Sunday, September 11, 2011

Fiscal irresponsibility 16: On government bail outs

The recent US bail out was meant to save corporate irresponsibility of some favored or crony corporations like BA. And to some extent, government irresponsibility like Freddie, Fannie and FHA. A fiscally irresponsible government is capable of using taxpayers' money to bail out corporate irresponsibility, personal irresponsibility, and its own fiscal irresponsibility.

The on-going European bail out is meant to save clearly fiscally irresponsible governments -- like Greece, Ireland and Portugal;, and soon, Spain, Italy, France, UK,... So it's a government to government bail out.

So on both sides of the Atlantic, its a problem of BIG governments getting big debts and big troubles. The biggest market player -- the taxpayers -- are out to bail out big governments, their big debts and their big troubles.

I and many other free marketers NEVER supported govt bail out of failing private companies, whether rich or poor country government. It was the statists and lovers of BIG and more government who endlessly advocate more govt intervention, including bailing out failing private companies.

Bail out of private companies is almost always government cronyism. Cronyism is not a monopoly of poor country governments like the Philippines. Rich governments like the US also have cronyism. Lehman maybe was a crony before, but at the height of the financial meltdown, it was no longer a crony, they allowed it to sink. But BA and others are cronies.

If people re looking for someone to blame in the on-going economic and financial turmoil, let them blame the statists, blame Paul Krugman, blame Obama and Bush and other architects of endless borrowings, of government living beyond their means. The free marketers have been advocating the opposite of what these people mentioned have been doing.

Over here, the main subject of discussion is not corporate bankruptcies or corporate debts, but BIG Philippine government debt, big annual budget deficit, big interest payment, which siphons off money away from more productive spending. If people will contest my above statement of "big deficit, big interest payment" then consider this: Interest payment alone, excluding principal amortization: P294 billion in 2010, P357 billion in 2011, P333 billion in 2012. Are these small numbers?

When the plan to impose a VAT on both expressways (NLEX and SLEX) was floated, some motorists already wanted to start a civil war. By how much would the DOF get from such move? I read about P1B per year.

When the plan to remove altogether the MRT subsidy was floated, some train commuters already wanted to start a civil war. How much is the MRT subsidy, P5B/year.

Such "marginal" tax revenues or subsidies can already spark high public discontent, how much more with P300B+ per year on interest payment alone? And that's one of several functions of government -- to accumulate more public debt, to give endless subsidies with no time table, to give endless pork barrel to more politicians.

And some guys think that letting go of endless fiscal irresponsibility, of going back to the market and more personal responsibility, is a bad thing. Bleeding heart formulation, but makes no sense.

On July 15, 2009, I wrote this:

Bailout money and the US bureaucracy

Below is one update of where a portion of the bail-out money went -- to the ever-expanding government bureaucracy in Washington DC. The additional groth of the bureaucracy goes something like this:

First, create a new set of bureaucracy to assess and decide who should get how much and when.

Second, the bureaucracy will monitor who spent the bailout money well and who wasted it.

Third, the bureaucracy will explain to US Congress and the public that the bailout went well, cover up the wastage if necessary.

Fourth, since they did a good job, the bureaucracy should stay forever whenever possible. Stimulus 2 may be necessary to "sustain the momentum" of stimulus 1.

The taxpayers? They should be thankful of the bureaucracy and the administration in the white house and capitol hill. In recognition of a well-done job, taxpayers will pay ever-higher taxes and fees, and wait for another borrowings for stimulus 2, another borrowings for stimulus 3 (for health care reform), and so on.

Below is the news report.

10 Cities With the Most Job Postings Per Capita

By Liz Wolgemuth Mon Jul 13, 11:03 am ET

Among the 50 largest cities in the U.S., one stands out for having the most abundant job postings per capita: Washington, D.C. The nation's capital boasted 133 postings per 1,000 residents in the second quarter of 2009, according to a report by, a broad job search engine that combs company and association websites, job boards, newspapers, and blogs for postings. That Washington took the top spot is no great surprise, as government hiring has held up during the recession.

The runner up is Baltimore, Md., which is aided by its close proximity to Washington, but also boasts an economy fueled by recession-hearty industries like healthcare and higher education. Baltimore's unemployment rate was 7.2 percent in May, well below the 9.4 percent national average that month.

Here's the top 10 list--pulled from Indeed's list of 50 largest metro areas ranked according to job postings per capita in the second quarter of this year (last quarter's ranking is in parentheses) :

1. (1) Washington, D.C.
2. (2) Baltimore
3. (3) San Jose, Calif.
4. (7) Austin
5. (6) Hartford, Conn.
6. (9) Seattle, Wash.
7. (8) Salt Lake City
8. (11) Denver
9. (5) Boston

10. (4) Las Vegas (Note: Charlotte, N.C. shared the same number of postings per capita as Las Vegas)

The city capturing the bottom spot on Indeed's list is Detroit. See the full list:

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