Let's take a look at a couple of our "economic recovery highlights" from the past 24-hour news cycle, both in the MSM and around the blogosphere...
The U.S. Treasury may have just provided AIG (that bailed-out behemoth on which taxpayers are "projected" to make a "profit" sometime in the next generation or two) with another few billion dollars in stealthy taxpayer bailouts, totally under the table, or at least under the guise of accounting fiction. (Here's a link to the most recent deeper dive that I provided on this ongoing, and quite massive, Wall Street bailout shell game, from Sunday: "The Wall Street Bailout Memes Are Alive And Well.") And, here's the latest of many, many travesties in status quo propaganda...
Is AIG Getting Yet More Presents from
the Treasury, Meaning the Chump Taxpayer?
Yves Smith
Naked Capitalism
Wednesday, February 9, 2011
On the one hand, as we pointed out, the Treasury has from the get go of its ongoing rescue of AIG engaged in continued subsidization of the giant insurer, starting with the all too frequent restructurings of its financings. The net effect was not simply to provide more dough to the AIG, but to put the taxpayer in a worse and worse position. The taxpayer effectively owned AIG, with the first financing secured by all the assets of the company and further holding 79.9% of the equity. The first rule of being a creditor in a troubled company is that you want the most senior position in the capital structure, always. That rule was repeatedly violated with AIG.
The latest until now took place in the pre-IPO restructuring, which looks to have provided a further $6 billion to AIG. Some creative accounting allowed Treasury to claim to the public that the expected losses for TARP accounting purposes were lower, when nothing fundamentally had changed. And if we read the latest, somewhat ambiguous press reports (hat tip reader Hubert, who flagged the issue), it looks like the Treasury's creative accounting move is at odds with continued leaks at AIG. It appears that the Treasury has given another $2 billion to AIG, at least per Bloomberg and the Wall Street Journal...
More on this from...Bloomberg...and The Wall Street Journal.
Meanwhile, back on Main Street (h/t's to FPer Jed Lewison and University of Oregon Economics Professor Mark Thoma, over at his Economist's View Blog)...paraphrasing the old saying: "The beatings won't stop until morale improves"..."or, at least until poor people die from exposure."
White House to Cut Energy Assistance for the Poor, by Marc Ambinder: President Obama's proposed 2012 budget will cut several billion dollars from the government's energy assistance fund for poor people, officials briefed on the subject told National Journal.
It's the biggest domestic spending cut disclosed so far, and one that will likely generate the most heat from the president's traditional political allies. That would satisfy the White House, which has a vested interest in convincing Americans that it is serious about budget discipline.
The Low Income Home Energy Assistance Program, or LIHEAP, would see funding drop by about $3 billion from an authorized 2009 total of $5.1 billion. The proposed cut will not touch the program's emergency reserve fund, about $590 million, which can be used during particularly harsh cold snaps or extended heat spells...
LIHEAP has been semi-sacred for most Democrats and many Republicans--a program that carries an emotional resonance as it was designed to keep poor people, particularly older poor people, cool in the summer and warm in the winter. "A lot of people in the Northeast are going to be unhappy," an administration official briefed on the budget said.
Critics say that the program is poorly administered and that, contrary to intentions, it's become a subsidy for energy companies, most of whom are prohibited by law from turning off services to delinquent bill-payers during weather emergencies. ...
Hmmm....$3 billion in subsidy cuts to the LIHEAP program...so more people on Main Street will freeze to death...or, otherwise die from pneumonia and related illnesses. Let's see what Mark Thoma has to say about that...
"White House to Cut Energy Assistance for the Poor"
Mark Thoma
Economist's View Blog
Wednesday, February 09, 2011 1:35PM
...Don't you feel sorry for the energy companies since they can't cut power on deliquent bill payers during weather emergencies? Private business should have a right to freeze people to death if they fall behind on their payments. Especially when there is a recession making it hard for people to get by and a lack of social support to fill the gaps in household budgets.</sarcasm>
As for the "subsidy to energy companies" argument, pretty much any spending on the poor can be recast as a "subsidy" to someone. For example, giving people food to prevent starvation is nothing more than backdoor support for those greedy farmers who already get enough help from the government.
Update: I should have also knocked the administration for this move. There are ways for the administration to show it is "serious" about deficit reduction besides going after the poor with cuts that are a drop in the bucket relative to the size of the deficit problem. I'd be much more impressed for example if the administration demonstrated its seriousness by going after powerful vested interests rather than those least able to defend themselves within the political arena.
Here's a link for more on this story from Kossack and FPer Jed Lewison: "White House to propose cutting energy assistance for poor."
$2 billion "out" to AIG, $3 billion "saved" in budget cuts.
Is this what they mean when they talk about "Pay-Go," down in DC?
Speaking of our "recovery"...it seems like folks everywhere are telling Main Street to "kiss their ass" if we don't like it.
From Hedge Fund CEOs On Wall Street...
Guest Post: We Don't Need No Stinkin' Jobs (In The U.S.)
Submitted by Charles Hugh Smith from Of Two Minds
via Zero Hedge
February 9, 2011
We Don't Need No Stinkin' Jobs (In The U.S.)
Global Corporate America has decoupled from the American middle class; its interests are now international rather than domestic.
Global Corporate America has been decoupling from its country of origin for a long time, and the last weak bonds appear to be snapping.
Longtime correspondent Cheryl A. recently submitted this snippet from a recent The Atlantic article, "The Rise of the New Global Elite," and this summary: "This is disturbing on so many levels."
The U.S.-based CEO of one of the world's largest hedge funds told me that his firm's investment committee often discusses the question of who wins and who loses in today's economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn't really matter. "His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that's not such a bad trade," the CEO recalled...
...to self-styled, armchair economic pundits right here on Daily Kos!
It's a recovery! And, we can kiss their ass!
"Yes. We. Can!" Kiss. Their. Ass!
Hey, someone's got to pay (with their lives) for our "recovery," right?