We were fans of the promises made by Obama to spend Federal dollars to rebuild our Nation’s roads, bridges, power grids, and fund an alternative fuel and energy program to end our dependence on imported oil. Sadly, those projects have yet to be funded by Congress while a lot of other very expensive and bizarre programs have been funded. Instead of rebuilding our country’s infrastructure and getting people back to work, Congress funded a $787 billion economic stimulus plan to entice Americans to increase their consumer debt, punish them for saving, and provide gigantic bonuses for the executives that nearly bankrupted our financial and insurance institutions.The $4 billion Car Allowance Rebate System (CARS) program gave $4,500 in cash to anyone willing to demolish their older working car or truck and buy a new one for up to $45,000. To qualify, clunkers had to be owned at least a year, built since 1984, and be completely demolished so that even their valuable reusable parts like pistons, engines, and drive trains could not be reused. Americans traded their paid off cars in exchange for debt on new cars with only a 10 mile per gallon difference in fuel usage required. SUVs and even Hummers qualified, while used cars with substantially better gas mileage did not.
Americans were encouraged with up to $8000 in tax credits to buy a house this past year even as job losses and overspending by Americans led to an ever increasing number of foreclosures. The Treasury spent over $400 billion on underwater mortgage-backed securities to keep banks, Fannie Mae, Freddie Mac, and Ginnie Mae afloat from their bad home loans. Subsidizing the failed housing market has kept mortgage rates at a record low and builders afloat in a market awash with houses. Meanwhile, Obama’s $75 billion Home Loan Mortgage Modification Foreclosure Prevention (HAMP) and Homeowner Affordability and Stability Plan (HASP) programs are not keeping up with the accelerating number of Americans unable to afford their payments while their housing values and salaries continue to decline.
The Treasury paid over $700 billion in cash bailouts to 770 recipients including banks, mortgage servicers, insurance providers, auto companies, and government backed institutions under the Troubled Asset Relief program (TARP). TARP allowed US Banks to not have to trouble themselves with the usual bank business of luring depositors, thus creating record low interest rates in government protected FDIC savings accounts and discouraging Americans from saving their money. These same banks are getting 29% interest and higher on credit card balances. We guess this bizarre business model is one of the reasons bank executives feel justified in giving themselves gigantic bonuses. The Treasury’s actions resulted in a US stock market bump in 2009 of 28% (S&P 500) and a global securities bubble where some international stock markets gained over 160%, further feeding Wall Street’s unrepentant attitude for the damage they caused with their creative mortgage-backed securities
The loss of income to the State of Hawaii due to sinking property values, rising unemployment, fewer tourists, increased bankruptcies and foreclosures had a big impact on life in Hilo in 2009. Hawaii’s cost reduction programs and cutbacks combined with Congress’s stimulus plan programs created some bizarre situations.
1 The concept of “Furlough Friday” has entered into the collective consciousness and almost come to seem “normal”. Hawaii State, Education, and soon County workers are on various forms of “Furlough Friday”. Traffic and shopping on the Big Island now revolve around Furlough Fridays and new businesses and services have emerged to take advantage of the new habits and needs of the growing number of furloughed workers and children.
2 The acceptance of the lowest number of instructional days in the US (down 17 days to only 161 days) at Hawaii’s public schools has become the new reality after lawsuits and a national scolding had no effect. Hawaii’s children had already lost their State’s Universal Child Health care program at the beginning of 2009. Yet, Representative Abercrombie garnered $59 million in 2009 earmarks for education, health care and activities only for Native Hawaiians excluding Hawaii’s children furloughed from the State’s public school system (ironically founded by King Kamehameha in 1840) due to a $38 million shortfall.
3 Hawaii’s Food Stamp program (SNAP) has the highest income limits in the US allowing 94,000 residents to collect the awesome benefit. On Food Stamp day (the day the State loads up the EBT plastic card holders) the Hilo grocery stores’ parking lots are packed. The strange thing is that the autos are mostly brand new, large SUVs, we presume bought through the clunkers program. The rest of the month, the lots have fewer, older, and smaller sized cars.
4 The rapid rise of unemployment, particularly among young Americans, has made enlisting in the US Military look attractive. If the fitness requirements and background investigation can be passed, being a solider is one of the few full-time, full-benefit jobs available without job experience and the only Federally supported employment for those without college degrees. While Obama was wringing his hands over sending more soldiers to Afghanistan, we met many young people in Hilo waiting impatiently for their acceptance into the US military knowing they would immediately be sent into a violent war zone if they were able to get through boot camp. This is a bizarre departure from the 1990’s when parents and public officials scolded gamers and game developers about the harmful effects of violent video games.
We are disappointed that during the first year of our new administration, Congress and Obama have not chosen to invest in America’s infrastructure, jobs, or college tuition support. We heard from our grandparents how strange things were in the Great Depression and as the bizarre become normal in these times we wonder what the next year of Obamanomics will look like in Hawaii.
