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Archive for the '2008 Government Bailout' Category

“Stimulus” FAIL

Just keep this chart in mind when they come back, in the near future, for debtslaveryus stimulus 2.0. Remember – the politicians are lying to you.

Stimulus Fail

Stimulus Fail

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Posted by: GRPundit on Friday, 6th Nov, 2009

GM: Zombie Car Company

Yesterday’s Wall Street Journal had possibly the most dire article I’ve ever read on a company’s viability. Unfortunately, the article wasn’t online, but here are some highlights:

General Motors Corp. capped a dismal 2008 with a $9.6 billion loss in the fourth quarter, brining its loss for the year to $30.9 billion.

…

GM burned through $5.2 billion in cash during the fourth quarter… and $19 billion over the year…

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GM is now subsisting on $13.4 billion in government bailout loans… [and is asking for] as much as $16.4 billion more… GM also said it needs $7.5 billion in loans from the Energy Department to build more fuel-efficient vehicles.

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GM’s auditors must make a decision on the company’s “going concern” status by the end of March.

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GM also reported a major reversal in the health of its pension funds. It said its U.S. pension commitments for hourly and salaried retirees are underfunded by $12.4 billion… In early 2008, the company said the pensions were overfunded by $18.8 billion.

In addition, the earning report revealed a profound deterioration of GM’s once-booming operations outside the US. It reported a fourth-quarter loss of $1.9 billion in Europe, $917 million in Asia, and $181 million in Latin America.

Wow. Just wow. General Motors is a dead company. GM’s net worth went from negative $39 billion at the end of 2007 to negative $86 billion at the end of 2008. GM sold 8.144 million cars worldwide in 2008, meaning that they lost $2333 per vehicle.

As the article points out, GM now wants an additional $23.9 billion in loans. Those loans come from us, the US taxpayers. Folks, the math doesn’t work. There is no way GM can pay off these loans and build net worth into positive teritory. GM is a dead company that is being propped up with absolutely no chance of recovery. It’s like Weekend at Bernie’s, except this is the real-life destruction of wealth, with the blessing and aid of the politicians in Washington. We, the taxpayers, are getting absolutely screwed.

We can debate the reasons for the death of GM, but the fact is that the continued life support of General Motors is irresponsible, destructive, and dangerous. 

Add the bailouts of GM and Chrysler ($17+ billion, so far) to the bailouts of banks ($750 billion), AIG ($150 billion), Fannie Mae and Freddie Mac ($400 billion), and we have the looting of the Treasury going on right before our eyes. The bill, so far, is already over $1.3 trillion. That’s just in the last five months.

Yet, the looting continues. Change we can believe in, right?

By the way, this isn’t a partisan issue. Both parties are destroying America. …And it’s probably too late to do anything about it. Are you prepared?

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Posted by: GRPundit on Friday, 27th Feb, 2009

Wool-Coated Globs of Fat

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Posted by: GRPundit on Thursday, 26th Feb, 2009

Wanda Sykes on the Bailouts

Change we can believe in? Last night’s press conference by President Obama was hardly a departure from the typical George Bush-style fear-mongering. You can sum his speech up like this: “Pass the stimulus, or else the universe will collapse!!! Gravity will fail! The sun will implode! Think of the CHILDREN!!”

Sometimes the best way to get real the message across is through comedy. It’s so much fun to expose the absolute idiocy of politicians:

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Posted by: GRPundit on Tuesday, 10th Feb, 2009

The Real National Debt

The REAL natinal debt – including all unfunded future mandates. The math just doesn’t work. Yes, it currently says $58 trillion.

Margaret Thatcher: “The trouble with Socialism is, sooner or later you run out of other people’s money.”

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Posted by: GRPundit on Sunday, 1st Feb, 2009

Why the “Stimulus” Won’t Do a Damn Thing

This post will show how the proposed $825 billion “stimulus” package will do absolutely nothing to help the economy and will only serve to make the existing economic problems worse.

