[Wags]

Post examples of Government waste. Seemed appropriate to use red 🙂

Wednesday, December 23, 2009

Federal Aviation Administration Spends $5 Million On Drunken Holiday Bash

Posted by: Jillian Bandes at 2:34 PM

With pretty much everyone cutting back on holiday expenses, the FAA feels it’s appropriate to spend $5 million on a drunken holiday bash — under the premise of having a “conference” on guidelines that would’ve been easily disseminated via videoconference. Chief Operating Officer of the FAA’s Air Traffic Organization Frank Krakowski said its “worth it because you have to get the frontline managers on board with what we’re trying to do.” How about getting the Chief Operating Office on board with the average American taxpayer? Or maybe even (gasp!) on board with the same sort of budgetary constraints as the rest of the private sector?  The ABC video is worth a watch in full.

[Wags]

This isn’t Government waste, but it sure shows how the news is spun

Granted the two headlines below are for different things, new versus
existing homes, but how much different of a take can you have on the
economy, both articles from the AP and the same writer and they really
stood out because I saw both of them as top stories on Yahoo finance one
day apart.

Yesterday (12/22/2009)

November home sales soar 7.4 percent

Washington — Home resales surged last month to the highest
level in nearly three years, reflecting an extraordinary level
of federal support hat has pulled the housing market back from
the worst downturn since the Great Depression.

Today (12/23/2009)

November new home sales sink 11 percent

Washington — Sales on new homes plunged unexpectedly last month
to the lowest level since April, a sign the housing market
recovery will be rocky.

[Un-Authorized]

Wags:

 

I don’t know if my outrage is all used up or just running so low I hate to squander it, but I’m not seeing much here. So people had drinks at a conference.

Joe

[Lenny E]

Hmmmm,

Wags, thanks for that. I especially liked the conflicting numbers from the gummmit. I wonder if they came from Joes favorite soiurce…the GAO.

Speaking of pilots and airline people drinking…..I could never fly sober, because of small seats, crying, puking babies, fat ladies on either side of you pressing you into your seat etc. etc.. Thats why I prefer my pilots just as drunk as I am when flying.

When 1 engine burns out, and the yuippie family in front of me, with all those bad ill behaved kids starts to freak out and scream “How far will this plane make it on 1 engine”?

I can calmly reply…….”all the way to the scene of the crash!”

Followed by.”.Stewardess…can I have another double?”

[Wags]

Perhaps that is exactly what is wrong in the country, we see this conduct as Okay.. so our government workers continue to waste. As the report said, the real front line workers get their information in a video conference, only the managers get to get drunk, dance on tables and act rudely.. as the one person admitted. $1400 per person when over 20% of the folks paying for this are out of work.

[Norm Walters]

Posted By Wags on 23 Dec 2009 07:49 PM
This isn’t Government waste, but it sure shows how the news is spun

Granted the two headlines below are for different things, new versus
existing homes, but how much different of a take can you have on the
economy, both articles from the AP and the same writer and they really
stood out because I saw both of them as top stories on Yahoo finance one
day apart.

Yesterday (12/22/2009)

November home sales soar 7.4 percent

Washington — Home resales surged last month to the highest
level in nearly three years, reflecting an extraordinary level
of federal support hat has pulled the housing market back from
the worst downturn since the Great Depression.

Today (12/23/2009)

November new home sales sink 11 percent

Washington — Sales on new homes plunged unexpectedly last month
to the lowest level since April, a sign the housing market
recovery will be rocky.

Wags, those numbers are probably accurate. Why would anyone buy a new home when the existing inventory has been discounted dramatically, add the 8K tax credit for first time homebuyers,  and the numbers make sense.

[Wags]

Ths is from a blog I read daily. Dr Martenson is extremely credible and logical in his thoughts.

His blog is at http://www.chrismartenson.com/   I suggest you take his “Crash Course” its very well done and makes it easy to understand our economy, how we got to where were at and where it is heading.  

The Christmas Eve Taxpayer Massacre

Sunday, January 3, 2010, 3:01 pm, by cmartenson

On Christmas Eve, while nobody was supposed to be watching, the Treasury Department lifted the bailout ceiling on Fannie and Freddie from an already appalling $400 billion to an unlimited amount.

