Stimulus Plan: Making Sure Your TV Works So You Do Not Riot

I am very excited for the 12 inches of snow, ice and rain that is coming tomorrow. NOT! I have already taken the day off, so I will have tons of fun shoveling tomorrow.

"Bad Bank" Transfer of Losses to Taxpayer Almost Complete
In case TARP 2.0 and the President's stimulus plan are not enough, the "bad bank" holding company idea seems to be on deck as well. We could debate the finer details of such a plan, but this is all you need to know: The Government will give banks basically whatever they want for bad assets and the government will sit on those assets forever. The banks get "mark to myth" cash to use as they see fit and the taxpayer gets to hold debts and paper that will guarantee huge losses for the foreseeable future. Sounds like a sure winner.

From CNBC:

Plan for Banks' Toxic Debt May Be Unveiled Next Week
By: Steve Liesman | 27 Jan 2009 | 05:04 PM ET
The Obama administration is close to deciding on a plan to purchase bad—or non-performing and illiquid—assets from banks, according to industry sources. The plan could be announced early next week.
The so-called "bad bank" plan, would address the key problem of how to price the assets by using a model-pricing mechanism.
The model would take account of the government's ability to hold onto assets, even to maturity, and pay for the them with cheap funding. Result: the government might end up paying more than current market prices for the securities.

"Might" end up paying more than current market prices? That is a silly statement from the usually reliable Liesman. the whole point of the exercise is to pay much more than market prices, otherwise what's the point? Some more:

In the developing bad bank plan, it's unclear how the government would pay for assets. There has been discussion of a "certificate of net worth" in which the government gives the banks a piece of paper that essentially can be applied to capital levels. But sources could not confirm that funding mechanism for the plan or what role existing TARP money or the Fed would play in funding the so-called bad bank.

This is rich! The government will issue monopoly paper certificates that banks can then use as "cash equivalents" for their capital base. Why print dollars when it is both cheaper and uses less paper to make "certificates of net worth". Maybe some day in the future your company will pay you using such paper. Won't that be nice.

All kidding aside, this is the next logical step in the illusion game. The FED and Treasury do not want to print too much money, it may seem like the US is behaving irresponsibly. Issuing phantom certificates that will never be backed by anything is yet another trick deployed by the smartest men the country has to offer.

Stimulus Plan: Making Sure Your TV Works So You Do Not Riot
The two best ways to grow control over a population are to 1.) keep them stupid and 2.) keep them occupied. Most Americans have done #1 themselves by giving up on real education and free thought. #2 is the job of the government. What better way to hold people's attention than to use the good old television? I mean now with DVR technology, some people spend entire weekends catching up on TV shows they missed during the week. Must see TV indeed.

In the current desperate atmosphere of economic calamity, we have been told that swift action is needed or there will be tanks in the street. If American Idol is interrupted, they may be right. Along these lines the stimulus plan covers the bases by offering 650 Million dollars for digital TV upgrade coupons.

Yes folks, some people out there still have old TV's that are going to be made obsolete in February! The horror! The upgrade costs from $40-70$. What if cash strapped consumers cannot pay up? That is what this 650 Million is for. By my back of the envelope math 650 Million dollars divided by $60 per conversion comes out to around 11 million TV's that will be upgraded. 11 Million TV's. Are there even that many old sets out there? When you are the government, you do not bother to ask.

Some stimulus plan excerpts:

Mr. Boehner cited numbers to counter Mr. Obama’s, saying the House Democratic plan included $600 million for the federal government to buy new cars, $650 million for digital television coupons and $50 million for the National Endowment for the Arts

Shiny new cars for the government that they will buy from American car makers that have received bailout money to survive. You cannot make up material like this. 50 Million for Art? That will create how many jobs? I mean starving artists are only good if they are starving right?

Between the TARP 2.0, "Bad Bank" plan, and now the stimulus bill we see a huge looting of the US treasury. The taxpayer ultimately will be on the hook. Massive giveaways and bank bailouts add up. Sooner or later that is going to matter.

Have a good night.