Friday, January 30, 2009

Modern Political Insanity

Einstein once said: Insanity is doing the same thing over and over again and expecting different results.

And that is exactly what we have now: modern political insanity. Upon reading the actual text of HR1 (the bill flushing another $819,000,000,000 down the drain) the insanity is all too apparent. Our elected officials intend to use more money to do everything we've already done. And they expect that throwing away another trillion will have different results than the first trillion (or so) that we've thrown away.

Here are some of the highlights that caught my eye:
  • It aims to try (again) to loosen monetary conditions. This has proven to be a complete failure. The last bajillion dollars we "loaned" to "investment banks" only went in their vaults to collect dust OR in the Executives' bonus package, OR toward the purchase of other banks. The only thing that did NOT HAPPEN was the loosening of monetary conditions.
  • The bill promises (again) to give Americans some spending money. Unfortunately, nobody can remember a similar attempt in the second quarter of 2008, where $170B was sent back to the taxpayers. Only 17% of recipients "spent" the money. The other 83% of us (including me) either put it in savings, or paid off existing debt. The vast majority of the money was NOT "spent," and did not jumpstart the economy. 
  • It allocates $4.5 billion to the Department of Defense. Not that we needed to add to the existing $514.5B 2009 Defense Budget!
  • It allocates $900M to Homeland Security. Not that we needed to add to the $132B 2009 Homeland Security Budget! (Which is already >10% higher than 2008's budget!)
So here is what I predict:
  • Congress somehow thinks they can outsmart the banking Executives. Our politicians honestly believe they are smarter and more devious than seasoned financial professionals who have already stolen several hundred billion dollars of taxpayer money. Those Executives already got away with the biggest theft of public funds in American history without any punishment. But our elected officials promise that things will be different next time. Congress says they will be able to hold Executive feet to the flames and "make them starting loaning money." Another trillion or so will go to the "financial system." And that trillion or so will disappear. Just like last time.

  • Congress will try to pacify the sheeple by giving us a thousand or so of our own tax dollars back. We won't spend it on a Ford or a house or a Blue Ray Player. Instead we'll bank it or pay off debt. Just like last time. And Congress will shrug their shoulders and feign tears and pretend they don't know why their valiant efforts didn't "jump start" the economy. Just like last time.

  • Once "the states," get ANY amount of money that is given for "infrastructure projects," that money will disappear, too. Almost every state is suffering from deficits. They will happily accept taxpayer money. But it won't go to roads or bridges or anything else it is earmarked for. And it certainly won't go toward 3,000,000 - 4,000,000 new jobs.

  • The Department Of Homeland Security (or some faction of the federal government) may end up being the only source of "new jobs." Of course, it will be ineffective and inefficient and eventually overages and budget cuts will give up some or all of the new positions.

  • Next summer, once our current surplus of oil is depleted, foreign (ie: Chinese and Indian) energy consumption continues to rise, and the continued production decline by OPEC of crude oil take hold, American gas prices will approach their previous levels.

  • And finally, in the middle of the year, we'll have torn through TARP V2.0. Everyone we elected to fix it will say "we tried," and we'll line up TARP V3.0 and TARP V4.0.
We'll see what happens by July. 

What would I have done differently? Reduced the Defense Budget. (Nobody other than China can raise any significant armed forces against us, and China needs us to be their primary consumer of their products!) Invest in projects that REDUCE dependancy on gasoline (ie: increasing spending the creation of roads only encourages more driving.)  Increase spending on national broadband capacity. Increase the tax credit for ANY home buyer, not just "first time" home buyers. Increase spending on revitalizing small agriculture, transitioning people back to organic food industries. And last, but not least: let the investment banks go through bankruptcy (let the bond holders and investors carry the burden, not the tax payers!)

Our elected officials want to try the same things that have already failed. I say: stop the insanity! Try something new. 

But I herd electric sheep. What do I know?
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