“But wait! How could that be?” you ask yourself. All the politicians and talking heads on TV are saying that it will boost the economy and create jobs! I’ll let you in on a dirty little secret – most politicians and talking heads don’t have a basic understanding of economics. I’ll explain it to you as simply as I can so that you can be better informed than 99% of politicians and talking heads.

First: The proposed stimulus has a price tag of $825 billion. You can view the proposed stimulus by clicking here. Let’s reduce that number, because it includes $275 billion in tax cuts. Government accounting is completely different from real world accounting, so they include a tax cut in the “cost” of budget bills. This simply means that we get to keep an additional $275 billion of our own dollars. The result? The actual new spending by the government is $550 billion. So, we’ve already reduced the “stimulus” spending by a third.

Second: Where does this new spending money come from? The US government raises money by selling Treasury bonds. These bonds are sold to the general public. It’s basically the same as taking out a loan to increase your personal spending. These bonds require the government to pay interest to those who purchased the bonds. Therefore, the money the government will spend on the stimulus will in fact be money that it borrows from other people. So in effect, for every $1 that the government spends on this stimulus, $1 was diverted from other investments. In other words, no new money or growth is being produced. It’s the same as borrowing a dollar from your neighbor and lending it to another neighbor. Nothing was added to the economy and no new investments were created. The money being spent on the stimulus is money that would have been invested someplace else anyways. 

Third: Instead of that “stimulus” money being spent by private sector employers, it will be spent by politicians and bureaucrats. The transfer of wealth from potential private sector investments to the Federal Government will do absolutely nothing to create new jobs. It’s simply a transfer of money. In fact, it will likely result in fewer jobs because once bureaucrats and politicians gets their hands on the money, it will be severely whittled down by bureaucratic wrangling and government ineptitude. 

Bottom line – the stimulus will do absolutely nothing to “stimulate” the economy.

Oh, but there’s more. That $550 billion that’s being borrowed to increase federal spending carries with it a bill for interest that the federal government must pay from either the general budget or by borrowing more money! Guess what! The federal government already spent $412 billion on interest on the national debt, just last year! This new spending will add approximately $20 billion to that amount, each year.

This is a losing game folks. It’s no different than taking out a loan to pay the interest on another loan. It will eventually collapse. It’s the biggest Ponzi scheme in the history of the planet. It’s piling borrowing on borrowing while adding nothing net new to the economy.

Excessive borrowing and leverage got the world into this economic crunch – more borrowing will not make it better.

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Posted by: GRPundit on Tuesday, 27th Jan, 2009

What Happens When You Take Away the Corn?

There’s an old parable about getting hooked on government handouts. I had heard this years ago, but it just popped in my mind again today. I searched the Internet and found one version of it.

A chemistry professor at a large college had some exchange students in the class. One day while the class was in the lab the Professor noticed one young man (exchange student) who kept rubbing his back, and stretching as if his back hurt. The professor asked the young man what was the matter. The student told him he had a bullet lodged in his back. He had been shot while fighting communists in his native country who were trying to overthrow his country’s government and install a new communist government.

In the midst of his story he looked at the professor and asked a strange question. He asked, ‘Do you know how to catch wild pigs?’ The professor thought it was a joke and asked for the punch line. The young man said this was no joke. ‘You catch wild pigs by finding a suitable place in the woods and putting corn on the ground. The pigs find it and begin to come every day to eat the free corn. When they are used to coming every day, you put a fence down one side of the place where they are used to coming. When they get used to the fence, they begin to eat the corn again and you put up another side of the fence. They get used to that and start to eat again.

You continue until you have all four sides of the fence up with a gate in the last side. The pigs, who are used to the free corn, start to come through the gate to eat; you slam the gate on them and catch the whole herd. Suddenly the wild pigs have lost their freedom. They run around and around inside the fence, but they are caught.

Soon they go back to eating the free corn. They are so used to it that they have forgotten how to forage in the woods for themselves, so they accept their captivity.

The young man then told the professor that is exactly what he sees happening to America. The government keeps pushing us toward socialism and keeps spreading the free corn out in the form of programs such as supplemental income, tax credit for unearned income, tobacco subsidies, dairy subsidies, payments not to plant crops (CRP), welfare, medicine, drugs, etc. While we continually lose our freedoms — just a little at a time.

