Bad TARP Side Effects
What an absurd side effect of rushed TARP legislation:
“In June 2008, U.S. Virgin Islands Governor John deJongh Jr. agreed to give London-based Diageo Plc billions of dollars in tax incentives to move its production of Captain Morgan rum from one U.S. island — Puerto Rico — to another, namely St. Croix.
DeJongh says he had no idea his deal would help make the world’s largest liquor distiller the most unlikely beneficiary of the emergency Troubled Asset Relief Program approved by Congress just four months later.
Today, as two 56-foot-high (17-meter-high) tanks for holding fermenting molasses will soon rise from the ground on the Caribbean island of St. Croix, the extent to which dozens of nonbank companies benefited from last October’s emergency financial rescue plan is just beginning to come to light.
The hurried legislation adopted by a Congress voting under the threat of sudden global economic collapse led to hidden tax breaks for firms in dozens of industries. They included builders of Nascar auto-racing tracks, restaurant chains such as Burger King Holdings Inc., movie and television producers — and London’s Diageo.
“It’s kind of like the magician’s sleight of hand,” says former House Ways and Means Committee Chairman William Thomas, a California Republican who ran the committee from 2001 to 2007 and oversaw all tax legislation. “They snuck these things in a bill that was focused on other things.”
Unbelievable . . .
>
Source:
Bailout of U.S. Banks Gives British Rum a $2.7 Billion Benefit
Ryan J. Donmoyer
Bloomberg, June 26 2009
http://www.bloomberg.com/apps/news?pid=20601109&sid=amp5wXx35fkc
June 26th, 2009 at 12:32 pm
The mass robbery by the elite continues……and why would it stop? They realize they can do it right out in the open without any consequences.
And we can’t get Universal Health care passed in some form that makes some degree of sense for everyone. Good grief.
June 26th, 2009 at 12:48 pm
Au contraire, Barry. Totally, unequivocally, 100%, absolutely, [synonymn, synonymn, synonymn. . . ] believable. Unfortunately.
MW
June 26th, 2009 at 1:03 pm
My own view is that signing the TARP legislation was just about the worst thing that Bush did during his presidency.
June 26th, 2009 at 1:05 pm
Bad TARP side effects? No.
TARP is a bad side effect.
Cranky, if you care about this stuff so much and you spend so much time and energy blogging, why don’t you run for office? Go up against Gillibrand in 2010. I am serious for once. You have an erudite mastery of economic policy topics, you have some money and know people with even more money, you are nationally well-known and have tons of media exposure, and you have an odd army of progressive and Libertarian brainpower, money, and connections on this blog who adore you and will support you. You know the times are crucial and you know there are few people who could do as good a job in public office as you. Cranky, the future of the world rests on your shoulders.
Senate in 2010, White House in 2016.
June 26th, 2009 at 1:23 pm
This looks like a bad side effect to people feeling fleeced of their pensions. Could be coming to a town near you.
http://www.independent.co.uk/news/world/europe/oap-gang-tortured-financial-adviser-1716327.html
June 26th, 2009 at 1:28 pm
I think your sarcasm is a little too light. If you would have said, “Oh No! My faith in democratic process is shaken because of this corruption. How could this have possibly happened?” then maybe everyone would have caught on.
Sheople are dumb. Subtlety is lost on us.
June 26th, 2009 at 1:31 pm
You really like that link, Jeffy-boy! BTW you should stay on top of Hoffer to find out whether he agrees with you on Klobuchar.
Because I think Barry Ritholtz will be every bit as good a Senator as Amy Klobuchar.
June 26th, 2009 at 1:33 pm
@CNBC Sucks: I don’t LIKE it, but I’m a bit shocked by it. Morbidly fascinated/horrified by it, like everything else that’s going on right now. How can you not be? We’re talking about seniors gang torturing someone? That’s insane.
Will do on Klobuchar. I’m sure she’s not perfect and that she’ll probably be tainted over time (even the best of intentions get tainted in our political system), but she seems OK to me. Believe it or not, I don’t think that T-Paw, our GOP governer is half-bad either. I don’t always agree with him, but he seems like a sensible, decent guy.
June 26th, 2009 at 1:34 pm
@ DL – absolutely right. I wonder who told Bush what to make him do such a stupid thing? The public was against it, as poll after poll showed, so he had political cover.
Now, Barack W. Obama is falling for the same old story. (I jest – the story fits right into the plans BWO and his RDDB-Ilk have had for us for decades.)
Thor – if you haven’t already, check out Dr. Housing Bubble for insights into the SoCal RE Mkt.