In 2007, I denounced the entire bailout as little more than a looting operation. I appreciate that some consider the bailouts as necessary to prevent a wholesale liquidation/collapse of the entire economy, and I even share some sympathy with that view. However, I humbly submit that similar actions could have been taken without enormously enriching the very same parties that either caused the disaster or unwisely invested their money with the companies that did. Both sets of participants deserved to learn a very expensive lesson, not get bailed out at enormous expense to future taxpayers and national prosperity.

In 2008, I warned that the Fannie and Freddie bailouts were going to cost a lot more money than was claimed by the government, despite the fact that the then-director of the Congressional Budget Office, Peter Orszag, firmly declared that there was only a 5% chance that taxpayers could lose more than $25 billion.

Here’s a blast from the past, just so that we can keep track of these things. This article is from July 23rd, 2008.

Cost of Loan Bailout, If Needed, Could Be $25 Billion

WASHINGTON — The proposed government rescue of the nation’s two mortgage finance giants will appear on the federal budget as a $25 billion cost to taxpayers, the independent Congressional Budget Office said on Tuesday even though officials conceded that there was no way of really knowing what, if anything, a bailout would cost.

The budget office said there was a better than even chance that the rescue package would not be needed before the end of 2009 and would not cost taxpayers any money.

But the office also estimated a 5 percent chance that the mortgage companies, Fannie Mae and Freddie Mac, could lose $100 billion, which would cost taxpayers far more than $25 billion.

[…] the director of the budget office, Peter R. Orszag, predicted that “a significant chance, probably better than 50 percent, that the proposed new Treasury authority would not be used before it expired at the end of December 2009.”

Mr. Orszag, at a briefing with reporters, acknowledged that pinpointing the eventual cost of the package was impossible. “There is very significant uncertainty involved here,” he said.

“Significant uncertainty?” Not to me, there wasn’t. I was completely sure that these CBO estimates were laughably low and completely out of line with every known bit of housing data at that point. Foreclosures were already higher than the CBO baselines and were trending downwards, and losses were already far higher in private mortgage pools than the worst-case estimates for the Fannie (FNM) and Freddie (FRE) pools.

I’m sorry, but any analysis that begins with the proposition that the government is vastly better at the mortgage business than private industry is simply not credible, especially given that together FNM and FRE are half the entire market.

Two weeks later, in September 2008, I wrote this:

…$250 billion is pretty much my floor on the costs [of the Fannie and Freddie bailouts]. I happen to think that we’ll experience something closer to a 10% to 15% default rate [on GSE mortgage pools], which would yield a $500 billion to $750 billion loss estimate.

These estimates are reasonably close to the truth as we know it today. How did I do it? How did I manage such stunning accuracy where the CBO failed so badly?

Easy. I made the assumption that the FNM/FRE portfolios would experience the same loss rates as private portfolios and used a calculator, the FRE & FNM balance sheets, and two minutes of my time to develop a reasonably good answer. With a team of analysts and the actual portfolio information, I could have gotten much, much closer.

On Christmas Eve, the time when the most incendiary news is buried deep to avoid detection, this is what happened:

On Christmas Eve, when most Americans’ minds were on other things, the Treasury Department announced that it was removing the $400 billion cap from what the administration believes will be necessary to keep Fannie Mae and Freddie Mac solvent. This action confirms that the decade-long congressional failure to more closely regulate these two government-sponsored enterprises (GSEs) will rank for U.S. taxpayers as one of the worst policy disasters in our history.

Where the director of the CBO stated that there was a 5% chance that the total cost would be in the vicinity of $25 billion, we are now faced with an exposure large enough to force the stealthy removal of a $400 billion cap on Christmas Eve.

One more time, we might ask how an outside analyst like me, using publicly available data, could be so much more accurate than the government itself, with its vast teams of analysts and better data?

The answer, unfortunately, is that my numbers are constructed from evidence and math, while the government’s numbers are regularly fashioned for political advantage. These numbers often have no basis in reality; nearly everybody knows it. Yet the NYTimes continues to breathlessly report the ersatz numbers (as they did above), failing to ever circle back on the errors once the numbers are proven to be dangerously wrong.

