Real American Independence Means Freedom from Debt, Spending
Real fiscal responsibility is the final frontier.
The assumptions used in the bank stress tests were stress-free. The stress-test timeframe ended in 2010. William Black, former bank regulator and author of The Best Way to Rob a Bank Is to Own One, concludes:
"There were no real examinations. Banks continue to overstate asset quality. The bankers pressured Congress, which extorted the Financial Accounting Standards Board, which gutted the accounting rules on loss recognition. Because there were no real examinations, there were no real stress tests."
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Even the panel Congress appointed to oversee the Troubled Asset Relief Program (TARP) said: "Unanswered questions about the details of the tests make it impossible to replicate the tests to determine how robust they are or to vary the assumptions to see whether different projections might yield very different results."
Billions in TARP funds went to the likes of GMAC (GM), Capital One (COF), and American Express (AXP) so they would lend it out to over-indebted consumers and jump-start the economy. The $787 billion stimulus plan has dumped wads of cash into the laps of bureaucrats throughout the country in the hopes that something productive might happen.
Senator Coburn of Oklahoma issued a report last week regarding stimulus spending: One town in North Carolina is using stimulus funds to hire an administrator whose job it will be to procure more stimulus funds. You judge whether these projects will jump start our moribund economy:
- Optima Lake is in line to receive $1.15 million in federal stimulus money to construct a new guardrail for a lake that doesn't exist. The guardrail's needed for "public safety," says the Army Corps of Engineers, but there's not much of the public around to protect. Because the lake has never filled with water it's all but useless to potential visitors.
- The repair of 37 rural Wisconsin bridges that average little more than 500 vehicles apiece each day -- with one carrying no more than 10 cars a day. The projects jumped ahead of larger, urban repairs because they were "shovel ready." $840,000 to repair a bridge in Portage County, which carries 260 vehicles a day largely to a backwater saloon and a country club.
- $1.5 million in stimulus money for a $5 million new waste-water-treatment plant in Perkins, Oklahoma. The stimulus money came with strings that will increase the costs. With a new total cost of $7.2 million, the city will be forced to borrow money and, as a result, utility taxes have increased by 60 percent this year.
- A $3 million project to repair taxiways at Hanscom Field, Massachusetts, which Coburn said is for corporate jets. Richard Walsh, a spokesman for the independent state agency that runs the airport, Massport, said only 18% of the traffic at the airport is for corporate jets. Most of the use -- 70% -- is for flight instruction, he said.
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