June 26th, 2009 at 1:35 pm
“It’s kind of like the magician’s sleight of hand,” says former House Ways and Means Committee Chairman William Thomas, a California Republican who ran the committee from 2001 to 2007 and oversaw all tax legislation. “They snuck these things in a bill that was focused on other things.”
Methinks Mr. Thomas is being a bit disingenuous. He knew it was going on and did nothing to stop it. In fact, I am sure he just looked the other way all the while.
June 26th, 2009 at 1:36 pm
CNBC Sucks:
Except BR lives in NY and not the Land of 1,000 Lakes. But still, BR would make a better Senator than Schumer.
June 26th, 2009 at 1:37 pm
@Calvin: That’s 10,000 lakes. You forgot a zero. Don’t downgrade our biggest asset here in Minny!! Second biggest asset = the mosquito, the unofficial state bird.
June 26th, 2009 at 1:39 pm
@DL: And that’s quite a list you’re talking about there.
June 26th, 2009 at 1:47 pm
congress is a bunch of incorrigible scoundrels
we need less legislation, not more
what a freakin’ mess
June 26th, 2009 at 1:50 pm
Kind of just another mind-numbing sign of the times.
Of course who inserted the provisions can be determined. Everyone is complicit until Congress changes the way they do business, and that ain’t gonna happen.
And BS Obama can posture all he wants and hire all the cost busters he wants. Staff the Treasury and WH to the gills. Business as usual.
We are cooked.
June 26th, 2009 at 1:52 pm
forgot to mention a nice investigation into TARP fraud and abuse naming names would be a nice gesture.
ditto the stimulus fraud
Ritholtz would never frustrate himself that badly by being in office. As a junior Sen or Rep he’s dirt until they’re sure he’s one of them.
June 26th, 2009 at 1:55 pm
Mannwich @ 1:39
I actually didn’t become a Bush-hater until the middle of 2008.
June 26th, 2009 at 1:58 pm
Just further proof that the majority of them dont even read the f*cking bills! Its blatantly obvious.
Especially when shit like this is snuck in at the bottom of page 623, with reference to Appendix 3, Sect B, line 342.
June 26th, 2009 at 2:04 pm
@DL: I hear you but that’s where we disagree. I supported (but did not vote for and always agree with) Bush after 9/11, but he lost me after it became apparent that Iraq was going to be a disaster, although I did NOT support the war going in. Katrina was the coup de grace for me.
June 26th, 2009 at 2:04 pm
Calvin – Of course, I know Ritholtz lives in LI…that’s why I told him to run against Gillibrand.
I think Barry Ritholtz might be a political genius. He draws tons of adoring, enthusiastic, and faithful Libertarian fans to his blog when he writes about bank nationalization and regulating the bejeezus out of the financial services industry day after day after day. I don’t know anyone else who can achieve that feat. Reagan had “Reagan Democrats’ and Ritholtz has “Ritholtz Libertarians”. The amazement never ends. People just love Barry Ritholtz.
I want to put Cranky into office just so that I can produce and cash in on a viral video called “The Ritholtz Deception”.
June 26th, 2009 at 2:10 pm
JoWriter – Thanks for the Dr Housing Bubble link – checking it out now.
June 26th, 2009 at 2:17 pm
Mannwich @ 2:04
Re Katrina: obviously they could have handled things a lot better during the first few hours, days and weeks. But I never advocated the idea of pouring massive amounts of Federal money into New Orleans.
June 26th, 2009 at 2:20 pm
I would vote for Barry if he ran against Gillibrand. I’m in NY.
June 26th, 2009 at 2:22 pm
ditto Dr Housing Bubble. Out of tens of thousands of negotiations, 36 had their principal reduced.
Oh, and how underwater is their principal balance against the home’s value?
A massive fraud.
June 26th, 2009 at 2:22 pm
@Mannie and DL-
i didn’t think i could get worked up on this again, but here goes a little bit…
i gave bush the benefit of the doubt when he was elected – “compassionate conservative” from Tejas – good for oil and gas (i.e. me). thought he was a bit arrogant and inarticulate with some goofy gestures, but wtf, he was elected, let’s move on.
it quickly became apparent that the “compassionate” part was a campaign slogan and that the super sleazeball rove, figured the calculus of politics by pandering to the religious extremist and the joe six packs to form a majority – so much for the compassion.
Then 9/11 and the response – a great portion of the world sympathized with the situation of the US. We went after OBL in Afganistan. OK. Started hearing some strange stuff – remember the first foray into Afgahnistan – Operation Crusades – huh?, wtf Crusades! They even has to change the name of the operation when it started coming out.
