CapitalistMarks

Tarp windfall? Maybe.

Posted on 07. Dec, 2009 by scott in economic daydreaming

So, I wake up this morning to the news that Obama’s roughly $350 billion Troubled Asset Relief Program (TARP) is in trouble.  Kinda good trouble to have in the circumstances too.  wow the news just keeps getting weirder.

Seems the banks and other lenders who seemed to need this huge bailout or relief don’t really need as much as anticipated and provided for.  But, makes you wonder . . . when over the weekend we learned that a few more banks have failed and now the count is up to 130 (and will continue through the end of the year).  Remember that this is more than FIVE times the number of banks that failed last year.

What is going on here.

The truth is that the few big financial institutions that are left are eating a LOT bigger piece of the money-profit pie.  Instead of needing more money they are paying the TARP funds that they got from the government back (with a profit no less).  To the tune of tens of billions of $$.  Means that the total TARP funds available should be even higher than announced right?

Good for them (the big banks)  I guess and too bad the regional and smaller banks are taking it on the chin.

Bottom line here:  Obama and the democrats smell something pretty good for them.  They think they have just found at least $200 billion that is already in the budget (yeah, that $1.5 trillion or so  deficit we are faced with) and is NOT going to be used for its intended purpose.

What does any government (city, state, county or federal) do with money they have left over each year?  Oh, come one . . . have you ever heard of them returning it?  Gotta find a way to spend it . . . and fast!  That’s the attitude in Washington.

Of course Obama just had the big confab last week on unempl0yment and tomorrow he is going to talk about how he wants to deal with this horrendous continuing problem (Tuesdays seem big to him lately — Afghanistan and now unemployment).

But the $200 billion?

Republicans want to use the funds to pay down debt.  Makes sense.

Democrats want to use the funds to increase employment.  Makes even better sense right now.  We are, after all, not of out the recession woods yet and unemployment is still 10%.

Spend the $$ on improving employment.

We need it.

But do it right.

No more of these projected ’saving or creating jobs’ deals that take months and years.

Get some (or most of the $$) into the hands of the needy masses right away.  Do it like they did during the depression.  Hire the infrastructure workers directly by the government and bypass the private sector (could save many months and still let the big contractors bid the jobs to save $$).

If this works we get the infrastructure improvements we need (some of them anyway –fix roads with pot holes, bridges, dams, levies etc.) much faster and the government puts people to work NOW.  Then later (I know that is a scary thought)  government employees can be transitioned to the private sector as the economy picks up.

$200 billion?  That is a lot of jobs Mr. President.

Hope you are reading this Obama, Pelosi and Reid.

Stay the course, spend the $$ and put people to work before Christmas.  What a great present that would be to this great United States of America!

thanks to flickr’s ciaran mcGuiggan for the photo

Tags: congress, creating jobs, democrats, infrastructure spending, President Obama, republicans, saving jobs, tarp