase the price (I’d guess $3,000 – $4,000). This increase in price would probably wipe out a significant portion of our benefit from the government money.
2. Government interferences screws with prices in indirect ways. By giving a subset of people $8,000 to buy a house, the government is getting people into the home buying market who otherwise would not be. This artificially increases demand, driving up the price above what it should be.
3. There will be a let down. A big reason we would consider buying a house is as a medium-term investment. If we bought a home now, it’s hard to imagine its value not going down in the short term, once the government subsidy stops increasing the value of the home, and all of the first-time buyers brought into the market by the $8,000 incentive leave the market. Whether it’s profitable for me to buy a house then becomes a function of how much that short term decline is, how long we intend to keep the house, and how fast we think housing prices will recover. All these things might still make this a profitable venture for a five-year investment, except . . .
4. There will be another foreclosure boom,. It’ll be smaller than this one, and it will be in different places than this one. But it seems impossible that the factors I just listed (lots of first-time home buyers being coaxed into a market they wouldn’t otherwise venture into, buying houses the values of which have been artificially inflated by government subsidy, with a short term decline in value) would not lead to another boomlet of foreclosures in a few years. Which would again drive down the value of homes on the market (absent another government subsidy), and make it difficult to sell a home.
5. Because of this massive interference, market prices are hard to determine. Whether the above speculation is right or wrong, the fact is that we simply cannot get an accurate gauge of the housing market. Perhaps the bottom has really fallen out and the stimulus money is keeping it afloat for a few months before it sinks some more. Perhaps the stimulus really has saved the market and it will go up from here. Either way, it’s impossible for amateurs like myself to make informed decisions. It would be unwise to make such a large purchase in an environment where we cannot accurately determine the value of what we’d be getting, so we’ll sit this one out.
Cars
1. The government is driving up the future value of used cars. By destroying lots of “clunkers” that would otherwise be for sale in a year or so, the government will create an artificial shortage of cheap used cars, which should drive up the value of some (but not all) used cars. Cars that fall on the lower side of $10,000 (like mine!) should benefit the most from this.
2. The goverment is creating an artificial bubble of new car demand. I’ve seen convincing analysis that the Cash for Clunkers new car selling boom isn’t creating all that many additional car sales, but mostly just compacting into a period of weeks car sales that would otherwise have occurred over a period of months. This means there’s almost certainly going to be a let down in sales after the period is over, increasing the bargaining power of those who wait (particularly if, as I’ve heard at least one Congressman foolishly predict, auto makers ramp up production in response to this sales boom – normally I’d say that’s too stupid to happen, but we’re talking about auto makers here).
3. The government is creating positive market incentives for people who aren’t me. My car definately does not qualify as a “clunker”; I get better mileage than virtually all of the new cars out there. I could sit around pointing out the moral issues of the government rewarding those who have been using inefficient cars while providing no reward to those of us who have driven clean, efficient vehicles and might like newer ones; but the reality is that the government is providing incentives for some, but not all of us to enter the new car market. All told, it’s actually providing incentives for some of us to stay out of the new car market. So we will.
So California is issuing IOUs? Why are the state’s creditors are letting them use IOUs instead of promissory notes? The state needs to declare bankruptcy already and get it over with. The longer Governor Schwarzenegger delays the inevitable, the messier it’s going to be.
Hubbard posted this at 10:05 AM CDT on Tuesday, June 30th, 2009 as Bailoutistan
The Fed’s capping executive pay at $1,ooo,ooo through the tax code in the 1980s lead to current incentive based executive compensation via stock options. Now, Comrade Barry wants to further limit executive pay.
The last time they tried this feel good communist crap we got the system that is now, according to them, broken. Who wants to bet that whatever crazy scheme they come up with now will be just as bad, if not worse?
What happens when people can’t get what they think they are worth? They move to place where they can. If Barry and Barney want to destroy American business and decimate the job market they are on the right track.
There’s a Dodge Magnum that always parks near me at the school parking lot. I don’t much care for the car, but it’s somewhat distinctive, so I can understand why someone might like it.
With that in mind, I was blown away by these sales numbers from Chrysler. Last month, they sold 5 (five) Dodge Magnums. Nationwide. This is not an expensive or unknown car; it ranges from $23k-38k and has been featured in multiple nationwide advertising campaigns. Compare that to Dodge’s high end sports car, the Viper, which starts at $91k and is never, to my knowledge, advertised. Chrysler sold 29 of those last month. (Compare to 112 Bentleys and 116 Ferraris; hell, even the preposterously pretentious and overpriced Maybach sold 7.)