The last straw was the lead up to the invasion of Iraq – the obvious lies, manipulation and cherry picking
of the facts – total bs – hidden agenda as clear as can be by one Neocon after another led by the super paranoid Cheney the Machiavellian puppeteer in grand form. Huge mistake, huge waste of human life, permanent physical and mental damage to so many, for what?
I could not believe Bush II was re-elected, I thought it was so obvious that there would be no possibility for re-election, but it happened.
Bush II disappeared during the financial meltdown -great leadership there – bailed out on the bail outs – Paulsen and Bernanke filled the void – and guess what – Banksters take care of Banksters and they have no qualms about raiding the US Treasury to do so, thank you very much
June 26th, 2009 at 2:30 pm
“Unbelievable”? Are you serious Ritholtz?
June 26th, 2009 at 2:30 pm
The problem is that all governments are bad–Democracy or Communism, etc. The idea is to limit the power and control of a gov’t. One way to do that is keep revenue and spending and creation of debt and borrowing, if at all, to an absolute minimum. Like in California, the day of recongning is here. CA gov’t will have to slash the budget by 24 billion in a month. Its power adn influence will decrease. BTW, I think that the next big round of layoffs is going to come from munis and state gov’t, which will lead the way down again.
June 26th, 2009 at 2:31 pm
Wes Schott @ 2:22
Re Iraq: There’s no question that from today’s perspective, the costs of that war vastly exceed the benefits. But I am at least open to the idea that 10 years from now, many will still believe that the costs exceeded the benefits, but by a much smaller margin than is currently perceived to be the case. Iraq was going to be a problem for us no matter what we did (or didn’t do).
June 26th, 2009 at 2:33 pm
Best damn Congress money can buy!
June 26th, 2009 at 2:33 pm
….getting less bad, huh?
June 26th, 2009 at 2:34 pm
Correction…
Best damn Government money can buy!
June 26th, 2009 at 2:36 pm
@DL: Sounds like the “better than expected” meme on the economy. Sorry, I can’t buy that Iraq is and ever was a good idea. Just another example of gross misallocation of capital. Time for us to mind to our own affairs at home, don’t you think?
June 26th, 2009 at 2:39 pm
Mannwich,
I’m not arguing that Iraq was a good idea. Only that, 10 years from now, it may be perceived to be “less bad”. (Yeah, a little like “BTE” on the economy, I agree).
June 26th, 2009 at 2:39 pm
Re Iraq: There’s no question that from today’s perspective, the costs of that war vastly exceed the benefits. But I am at least open to the idea that 10 years from now, many will still believe that the costs exceeded the benefits, but by a much smaller margin than is currently perceived to be the case. Iraq was going to be a problem for us no matter what we did (or didn’t do).
that’.s a good point, sir
June 26th, 2009 at 2:40 pm
@I-man, that’s part of the problem. When was the last time you read “the bottom of page 623, with reference to Appendix 3, Sect B, line 342″ of anything”? Let alone half a dozen bills a week. E.g., “Only a handful of senators outside the Intelligence Committee say they read the full 92-page National Intelligence Estimate on Iraq’s ability to attack the U.S. before voting to go to war,” (The Hill, 6/19/07) and that was only 92 pages, without molassas tanks. Besides, to hear most of these people talk, (when they’re not reading prepared notes) one wonders just how well they can read.
June 26th, 2009 at 2:41 pm
Barry:
This listing detailing the outrageous and scandalous use of TARP money is the kind of listing I wish you would focus on more.
Lately, a majority of this site has been focused on the sins of the past as detailed in your book. A review of these sins is very important. But we really need to focus on what is going on in the here and now.
The current administration and congress are doing all sorts of ridiculous things based upon the premise that George Bush screwed up. The problem is that in reality they are tripling down on what Bush did and loading this country up with ridiculous amounts of debt. This administration and congress really don’t care about righting the sins of the past. They want to fundamentally re-make this country and are using egregious amounts of debt to do it. The federal government is just GM and Chrysler in drag — only 10,000 times bigger. And B.O. want to make government cool again.
Bernanke, Bush and Paulson truly had to deal with a crisis. The banking system was completely melting down. Things get messy in a war. Sure, they made big mistakes, but that happens in times of war.
The Obama stimulus package was not passed by the current congress during a time of economic meltdown like we had last fall. There was time to do it right. There was certainly time to let everyone at least read the darn bill.
But Obama and Pelosi and Reid and Frank wanted their ridiculous, pork-laden bill passed without anyone having a chance to read it. And this is what we get – outrageous uses of the debt they approved.