For example, the most recent full-length article in the New York Times about Peter Orszag goes into great depth about his deep policy experience, budgetary skills, family life, and workout habits, but not his stunning inability to spot a multi-hundred-billion-dollar black hole (obviously in sight at the time of this article) that so many in the blogosphere immediately saw.

In a culture where we worship power, but apparently not the ability to get to within the nearest few hundred billion as a budget director, I suppose this is not much of a surprise. Still, it tells us something about our chances of being faithfully guided to safe shores by our promising young leadership. They’re not good.

In this long sordid tale, marked by the constant use of fuzzy numbers that overstate our economic health and understate our fiscal losses, we find little to bolster our confidence in either our existing processes or rules. Once again I call for honest numbers as the only meaningful way to gain a true picture of our state of health, so that we can more readily assess the scope of the problem and craft acceptable responses.

I will also note here that without the massive subsidization of the US housing market by the government through Fannie and Freddie, it is unlikely that the enormous housing bubble would have developed to the extent that it did. I see that there’s some pressure now to assign blame to loose underwriting standards in the subprime markets, but one cannot ignore the $4 trillion growth in the balance sheets of FNM and FRE. They provided an unending wall of fresh liquidity, without which the bubble never would have attained its deathly heights.

Instead of now squandering an additional half trillion dollars on blown mortgages – all just paper losses attached to depreciating assets – our nation could have afforded to completely revamp our electrical grid, install wind and solar power to an enormous degree, and put solar water collectors on nearly every rooftop, thereby greatly helping our future prospects while providing productive jobs today.

But we’re not doing that, and most likely we’ll n
ever be able to, because we chose instead to provide ourselves with a housing bubble, an endless stream of bogus loss estimates, and the protection of the investment portfolios of the very richest people in the land.

If I were an incumbent in office, I’d be very, very worried about keeping my job.

The way out of this remains the same: The losses for this fiasco need to be assumed by those who made the bad decisions. Otherwise there’s no justice, no fairness, and no opportunity to learn a good lesson from a bad time. Moral hazard is corrosive, not just because it fosters future mistakes, but because it undermines the rule of law by making it clear that there’s a different set of rules in play, depending on who you are.

I am practically desperate at this point to see my nation and my government stop wasting money trying to resurrect already-destroyed capital and begin investing in the energy and educational infrastructure that we really need.

I am going to spend 2010 working as hard as I can to continue spreading the message about our true predicament and the solutions and actions that could help us build a better future. Let’s work on this together.

Otherwise, the Christmas Eve taxpayer massacre will simply be the opening salvo to another lost decade. A decade that I am not willing to lose.

[Wags]

And we trust these guys with our health care ?

January 4, 2010 07:35 AM EST by John Stossel
“Wrenching, yet Cleansing”
Saying goodbye to $75 billion is always tough. Discovering that your government used it to do harm, hurts even more.

In February, President Obama announced the “Making Homes Affordable” program, a plan to lower mortgage payments for deadbeats, er, homeowners who couldn’t keep the payments current. The plan took $75 billion in tax dollars from those of you who pay your bills and transferred it to those who don’t. Spreading the wealth.

As usual, It didn’t work.

“It’s a failure,” said Henry Sommer, director at the National Association of Consumer Bankruptcy Attorneys in Philadelphia. “We’re looking at millions of foreclosures on the horizon and only a tiny amount of these mortgages have received permanent modifications.”

The Atlantic is more blunt.

Some government programs turn out to be moderately successful. Others turn out to be a disappointment. A few turn out to be disastrous failures. Then there’s the Obama administration’s mortgage modification program, which hasn’t done well enough to qualify for even the worst of those categories. Data released yesterday shows that it’s had an incredibly pathetic 1% success rate thus far…

Government made things worse. In this case, government made things so much worse that even the New York Times acknowledges it.

“(D)esperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences…

(T)he program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.”

That wrenching process is the creative destruction that lets capitalism work. The cleansing lets prices find a real floor, so economies can grow again.

That is, unless politicians pretend they can prevent all pain. Then they take your money, waste it, and create much more pain.

[Author]

Posts