Greed runs rampant: Everybody wants more
Today's Financial News - Posted January 16, 2009
Americans are becoming used to seeing our money get sucked into a government-created whirlpool of debt and frivolous spending. A trillion dollars used to be a lot of money, but after the last few months, it is nothing. Get out your checkbook, Uncle Sam.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): Somehow it is becoming more and more acceptable for the American people to simply roll over and cover the “gambling” losses of America’s biggest corporations.
When companies like Bank of America (NYSE:BOA) do not do their homework and purchase the assets of Merrill Lynch just to find out the newly acquired company is filled with horrific debt and losses, we (or more appropriately, our leaders) shrug it off and say, “That’s okay, here’s another check.”
Maybe BofA’s latest check from Uncle Sam is not so much a bailout as it is a plea for forgiveness. After all, Washington is the one that hurriedly “pressured” the bank into locking in the risky deal.
After it was revealed that Merrill Lynch would be forced to swallow some $15 to $20 billion in Q4 write-downs, the Federal government stepped up last night and said it would shell out $20 billion in cash and take a hit of up to $98.2 billion in Bank of America’s eventual losses. Washington is acting more like a greedy investor than a government.
Does anybody in this country realize just how much money we have spent during this debacle? Or how many schools, hospitals and roads it could build?
Madoff was supposed to have ran the largest scam in world history. But he made off with less than half of what Washington spent just last night. I guess when you are dealing with freshly printed money, a few zeros do not add up to much.
Bring in the sheep
The worst part of this deal is not the unconceivable amounts of money getting tossed around. It is the fact that Americans are getting used to it, even welcoming it.
Everywhere I look, average Americans are looking forward to the upcoming stimulus package. Heck, the equities market rallied over the mere notion of its revealing yesterday afternoon. But where in the world does anybody get an inkling of evidence that this stimulus, unlike the previous handful, has a shot of actually working?
If politicians were not involved, I would change my mind, but when votes are at stake, I have no faith. Just look at the TARP. It started with a concise demand for fresh capital. What we got was enough pork to fill a freezer.
At first glance, an average investor would have ample reason to believe Congress’ $825 billion package would be enough to jumpstart America’s economy. But when you start digging into the fluff, you find out it is just another piece of political waste.
When constricted like a laser beam, the money could create a fire under almost any industry, but when tossed through a system of smoke and mirrors designed to make every single constituency happy, it is worthless.
The bill allocates $6 billion to “weatherize” modest-income homes. It sends another $6 billion to rural areas to boost Internet access. $32 billion goes to a “smart energy grid.” And there are sure to be even more “vote getters” added on as the bill makes its rounds. Rumor has it the dairy industry will get money to help reduce the supply of its products. In other words, it wants rebates for every cow it kills.
Eventually, we are going to stretch this package so tightly that we will be able to see right through it. It will do little good if it is only as thick as a piece of used chewing gum.
The first $350 billion in TARP money proved it. Now the second round of checks looks like it will be even more useless. If we are willing to open this country’s debt spigot, at the very least, we should be sure the money will do some good.
But as I have said before, this package is nothing more than a taxpayer-funded, trillion-dollar campaign ad. In four years, we all know who will be saying, “I voted against it before I voted for it.”
Next Article: Mother Economy wins: Another one bites the dust
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