This is why Westboro Baptist Church is a joke

[Jester]

]Right, it is counter-intuitive though. The more you give unemployed people, the more people are unemployed. The government is like the worst venture capitalist ever. It's like we gave them some billions of dollars and they blew it on a big party, instead of careful investments in things that would grow the jobs market.

There are, roughly, three reasons people are unemployed.

1) They want to be unemployed.
2) They want to be employed, but are delaying to find a better job.
3) They want to be employed, but aren't able to find jobs, at all.

Increasing or decreasing unemployment benefits alters categories 1 and 2, but doesn't have much traction on category 3. You can't really cause businesses to expand by making workers more desperate. Indeed, if workers are desperate, they'll cut back spending, depressing demand, and further reducing incentive to hire.

The current jobs crisis has almost nothing to do with 1 and 2, and everything to do with 3. People didn't suddenly and collectively shift their preferences for leisure, or raise their expectations for better jobs. The jobs just up and vanished, and aren't coming back until demand picks up. Failing to pay unemployment insurance now, or cutting it back, would be bad for everyone.

But hey, you're right, we can also think of this as a party! Hellz yeah, the federal government continues to pay us a pittance to survive without work! Woo! Unemployment roolz! Somebody pass the beer bong!

Much of the bailouts happened on Obama's watch, the "Stimulus I" in February 2009, "Stimulus II" 6 months later were Obama, Reid and Pelosi, then in 2010, "Stimulus III" was Obama, Reid, and Bohner. The Stimulus bills all included more unemployment, and tax cuts across the board. Cash for clunkers, cash for caulkers, cash for quackers, whatever. You can't say that there wasn't a ton of crap in there that was meant to help out "the little guy" and the average citizen. Bailing out the States, meant the states could continue their social services. Then, the feds increased the Student Loan budget as well. Everybody got a big piece of the trillions of dollars borrowed from tomorrows prosperity.

Cash for clunkers was popular, but by and large a waste. Also, it has no traction on the poorest, who do not have clunkers, because they do not drive. Tax cuts largely benefit those who pay taxes, again, not the poorest, who don't. That the states did not default on their various obligations is fantastic, but that's just continuing the status quo, not contributing anything new.

The banks, on the other hand, were basically forgiven the whole credit default swap issue, with their terrible decisions being "insured" not by AIG, who couldn't foot the bill, but by the taxpayer.

And what was the cost, to those who led the financial sector down this path? Rack and ruin? Jail time? Tar and feathers? Smaller bonuses? Nope, they're pretty much still rich and powerful. Bonuses here in London just reached a new record high - I don't know the US case, but nothing fundamental has changed. The same old casino playing the same old games.

And, it's hilarious how mad these people are at the banks. The banks are suffering the most and are all about to go under due to new cash reserve requirements, zero percent interest and the imposition of Dodd/Frank restricting their income.

We'll see. But many of them would have gone under already, many times over, were it not for massive injections of government liquidity. If they still fail, well, maybe they shouldn't have been playing with fire in the first place. (By fire, I mean an ever-increasing web of collateralized debt obligations backed by credit default swaps, all insured by AIG, which could not possibly cover the kind of losses the industry would face in the event of a serious crisis.)

But, when the government keeps BOA, Citigroup, Freddie and Fanny afloat, don't people realize that it's their mortgages that are being propped up? Otherwise, some bureaucrat would be foreclosing left and right. I'm sure the reason I'm still in my home is due to probably due to TARP. People don't see that because of the governments policy, the banks have been able to allow people to stay in their homes rather than be foreclosed upon?

There are many ways the government could prop up the mortgage market. They could do it directly - just shave a whole whack off mortgage values on primary residences, financed directly by the government. Or they could nationalize the banks' balance sheets, sort them out, guarantee mortgages as part of a larger restructuring, and spit them back out in a couple years when things have calmed down.

But no, they decided to just give enormous sacks of cash to Wall Street, and hoped they'd go do the right thing with them. Their risks were insured ex post, their balance sheets were propped up, they got loans at absurdly good rates. The folks who were supposed to fix the crisis were all drawn from the same pool of Wall Street financiers and high-end Econ/Finance academics, a three-legged technocratic chimaera. If that's not a textbook case of regulatory capture, I don't know what is.

-Jester