Obviously, all of those sales numbers from Chrysler suck, and they should really give second thoughts regarding the wisdom of saving this company through bailouts and by taking money from creditors and giving it to unions. But I was just blown away by the Magnum sales numbers. They’ve only sold 77 this year – that’s like 1.5 per state. And last year’s numbers were pretty crappy too, considering how much of an advertising push that car had behind it.
Apollo posted this at 2:20 PM CDT on Monday, May 4th, 2009 as Bailoutistan
California is going bust, and the British are amused:
How did this happen? Sure, the economy is bad. But this is a state whose money comes from the most bankable economic assets on Earth – the Long Beach ports, the Central Valley agricultural region, the defence contractors out in the Mojave desert, Silicon Valley, Napa Valley… Hollywood. How do you tax all this and end up amassing debts at the present rate of $1.7 million per hour?
Perhaps it has something to do with the man running the place. And I am ashamed to say that, yes, when the actor most famous for playing a killer robot in a so-so B-movie ran for governor, I was behind him. I defended his fiscally conservative, socially moderate agenda and loveable tendency to work movie tag lines into important policy debates. I believed in Governor Arnold Schwarzenegger, the “governator”. And like the five million Californians who voted for him, I’m feeling a bit silly now.
A lack of appreciation of the past has been a hallmark of California politics for some time now. My co-blogger Apollo aptly quoted Ghân-buri-Ghân to this effect:
Many paths were made when Stonehouse-folk were stronger. They carved hills as hunters carve beast-flesh. Wild Men think they ate stone for food.
Infrastructure didn’t just arise out of the desert. It took generations to build—and only a single generation to wreck. Will the state get a bailout?
Obama’s unprecedented power derives from the astonishing events of the past four months that have made indistinct the line between public and private sectors. Neither the public as currently alarmed, nor Congress as currently constituted, nor the Constitution as currently construed is an impediment to hitherto unimagined executive discretion in allocating vast portions of the nation’s wealth.
Tom posted this at 12:16 PM CDT on Wednesday, January 21st, 2009 as Bailoutistan
The levels of bad government involved in this story astound. Why does the White House insist that Congress “failed” to act? Rather, they succeeded in not acting, which is the toughest thing to do in these circumstances, and something to be lauded.
But, of course, Congress is to be blaimed for giving the administration $700 billion, no strings attached. Plainly this is not what was intended; we were all told that bailing out banks was a unique circumstance, if the banks fail we’d all fail. That can’t be true of GM.
I hope those who supported the original bailout are pleased with their handiwork. Some of us knew this was a path to unending government bailouts of anyone with a lobbyist who felt like whining. Now, money that was supposed to be used to keep credit flowing and small businesses open is instead being used to keep an oppressive labor union from bringing its practices into the 21st century, and multi-billion dollar corporations with idiotic management from harvesting what they’ve sowed. Now we’re propping them up, in an economic downturn where auto sales obviously won’t be picking up anytime soon.
This reliance on mega-corporations is very 1960s. What’s going on now is a futile and extraordinarily costly attempt to keep dinosaurs alive in an environment better suited to smaller, more versatile creatures. Why not let these three automakers flounder and a dozen pop up in their place? If there’s room in the market place for both GMC and Chevy trucks when both are owned by the same company and are identical (except for a mild variation in headlights), imagine how much better the market would be if we had a GMC and a Chevy that were competing against each other. It’s 2008 and some still think we’re dependent on three automakers and a union that’s a parody of Wagner Act stupidity? Talk about a failure of imagination.
And just as with the original dinosaurs, these guys are not savable. The only question is how much good money will we continue to throw after bad. The answer from the Bush administration, enabled by the nitwits in Congress and those who panicked back in September by supporting this chain of bailouts, is “untold trillions.” We’ve no reason to expect that the incoming administration is going to be better; indeed, we’ve every reason to believe that this impending bankruptcy was a once in a generation chance to give Detroit a chance at regaining competitiveness. Now the Bush administration has ruined it, and steered the government down the road to nationalization, a path that the next administration probably won’t object to very loudly.
This is going to take decades to unravel, if we’re lucky.
Aside from the hilarity of the accusation itself, the fact that it’s an immigrant purporting to lecture Americans on what is and isn’t American is amusing in its own right. Is that why tens of millions of people from around the world have dreamed of coming to America: Because we bail out failing corporations? Life, liberty, and the pursuit of government handouts?
And I assume the deafening roar outside isn’t a strong Texas wind, but rather the cacophony caused all the people who have been griping for years that somehow Republicans are “questioning their patriotism” denouncing Granholm for calling these senators bad Americans.
Apollo posted this at 5:53 PM CDT on Friday, December 12th, 2008 as Bailoutistan
