Let the Bailouts Begin!

The House of Representatives passed a bill to bailout Puerto Rico a couple of days ago.  Will they do the same for states that are just as irresponsible?  According to the Mercatus Center at George Mason University, six states are just as bad as the little Caribbean island with a sweet tooth for spending cash.

With short-term budget troubles and colossal long-term debt, Kentucky, Illinois, New Jersey, Massachusetts, and Connecticut, in particular, are much closer to the basket case economic condition of the Caribbean territory on the Mercatus fiscal health index than they are to states such as Texas, the Dakotas, Florida, or Nebraska, where budgets are balanced and public pension systems may yet be salvaged.

For example, Connecticut, which ranks 50^th out of the states for fiscal health, has run up $67 billion in debt, compared to Puerto Rico’s $118 billion, while both have populations of around 3.6 million. But personal income in Puerto Rico is less than one-third of Connecticut’s. If that seems reassuring, consider that the Nutmeg State’s debt figure grows to $124 billion if you recalculate pension debt, assuming it will all be paid — an assumption one no longer makes for Puerto Rico, which gave up on funding its pension system a decade ago and is now just draining the balance.

Get ready folks.  States that are fiscally responsible will be the one’s holding the bag for a bunch of reprobates.  If bailouts occur, consequences should be meted out.  I believe states should lose representation in Congress and electoral votes for president disqualified until their debt is paid back in full.

Source:

http://watchdog.org/267047/puerto-pension-debt/

Big Insurance Cartel Expecting Obamacare Bailout

The best way a handful of businesses in any given industry can guarantee profits, marginalize competitors, and bailout their mismanaged company is to become a government sponsored cartel.  We’ve seen this “most favored” status conferred upon select banks, auto makers, and various businesses that know how to milk the government teat.  Their names need not be listed.  We all know who they are.

The health insurance industry has become the next “too big to fail” government sponsored cartel and Obamacare is the vehicle for which a handful of businesses will shelter themselves from a massive failure with the expectation that taxpayers will bail them out.

The handwriting is on the wall.  Performance is not meeting expectations.  This means massive increases in premiums.  Big insurance knew this was coming, as well as their enablers in Washington D.C. 

The Washington Examiner reported the following:

   

This is an ominous sign for the future of Obamacare, because two federal programs that were supposed to act as training wheels for insurers in the early years of Obamacare by absorbing excess risk are set to expire after 2016. If insurers don't do a better job of attracting a healthier risk pool, 2017 promises to be a rocky year for insurance markets, regardless of which party is in control of the White House.

In the first two years of the implementation of Obamacare's insurance exchanges (2014 and 2015), insurers set rates with the expectation that the government would absorb a certain degree of risk and they made assumptions about the medical costs of their enrollees.

And here comes the rub:

In a scenario in which there are massive industry-wide losses (and thus there isn't enough money being raised by the program to make it self-sustaining), Republicans argued that the program would take on the characteristics of an open-ended taxpayer bailout.

At first, the administration said the program would be budget neutral – meaning it would only make payments to insurers up to the amount that was collected from other insurers. But that led to a furious backlash from insurers last spring, as lobbyists and company executives warned of serious rate hikes for policies starting in 2015 unless they were given added reassurance that the federal money would continue to flow

Now that insurers have had more time to look at the claims coming in from those enrolling from Obamacare, they're finding that the pool of customers is older and sicker than originally projected, driving up medical costs. Meanwhile, federal help isn't what they anticipated.

Or, do they?  Does anyone truly believe Washington D.C. is going to let this government program fail?

Source:

http://www.washingtonexaminer.com/rate-hikes-expose-shaky-foundation-of-obamacare/article/2564841#.VV_DgEXvd5E.facebook

Financial Calamity - It's Coming

H/T:  NC Renegade

Solyndra Employees Get Another Bailout

The Solyndra nightmare isn’t over yet. Now, the American people are getting another kick in the package from their employees.

The Labor Department today announced that it had approved Trade Adjustment Assistance for the former employees of the bankrupt solar panel maker Solyndra.

That means all of the firm’s 1,100 ex-employees are eligible for federal aid packages, including job retraining and income assistance. The department has valued packages at about $13,000 a head.

