You will be haunted by 3 ghosts, the Ghost of Malinvestments Past, the Ghost of Malinvestments Present, and the Ghost of Malinvestments Yet To Come.
GHOST OF MALINVESTMENT PAST (Pre-Peak Housing/Credit Bubble)
Past is Prologue: America learned nothing from the 1990s Asian real estate bubble and 1997 Asian financial crisis that left Asia littered with derelict"modern ruins," the "ghost towers":
We instead launched our own stock and housing bubbles even as the Asian bubble imploded.
The massive oversupply of residential buildings (houses/homes, condos) and commercial real estate (CRE) (malls, auto dealerships, coffee shops) not only wastes resources in their initial construction but further wastes resources when the resulting infrastructure is destroyed, either by negligence (frozen water pipes in abandoned buildings), vandalism, or deliberate economic decision.
Bulldozing Brand New Houses
The classic joke about the malinvestment of make-work, the absurdity of paying people to dig holes and then paying people to fill those holes, is now a reality as owners are bulldozing brand new houses in Victorville California.
If there is a picture in the dictionary for malinvestment, bulldozing Victorville's housing-bubble homes could be it:
"I love the smell of malinvestments in the morning....Smells like...Victorville."
Obama embraces the Vietnam War cliche, "to destroy the village in order to save it" (often attributed to a US major regarding the destruction of Ben Tre, 1968):
Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic "shrink to survive" proposals being considered by the Obama administration to tackle economic decline. . . . "US Cities May Have To Be Bulldozed to Survive," Telegraph.co.uk, Tom Leonard, 6/12/09, hat tip: Beemer)----- Local [Flint Michigan] politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area. (
GHOST OF MALINVESTMENT PRESENT (Post-Peak Housing/Credit Bubble)
Sob stories about alleged credit crunches and tight budgets do not match ongoing profligacy.
Multi-Million-Dollar School Swimming Pools Despite Financial Crisis
NYC Co-Op City Harry S. Truman school is trying to spend at least $3 million dollars on an olympic-sized swimming pool:
"People keep thinking of having a pool as a luxury, but it's not," said Truman Principal Sana Nasser. "It's just as crucial as learning arithmetic and reading, as far as I'm concerned." ("Co-op City calls for restoration of Harry Truman High School pools," Tanyanika Samuels, New York Daily News, 6/16/08)Painting Ourselves into a Corner with Multi-Million-Dollar Art Subsidies Despite Financial Crisis
A public-radio commentator suggested that stimulus should subsidize public-radio commentators, citing New Deal subsidies for writers and artists.
Another public-radio ( NPR) commentator talked of an "arts czar" and "arts corps," praising $50 million for 14,000 NEA art jobs.
Strangling the Economy in Red Tape and Parasitic Grants
During the [Obama] transition, arts advocates floated some big ideas—including the creation of an arts corps to bring young artists into underfunded schools, the expansion of unemployment support and job retraining to people working in creative industries and the appointment of a senior-level "arts czar" in the administration. . . . In January they lobbied for $50 million for the NEA in the stimulus package and prevailed over Republican opposition. The one-time allocation will preserve more than 14,000 jobs, allow for new stimulus grants and leverage hundreds of millions more in private support for the arts. Two million Americans list "artist" as their primary occupation. Nearly 6 million workers are employed in the nonprofit arts-and-culture complex. In the words of the NEA's Patrice Walker Powell, the stimulus vote finally "dignified [them] as part of the American workforce." ("The Creativity Stimulus," Jeff Chang, NPR, 4/22/09)
The "recovery" programs are preventing recovery by converting all economic activity into begging for government hand-outs ("rent seeking"--transfering wealth made by others instead of creating wealth).
Cumberland County Maine grants coordinator Elizabeth Trice (?) is “spending a lot of time” on grants.gov groping for stimulus funds and wading through a maze of mostly irrelevant material.
Hundreds of county and city officials attended a 9-hour White House Recovery and Reinvestment Act Implementation Conference in Washington DC.
National Association of Counties President-Elect Valerie Brown called the byzantine welfare mess“exciting” and “wonderful.” ("Local Governments Tackle Federal Grant Process," Elizabeth Blair, NPR, 3/25/09)
GHOST OF MALINVESTMENT YET TO COME
The grants and other "stimulus" programs will have the opposite effect and mire the economy in a morass of fraud, corruption, rent seeking, squandered labor, wasted resources, misallocation of capital, crowding-out (government spending monopoly starves productive investments of funds), and hyper debt.
The FBI is bracing for a wave of fraud and corruption cases stemming from the government's multitrillion-dollar effort to get the economy moving again, the agency's chief told Congress Wednesday. ("FBI: Stimulus, Bailout Will Lead to More Fraud," 3/25/09)-----
UPDATE 9/16/09: I hate to say I told you so but Congress presented Malinvestment Exhibit A, Cash for Clunkers.
Obama is trying to perpetuate Bush's "guns and butter" debt bubble while pretending to favor sound economic policy and pretending to solve the economic crisis.