Now we will have a climate change bill that no one has read or understands. Then we will have a health care bill that no one has read or understands. This is completely outrageous.
We can do something about these sins right now by stopping them. These current sins deserve much more of the attention by this society than the sins of the past…..or we are going to wake up to a much bigger mess than we inherited from the Bush years.
June 26th, 2009 at 2:51 pm
@Brett -
you are so right
June 26th, 2009 at 2:56 pm
@ Tibbits:
“Now we will have a climate change bill that no one has read or understands. Then we will have a health care bill that no one has read or understands. This is completely outrageous. ”
Amen.
Hey, Congresspeeps, the Natty Dread in the Wilderness has some words for you:
Read the damn bills before you vote on them… thats what you dipshits are paid to do.
June 26th, 2009 at 3:15 pm
Wes – Re: 2:22 – Completely agree, almost as if I wrote that post myself
June 26th, 2009 at 3:27 pm
Mannwich,
Speaking of mosquitos, how are they up there this year? Last year I thought they were incredible.
I hope to get back up there this year but not sure if I should bring any shorts or short sleeved shirts or anything that leaves skin exposed after lasts years voracious horde…
June 26th, 2009 at 3:31 pm
“Fisher Says Fed Actions Helped Pull U.S. ‘From Abyss’ (Update1) ”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aHxbvg_xRPDM
I am sick of these regional Fed presidents cheerleading the Fed- what abyss??? the bankruptcy of large insolvent banks??? for a Fed President- I guess that is the abyss-
douche bags
June 26th, 2009 at 3:51 pm
@Ahab
How about the complete meltdown of the global economy, making the present crisis seem like an unmitigated economic boom?
Wow. Some people’s historical ignorance is utterly astounding.
June 26th, 2009 at 3:58 pm
@bman: Not bad at all around the cities area during the day (in country probably a different story). It’s been quite hot (high 80’s/90’s), so they don’t tend to be bad in the heat, but at dusk (early a.m.) is when they really come out. Can be brutal.
June 26th, 2009 at 3:58 pm
This is off the top of my head on a Friday afternoon, but….as I recall Goldman Sachs owns a big chunk of Burger King that, is not limited to but includes a benefit to employees invested in its non-liquid asset portfolio.. Correct me if I have that wrong, but if I’m right it’s another example of the TARP benefitting GS, and may in fact be the reason BK got the TARP funds in the first place…
Scott in Chicago
June 26th, 2009 at 4:02 pm
This should be no surprise at all. Legislators live for moments of crisis because they are allowed to sneak in perks and giveaways to their constituents. Look at the economic stimulus package; how many irrelevant boondoggles are being funded under that banner?
June 26th, 2009 at 4:07 pm
1, 10 or 100 years from now our invasion & occupation of Iraq will be seen as a colossal mistake – and immoral too. The next year or two could be a real bloodbath there, the surge merely kept the lid on a simmering pot
June 26th, 2009 at 4:08 pm
redrum,redrum,redrum
Diagio welfare is bloody murder
June 26th, 2009 at 5:39 pm
DL @ 2:31
Want to know the real cost of war…Ask the loved ones of those who didn’t make it back, ask those that came home missing limbs as they try to adapt to a “normal” life again; ask the loved ones of those who came back with scrambled brains.
I still jump when I hear a loud “BANG and I left the battlefeld 45 years ago.
War has many more coststhan pure Dollars & Cents.
June 26th, 2009 at 8:36 pm
[...] Bad TARP Side Effects | The Big Picture (tags: TARP spending government weird taxes) [...]
June 26th, 2009 at 10:30 pm
Amen grumpy, amen.
June 27th, 2009 at 12:33 am
Congress just can’t help itself. They HAVE to insert some tax breaks here and there for the hell of it.
Mark Twain said it well: “No citizens’ assets are safe while Congress is in session.”
June 27th, 2009 at 12:39 am
I second that Grumpy: my grandpa came back from WWI and he was OK during the day…but the nights…that was horrible.
June 28th, 2009 at 5:25 am
Don’t blame me, I voted for Xenu…
As far as Libertarians for Barry: maybe squishy ones like myself, who believe that in the real world folks need an impartial government to set and adjudicate rules among market participants. Presumably the hard libertarian POV would be to simply declare _caveat emptor_ and let the market decide, but that dog just won’t hunt in the real world, monsignor..
I do wonder about anarchists though, which is IMO the logical end state of hard libertarians.. Need we all gun up? Because, to me, surviving anarchism is all about having the best arsenal and least compunction to deploy it…