Taxpayers will have to cough up yet another $14.3 million as a result of Solyndra’s bankruptcy. They are already on the hook for $528 million in federal loan guarantees to the company that are unlikely to ever be paid back.

And how does the Obama administration justify paying his most favored company after they screwed the American people out of $528 million in guaranteed loans?

The TAA program offers help to domestic workers who have lost their jobs due to the trade practices of foreign countries. The assistance includes job retraining, allowances for job searching, health benefits and up to 130 weeks of income support. The average recipient gets about $13,000 in assistance

These guys didn’t lose their jobs because of foreign competition. They lost their jobs because a bunch of grafters started a company with a fraudulent business model.

Source: http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/6645-solyndra-staff-get-13000-taa-federal-aid

General Motors Bailout Cost Taxpayers an Additional $9 Billion

American taxpayers just received another round of good news. General Motors and the Treasury Department just screwed everybody out of $9 billion.

The Treasury Department dramatically boosted its estimate of losses from its $85 billion auto industry bailout by more than $9 billion in the face of General Motors Co.'s steep stock decline.

In its monthly report to Congress, the Treasury Department now says it expects to lose $23.6 billion, up from its previous estimate of $14.33 billion.

The Treasury now pegs the cost of the bailout of GM, Chrysler Group LLC and the auto finance companies at $79.6 billion. It no longer includes $5 billion it set aside to guarantee payments to auto suppliers in 2009.

The big increase is a reflection of the sharp decline in the value of GM's share price.

The current estimate of losses is based on GM's Sept. 30 closing price of $20.18, down one-third over the previous quarterly price.

GM's stock closed Monday at $22.99, up 2 percent. The government won't reassess the estimate of the costs until Dec. 30.

The government has recovered $23.2 billion of its $49.5 billion GM bailout, and cut its stake in the company from 61 percent to 26.5 percent. But it has been forced to put on hold the sale of its remaining 500 million shares of stock.

Why not sell those shares to the UAW? I’m sure they’ll give the Obama administration an offer they can’t refuse.

Source: http://detnews.com/article/20111114/AUTO01/111140434/U.S.-boosts-estimate-of-auto-bailout-losses-to-$23.6B#ixzz1dvbqii3Z

Department of Energy Bails Out the Kennedy Green Baron

Where would a government boondoggle be without a Kennedy? The Department of Energy adds Camelot to its menu of corruption; and Teddy’s favorite item (a waitress sandwich) isn’t even listed. No, this time Robert Kennedy Jr. steps up to the plate and gorges himself on $1.4 billion of taxpayer money.

Peter Schweizer’s new book Throw Them Out details this and a myriad of other D.C. scandals. Big Government.com writes the following:

The details of how BrightSource managed to land its ten-figure taxpayer bailout have yet to emerge fully. However, one clue might be found in the person of Sanjay Wagle.

Wagle was one of the principals in Kennedy’s firm who raised money for Barack Obama’s 2008 presidential campaign. When Obama won the White House, Wagle was installed at the Department of Energy (DOE), advising on energy grants.

From an objective vantage point, investing taxpayer monies in BrightSource was a risky proposition at the time. In 2010, BrightSource, whose largest shareholder is Kennedy’s VantagePoint Partners, was up to its eyes in $1.8 billion of debt obligations and had lost $71.6 million on its paltry $13.5 million of revenue.

Even before BrightSource rattled its tin cup in front of Obama’s DOE, the company made it known publicly that its survival hinged on successfully completing the Ivanpah Solar Electrical System, which would become the largest solar plant in the world, on federal lands in California.

In its Securities and Exchange Commission filings, BrightSource further underscored the risky nature of the Ivanpah venture and, more broadly, the company’s viability:

Our future success depends on our ability to construct Ivanpah, our first utility-scale solar thermal power project, in a cost-effective and timely manner… Our ability to complete Ivanpah and the planning, development and construction of all three phases are subject to significant risk and uncertainty.

But what is certain, if you have the right connections at the Department of Energy, you can get a taxpayer funded guaranteed loan.

Source: http://biggovernment.com/whall/2011/11/16/robert-kennedy-jr-s-green-company-scored-1-4-billion-taxpayer-bailout/