Bloopers

Economic Bloopers

Every day the government makes new mistakes or discovers new economic consequences of their past errors. Arbitrary Vote brings you the country's biggest economic bloopers.

t Blooper of the week Blooper of the month

4/8/09 - All banks to pass the stress tests!

Criteria to pass stress tests:
Be insolvent enough to need more taxpayer money.

Banks Holding Up in Tests, but May Still Need Aid - New York Times

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4/7/09 - Throwing $4 trillion at the problem isn't working

The Congressional Oversight Panel isn't seeing the same "green shoots" as the rest of the media and government? Maybe they don't want to hurt their chances of getting another $4 trillion to play with.

Financial Crisis 'Far From Over,' Panel Says - ABC News

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4/6/09 - Treasury extends sign-up deadline for toxic plan

Translation: Very few organizations want to sign-up for a plan in which they will lose money by buying over-priced assets while the rules can change on a government whim.

Treasury extends deadline to participate in toxic-asset plan - MarketWatch
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4/3/09 - A stealth $3.6 trillion nail in the coffin

Congress whispering at about midnight last night:

Ok everybody, most Americans are asleep. Now that we've fast-tracked this process through shady politics, let's pass the largest federal budget in history, creating the largest budget deficit in history (by a factor of about 4), and effectively ruin the country. Might not even make the news headlines tomorrow morning with all the other stuff going on!

Congress Approves Obama's $3.6 Trillion Budget - The Wall Street Journal
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4/2/09 - Accounting rules miraculously change intrinsic value!

1. If the owner of a car totals it by smashing it into a wall, can they pretend that it is fine and try to sell it as if it weren't totaled? Nope. No one will buy. In that case should they pretend that they did not lose any money and try to buy another one without money? That doesn't seem to make sense either.

Moral of the story: A loss is a loss. You cannot sweep it under a rug. The pain will have to be felt at some point.

2. If a little kid kicks a soccer ball directly out of bounds 10 feet wide of the goal post and suddenly declares it an official goal mid-game, will the other team of kids want to keep playing? Probably not, but if they do, they likely have a plan to make some other changes to the rules to favor themselves as the game goes on.

Moral of the story: Change the rules when it suits you and either no one participates or everyone becomes corrupt.

Relaxed accounting rules will help banks - MSNBC/Associated Press
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4/1/09 - The G-20 circus of anti-capitalists

Protesting angrily in the streets of London are mobs of anti-capitalists. A stupid move on their part as meeting inside the nearby G-20 buildings are mobs of anti-capitalists as well.

Rather than leaving it up to the folks inside the buildings, why not get both groups together and see if they can come up with a sustainable model for society that includes no creation, productivity, profit, or property rights?

Protesters scuffle in London's financial heart - CNN
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3/31/09 - Government mandated pension insurer takes big risks and loses

With all the talk of the auto debacle yesterday, this one flew under the radar. The Pension Benefit Guaranty Corporation (a government agency) switched their investment approach to a risky stock betting strategy just before the stock market collapsed in 2008. This brilliant move will make this insurance vehicle's chances of funding a likely $500 billion national pension shortfall extremely unlikely. What is likely is that the U.S. will print a whole bunch more cash in yet another massive bailout.

Pension insurer shifted to stocks - The Boston Globe
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3/30/09 - The auto saga continues

1. Surprise - The billions of dollars in bailouts didn't work.
2. Great idea - Let's fund these companies for 30 and 60 more days while they continue to fail.
3. If Chrysler completes a deal with a sub-par Italian auto company, Fiat, let's lend them $6 billion.
4. If forced to bankruptcy, let's circumvent normal legal process and make all the decisions around plant closings, liquidation, and debt holders to further trash property rights in the United States.

Obama says U.S. won't let auto industry 'vanish' - MarketWatch
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3/27/09 - Consumer spending down - not up

It's interesting how the news of consumer spending data was released today. The more visible articles communicated that spending was up in February; marketed as reason for celebration and a continued market rally. However, when (properly) adjusted for inflation, spending was actually down in February.