It’s a good story by itself, explaining how government breeds dependence. But another thought popped into my mind as I thought about this story. What happens we you take away the corn? 

We’re in the midst of the largest expansion of federal spending in the history of this nation, with over $8.5 trillion of federal government outlays and guarantees, just in the last four months. We have a national debt that has doubled under the Bush administration, to over $10.5 trillion. We have future unfunded liabilities, just at the federal level, of over $40 trillion. We have state and local governments that put taxpayers on the hook with unsustainable defined benefit pension plans that are just now beginning to collapse. 

The point is this: The American people have been fattened up by corn over the last several decades, with an acceleration over the last two decades of Federal Reserve-induced malinvestment orgies. First in technology, then in real estate. These malinvestment orgies led to expanded government spending and government promises, making more and more people dependent on government money (corn), one way or another. However, the math doesn’t work in the long term. Something has to, and will, give.

We are seeing the first stages in a potential catastrophic collapse. We are in the midst of deflation. The Federal Reserve and politicians in Washington will do anything they can to prevent deflation. So they have cranked up the printing presses and are expanding the money supply at a truly unprecedented rate. We have collapsing banks, collapsing industry, a collapsing economy, a collapse in debt, and a collapse in consumption. Eventually, people (and, more importantly, foreign governments) will stop buying US Government bonds as they see that annual deficits of $2 trillion are unsustainable. Then what?

“Stimulus” plans will fail. Hoover/FDR stimulus plans in the 1930s only extended the length and depth of the depression. The Bush/Obama stimulus plans will do the same.

Folks, the government corn will run out when we all realize that nothing can be done to stop the natural correction of the economy.

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Posted by: GRPundit on Monday, 19th Jan, 2009

Where Does the $700 Billion Bailout Size Come From?

Here’s an example of the absolute recklessness of the current bailout mess. An article from Forbes ought to make all Americans go berserk on the members of Congress that are voting in favor of this thing:

In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

“It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.”

Are you &*#%@%^ kidding me?!?!

Source.

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Posted by: GRPundit on Thursday, 2nd Oct, 2008

Giant Socialist Bailout: Levin YES, Stabenow NO

Josef Stalin is pleased with the United States Senate today

The giant socialist bailout bill passed the Senate yesterday 75 to 24. Senator Carl Levin voted YES, Senator Debbie Stabenow noted NO.

Call Senator Stabenow and say thanks! 202-224-4822. Email her here.

Call/write Senator Levin now and tell him that Josef Stalin would be proud! (202) 224-6221 (Fax him at 202-224-1388) Email him here.

Call the US House’s switchboard at (202) 224-3121 and ask to speak with your Congressperson’s office. Tell him or her to vote no on this monstrosity.

Josef Stalin would be proud of the US Senate today. Hopefully it’s not too late to stop the statist/socialist cabal in Washington that is governing by fear and ignorance.

Further reading:

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Posted by: GRPundit on Thursday, 2nd Oct, 2008

Bailout Reader

(Note: this post is taken from the Ludwig von Mises Institute’s economic blog)

The events taking place in the financial market offer an illustration of the soundness of the Austrian theory of money, banking, and credit cycles, and Mises.org is your source not only for analysis of these events but also the economic theory that helps explain what is happening and what to do about it. There are many thousands of articles available, and also the full text of thousands of books as well as journal articles. It is impossible to draw attention to the full range of literature one can use to understand the crisis.

However, below we offer a brief look into the topics most discussed in these times, with extended treatments of each in the sidebar. Mises.org also offers both a blog and a community forum for reading and discussing them all.

It’s never been more important to spread a sound view of money and banking, not only as a protection against the fallacies of “stabilization” and “reflation” but also as way to see what kind of reforms are essential now.

Fannie Mae and Freddie Mac

The Housing Bubble

Inflationary Finance

Community Reinvestment Act

Short Selling

The Austrian Theory of the Business Cycle

Who Predicted This?

What To Do

Books to Distribute

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Posted by: GRPundit on Monday, 29th Sep, 2008