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Archive for July 20th, 2011

Here’s a great example of family values, but only if you think it’s noble for a husband, wife, and daughter to conspire together to rip off taxpayers. I guess the family that steals together, stays together.

Here are some of the details from the Daily Caller expose.

A special investigation by The Daily Caller has discovered that a State Department contract specialist participated in awarding more than $52 million in taxpayer-funded contracts to a company owned and operated by her husband and daughter. Kathleen McGrade helped their company, Sterling Royale Group, win 43 federally funded contracts over the last few years. McGrade acted as the Contracting Officer (CO) for awards to Sterling Royale Group. McGrade’s husband, Brian Collinsworth, serves as the company’s Vice President. McGrade’s daughter, J.L. (Jennifer) Herring, is its president and CEO.

What isn’t apparent from the story, but which presumably will add insult to injury (or, perhaps in this case, injury to injury) is how much money was involved and the degree to which the money was spent on purposes that would be illegitimate even if the contracting process was honest. And speaking of government fraud (is that a redundancy?), James O’Keefe of ACORN fame is back with a set of undercover videos on Medicaid fraud. Experts have estimated that there are tens of billions of dollars of fraud in Medicare and Medicaid, so O’Keefe isn’t uncovering the tip of the iceberg. He’s looking at one snowflake on top of the tip of the iceberg.

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Allister Heath is one of the best economic columnists in Europe and his analysis of Europe’s fiscal situation is rather grim. But Americans can’t be smug. This is where the Bush-Obama policies, combined with demographics, are leading America.

Here’s Allister’s analysis of where things stand in Europe.

Gold hit £1,000 an ounce today for the first time, as equities fell, Club Med government bond yields jumped, spreads increased and the fear and loathing in the credit markets intensified – and all of that in response to the EU’s banking stress tests on Friday night, which were supposed to reassure investors that all was well. What a farce. The tests’ preposterous lack of credibility – they didn’t even envisage the possibility that a government could go bust – have been greeted with the contempt they deserved.

In other words, feckless behavior and grotesque dishonesty from the political class have made a big mess. So what’s going to happen? Allister clearly is a believer in Mitchell’s Law, so he expects the politicians and bureaucrats to use the crisis they created as an excuse to impose additional bad policies.

…the most likely outcome is that the EU will eventually find a way (by bending or rewriting rules) to federalise the debt of failed, bankrupt states: they will issue vast amounts of EU-backed bonds (say €1 trillion, as an order of magnitude) and tell all financial institutions, including insurers and pension funds, that they wish to buy every single government bond from bankrupt countries that they are willing to sell, probably at the discount to face value being priced in at that particular time by the markets. The authorities would give holders an ultimatum: sell now, or bear all future losses. It may be that such an arrangement will not be ready on time for Greece, which could yet be left to go bust and be thrown out of the euro. But regardless of the details, a giant euro-bond would transfer the default risk from private institutions stupid enough to trust Club Med governments (or who were forced, for regulatory reasons, to hold their bonds) to all European taxpayers. This could damage the credit rating of more solvent countries – but even if it doesn’t, it would be tantamount to a massive bailout. In return, the EU would want its pound of flesh: the weaker Eurozone countries would be turned into quasi-protectorates. Such a plan would further discredit capitalism (even though the people who caused the crisis were over-spending politicians) and it would rob the EU of its legitimacy in the eyes of both Southern Europeans (who would lose their independence) and Northern Europeans (who would pay for the south’s greed, stupidity, mismanagement and economic illiteracy).

Allister closes with a very accurate observation about why bureaucrats and politicians enjoy a good crisis.

The EU has always worked on the basis that every crisis is good because it invariably provides an excuse to centralise powers. But the present nightmare could prove to be a bridge too far and herald the beginning of the end for the entire project. Fun and games are about to start.

Yes, they are. And American politicians are playing the same game – more government, less freedom, more government. Lather, rinse, repeat.

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