Tuesday, February 17, 2009

$500... No, Wait... $400 Each

We tax all the others and pass the revenue on to you

$400, that's your share of the stimulus bill, $7.69 a week. Buy anything great for $7.69 lately, a fast-food steak sandwich maybe? Good, you can do it agin next week. Seems puny compared to the billions in stimulus-funded bonuses. Congress can get pretty aggressive about reducing your share (remember when it was $500?) but they can't seem to get those bonus billions back. If you were the 696th-highest-rated employee at Merrill Lynch you still got a $1 million+ bonus. You know, to retain your talent and reward your achievements? ML was such a talented achiever that they... um, failed and took your money out the back door.

$7B for rural high-speed internet? Private industry decided there wasn't enough demand to justify the expense of serving that slice of America because... it's RURAL! (Sometimes I miss Sam Kennison.) No problem, let the stimulus pick it up. Broadband providers must love this provision. Infrastructure costs picked up by us and the providers still get to charge full rates for their services. I smell stimulus bonuses here. Sweet.

The G7 (used to be the G8) says our stimulus is OK but they would like to see us spending more. MORE? (Thanks again, Sam.) The G7 doesn't include Russia (kicked out) or India or China or South Korea (all uninvited) or any country south of the US. Ever wonder why not?

* * * * *

We're already being set up for the failure of the stimulus bill. "It's not perfect" says the prez. Here's a thought: If you wanted it to be better, maybe someone should actually have read the freakin' bill before we spent the $800B! If everything goes right (and how often has that happened?), still "a 30% chance of failure" says the VP. Biggest effect not until 2010 says IHS Global Insight. Can't get much assurance for a tril these days.

Let's say you're a major investment firm or the manager of a large pension. You've gotta put your money somewhere, right? Do you bet on the stimulus working or not working? You hedge, of course, but sooner or later you're gonna have to bet the black or the red or lose your accounts to someone who will. Which way do you bet -- it works or it doesn't? How well has California done by going in the hole by $42B? It's a clue. As a wise man wrote, "What if it doesn't work?"

Remember the angst when we lamented our declining savings rate? Now we're giving money away and screaming "Don't save it, BUY something!" Cars and houses, preferably, and more than one if you can... with your $7.69. Confused yet?

I'll wrap it up with a comment from Italy's finance minister regarding our stimulus package:

"If the problem is an excess of debt, the cure is not adding more debt, whether that debt is public or private."

I think he gets it. Do we?

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