Also, note that consumer spending is not necessarily a good thing while there is still significant consumer debt and little consumer savings.

Both today:

Good news! Consumer spending rises for second month - MSNBC/Associated Press
Oh, wait - Bad news... U.S. real consumer spending falls 0.2% in February - MarketWatch

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3/26/09 - Stock market up 175 on dire economic news

A 175 point Dow increase is an interesting phenomenon on a day when continuing jobless claims sets a max record, there is a Q4 GDP revision to additional contraction, and there is 0 good economic news to be found.

Jobless claims tally rises to a new record - MSNBC/Associated Press

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3/25/09 - Anemic Treasury auction spells trouble

U.S. debt isn't attractive??? Not to worry, the Fed will throw several hundred more billion at long-term treasurys to make up the difference...And corresponding higher interest rates will greet everyone with a online casino spiele smile.

Anemic Treasury auction felt beyond bonds - Reuters

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3/24/09 - China wants a new world currency

Three comments from China about the dollar and U.S. debt within 2 weeks. The message is loud and clear. Can Bernanke and company speak Chinese? Nope.

Chinese official calls for new global currency - MSNBC/Associated Press

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3/23/09 - Trillionaire Geithner's brilliant plan for toxic assets

This is what we've all been waiting for? A slight variation of the Paulson plan that was abandoned months ago because it was known it wouldn't work. Very creative. When will it be realized that these assets cannot be priced because there is no market for them? With this plan, price too low and you bankrupt the bank; price too high and the buyer takes the loss. Oh - forgot - the government will pay for any losses to the buyer or bank...The government has plenty of cash.

And didn't we get into this mess because of gun-slinging banks unleashed by government mandates and lax regulations to allow for risky bets on bad investments? It makes perfect sense for the government to back the buyer by over 90% to take extremely risky bets on toxic assets. As usual, everybody wins!

Treasury unveils plan to buy toxic assets - MSNBC/Associated Press

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3/20/09 - More banks seized by the government

These banks seemed to appropriately follow the moral code of the FDIC as per the 3/17 blooper.

Calamitous day sees banks, credit unions seized - MarketWatch

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3/19/09 - Treasury tosses $5 bil' to auto suppliers

Treasury to GM and Chrysler:

Hey, there's no market for your cars, so here's $17.4 billion for you to piss through and come back to us in a few months for more. Oh, there's no market for your suppliers too? We'll throw them $5 bil' and let you guys decide which ones live and which ones die. Just know we're here to help as we have stolen this money from the American people.

http://www.msnbc.msn.com/id/29774193/

See more background on the auto bailouts.

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3/18/09 - Fed prints $1.2 trillion

Hmmm, the Fed is buying bad long-term mortgage backed assets and long-term treasuries. Aside from this being a signal that foreign creditors are likely already showing reluctance to lend to us, what happens when inflation begins and they need to rein in dollars but can't because of the political nature of housing assets and illiquidity of long-term treasuries?

http://news.bbc.co.uk/2/hi/business/7951493.stm

See more on fiat currency and the practices of the Fed.

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3/17/09 - FDIC criticizes good bank for being too cautious

An amazing demonstration of the government's principled stance on responsibility and ability to learn from its own mistakes.

http://www.foxnews.com/story/0,2933,509584,00.html

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3/16/09 - Obama outraged over AIG bonuses

Let's get outraged over $165 million because it's a very large portion of the $182 BILLION that was taken from our pockets to bail them out in the first place. Can't wait to see more of the continued assault on private property when these bonus contracts are finally rendered meaningless by the government as they figure out a way to void and retract the bonuses.

http://www.reuters.com/article/bondsNews/idUSWAT01115420090316

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3/13/09 - China concerned over U.S. treasuries

If you lent a ton of money to someone you thought was trustworthy and good for it, but suddenly they printed a bunch of worthless paper to pay you back, wouldn't you be a little concerned?

http://online.wsj.com/article/SB123692233477317069.html

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