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Is the sky falling?
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The Spectator
founded 2004 by ron cruger
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 by Ron Cruger
rcruger@san.rr.com
2013 Spectator Ron - The Spectator All Rights Reserved
C
Is Chicken Little in danger?
  If I were you, Henny Penny, I’d make a run for it. I don’t know where I’d run to, but I’d run, because all signs point to the fact that the “sky is falling.”
          The almost trillion dollar “Stimulus Plan” that is bouncing back and forth between President Obama, the Democrats and the Republicans is beginning to look like a tennis ball at the U.S. Open. “Whack” and it’s over here. “Slam” and it’s over there. Whose serve is it today?
          It’s no secret that the economy of this country is going downhill and going rapidly. And it’s not just a problem for the federal government. Over 200,000 California state workers had to stay home without pay this past Friday because Governor Schwarzenegger’s state is broke. There’s not enough money in the California state wallet to pay those 200,000 workers. If California was like a “Circuit City” or a “Linens and Things” it would have had a going out of business sale and then closed its doors, but being one of the fifty states it’s obliged to remain in business.
          We’ve trusted our President, working with the men and women of the Senate and the House to come up with a meaningful and intelligent plan to stem the disastrous descent of the nation’s money and employment problems. The result, so far, has been an announcement that the first piece of legislation found that the U.S. Treasury was buying pieces of banks at the end of last year – and they overpaid by thirty percent!
          A number cruncher overseeing the government’s initial try at saving our economy, the $700 billion dollar bailout, estimates that the Treasury Department paid $254 billion for $176 billion of assets – an overpayment of $76 billion dollars. That’s quite a goof-up. $76 billion will buy a lot of Big Macs or bagels for the poor and hungry. And remember, these guys who came up with this investment are supposed to be the smartest of the smart in our country.
          These same officials, who testified before the Senate Banking committee, also warned that there should be better oversight of the bailout funds, warning that some programs were vulnerable to fraud. Imagine that – fraud. They also warned that the $200 billion plan to get credit moving for consumers was “ripe for abuse” and said that the Treasury Department should not spend any taxpayer money on the lending program until it set up safeguards. These officials kept using the word “fraud.” Imagine, these experts are using the words “taxpayer money” and “fraud” in the same sentence! And, to think, the newspaper headlines are all about Bernie Madoff. If these blunders continue Bernie Madoff and his Ponzi scheme will look like a pikers.
          The President himself announced recently that even with all the bailout money being wheelbarrowed into the fancy schmancy offices of the some of America’s largest banks some of them might still fail – and that means shutting their doors. Kaput, goodbye, aloha. Gives a guy the shivers just thinking about it.
          The other scary part about the bank bailout plan is that the giant infusion of taxpayer money (that reads “our” money) into these banks for the purpose of easing the U.S. credit market was used by some of these same financial institutions to pay dividends, buy other banks and pay out big year-end bonuses to employees. Somehow I think something stinks and it ain’t in Denmark.
          I’m beginning to have serious trepidation about what’s going on in our country. It’s getting to the point where we’re not sure which is worse the problem or the cure.
          The fear of where our economy is headed has sorely affected the buying habits of millions of Americans. Many major retailers have suffered double-digit declines in January. The entire retail industry fell 1.8 per cent last month. If it weren’t for gains by Wal-Mart sales would have been down 5.6%.
          Here are some statistics for you that illustrate the adversities in retail – Neiman Marcus, down 24.4 per cent; Saks, down 23.7 percent; Nordstrom, down 11.4 per cent; Gap, down 23 per cent; Abercrombie & Fitch, down 20 per cent; J.C. Penney, down 13.4 per cent; Kohl’s, down 12 percent. That’s a lot of merchandise just sitting around. A bunch of sales people with nobody to sell to and a bunch of factories that don’t have to produce anything.
          The “Stimulus Plan” as it is written today fills almost 800 pages and I haven’t read all 800 pages, but the “pork” that I have seen bothers me.
          Some of the stuff in the “Stimulus Plan” doesn’t seem to be what we’re looking for – to put people back to work and getting credit flowing in the country.
          Check some of the “Stimuli.” The National Institute of Standards gets $357,000,000 for construction of research facilities. The Oceanic and Atmospheric Administration gets $427,000,000 for the same work.
          The FBI gets $75,000,000 for salaries and expenses. Inside the $6,200,000,000 Weatherization Assistance Program we find “expenses” of $500,000,000. That’s an unspecified expense of a half billion dollars. That’s for “miscellaneous” things.
          This is beginning to look like a playground for kids playing “Fraud, Fraud, who’s got the Fraud.”
          Our country has lost 3.6 million jobs with half of that total occurring during the last three months. Americans lost 598,000 jobs in January. The total unemployment is now at 7.6%.
          Maybe Franklin Delano Roosevelt had the right idea. Hire those people who are out of work and fix our roads, our bridges, build schools and libraries and repair our dams. Put more cops on our streets.
          I have this scary feeling that we’re about to spend a trillion dollars and there’s a strong chance that it may not buy the cure – and that would be a monumental blunder.
          I know that in a few years America will regain its balance and get back on track. In a few years Americans will be flocking to the Gap, and Nordstrom and J.C. Penney and Kohl’s, but until then I hope our elected representatives get rid of the “pork” and pass a “Stimulus” package that has an immediate effect with a minimum or no fraud.
          Our only hope is for more Americans to keep their eyes on our elected officials and stay aware of what they’re doing. After all, it is our money – yours and mine.
 
                                                                      . . .
 
          In a related matter – in the business section of this morning’s newspaper, set in small type is a seemingly unimportant report titled, “Earnings Roundup.” Listed is a piece about “MasterCard.” It states, “MasterCard reported a fourth-quarter profit that easily beat analysts’ expectations.” MasterCard shares rose 14.1 percent. MasterCard’s revenue increased 14 percent to $1.22 billion.
          As more and more people join the ranks of the unemployed are they now relying on their credit cards to pay their bills? MasterCard’s fourth quarter report indicates that our country’s credit problems aren’t fading away. They’re just changing shape.