Coyote Blog

A couple of years ago I wrote:

Activist: A person who believes so strongly that a problem needs to be remedied that she dedicates substantial time to "¦ getting other people to fix the problem.   It used to be that activists sought voluntary help for their pet problem, and thus retained some semblance of honor.  However, our self-styled elite became frustrated at some point in the past that despite their Ivy League masters degrees in sociology, other people did not seem to respect their ideas nor were they particularly interested in the activist's pet issues.  So activists sought out the double shortcut of spending their time not solving the problem themselves, and not convincing other people to help, but convincing the government it should compel others to fix the supposed problem.  This fascism of good intentions usually consists of government taking money from the populace to throw at the activist's issue, but can also take the form of government-compelled labor and/or government limitations on choice.

So now, we have the next step -- advocating that others spend their time convincing government to use compulsion to solve some imagined problem.  Kevin Drum urges:

The only real way to address climate change is to make broad changes to laws and incentives.  It puts everyone on a level playing field, it gives everyone a framework for making their own choices, and it gives us a fighting chance of making the deep cuts we need to.  So listen to Tidwell: "Don't spend an hour changing your light bulbs. Don't take a day to caulk your windows. Instead, pick up a phone, open a laptop, or travel to a U.S. Senate office near you and turn the tables: 'What are the 10 green statutes you're working on to save the planet, Senator?'"

Jackboots seem to be "in" this season.

Postscript: In the language of mathematics (I mentioned before I am in the middle of Goedel-Escher-Bach) if actually aiding someone is "helping," then I guess organizing people to help is meta helping, and lobbying government to force other people to help is meta meta helping and so advocating on your blog that people should lobby the government to force other people to help is meta meta meta helping.  Must really warm Drum's heart to be so directly connected with helping people.

The union whose president leads the world in visits to the White House this year has shown what is at the heart of its quest to help mankind -- a  naked power grab.

In pursuit of an Eagle Scout badge, Kevin Anderson, 17, has toiled for more than 200 hours hours over several weeks to clear a walking path in an east Allentown park.

Little did the do-gooder know that his altruistic act would put him in the cross hairs of the city's largest municipal union.

Nick Balzano, president of the local Service Employees International Union, told Allentown City Council Tuesday that the union is considering filing a grievance against the city for allowing Anderson to clear a 1,000-foot walking and biking path at Kimmets Lock Park.

"We'll be looking into the Cub Scout or Boy Scout who did the trails," Balzano told the council.

Balzano said Saturday he isn't targeting Boy Scouts. But given the city's decision in July to lay off 39 SEIU members, Balzano said "there's to be no volunteers." No one except union members may pick up a hoe or shovel, plant a flower or clear a walking path.

via Alex Tabarrok

I have warned about this before:

In fact, Hollywood's portion of the stimulus package reveals an important factor of the Recovery Act: The money is not going to areas that would more directly stimulate the economy but instead to provide ongoing life support to deficit-ridden federal, state and local agencies.

That is the main impression I have gotten when reading the stimulus jobs data base -- the fake districts and BS accounting did not catch my eye so much as the fact that all the jobs seemed to  be saved jobs in government agencies.  I am pretty sure that had the stimulus been originally sold with its true goals -- to help stave off financial accountability in state and local governments -- it would have had more difficulty passing.

Though some of us saw this even in the bill itself (this blog, Jan 27, 2009)

So do you see my point. The reason so much of this infrastructure bill can be spent in the next two years is that there is no infrastructure in it, at least in the first two years!  42% of the deficit impact in 2009/2010 is tax cuts, another 44% is in transfer payments to individuals and state governments.  1% is defense.  At least 5% seems to be just pumping up a number of budgets with no infrastructure impact (such as at Homeland Security).  And at most 6% is infrastructure and green energy.  I say at most because it is unclear if this stuff is really incremental, and much of this budget may be for planners and government departments rather than actual facilities on the ground.

Obama specifically promises not to spend the stimulus money on dog parks  (as an example of what people would consider frivolous public investment).  Katherine Mangu-Ward brings us this picture of a stimulus funded dog park near her home:

Cafe Hayek has a series of articles here and here on the absurd numerical games going on to pump up the stimulus numbers (which I also offered example of here, where pay increases were considered a "job saved").

For example:

Up to one-fourth of the 110,000 jobs reported as saved by federal stimulus money in California probably never were in danger, a Bee review has found.

California State University officials reported late last week that they saved more jobs with stimulus money than the number of jobs saved in Texas "“ and in 44 other states.

In a required state report to the federal government, the university system said the $268.5 million it received in stimulus funding through October allowed it to retain 26,156 employees.

That total represents more than half of CSU's statewide work force. However, university officials confirmed Thursday that half their workers were not going to be laid off without the stimulus dollars.

"This is not really a real number of people," CSU spokeswoman Clara Potes-Fellow said. "It's like a budget number."

Also here:

While Massachusetts recipients of federal stimulus money collectively report 12,374 jobs saved or created, a Globe review shows that number is wildly exaggerated. Organizations that received stimulus money miscounted jobs, filed erroneous figures, or claimed jobs for work that has not yet started.

The Globe's finding is based on the federal government's just-released accounts of stimulus spending at the end of October. It lists the nearly $4 billion in stimulus awards made to an array of Massachusetts government agencies, universities, hospitals, private businesses, and nonprofit organizations, and notes how many jobs each created or saved.

But in interviews with recipients, the Globe found that several openly acknowledged creating far fewer jobs than they have been credited for.

One of the largest reported jobs figures comes from Bridgewater State College, which is listed as using $77,181 in stimulus money for 160 full-time work-study jobs for students. But Bridgewater State spokesman Bryan Baldwin said the college made a mistake and the actual number of new jobs was "almost nothing.'' Bridgewater has submitted a correction, but it is not yet reflected in the report.

It is becoming clearer and clearer that the vast majority of "jobs saved" were in government, and in effect the stimulus merely had the effect of bailing out state governments that were able to use stimulus money to put off their budget reckonings.

I am a bit late to this but from Arnold Kling:

The further into this crisis we go, the greater the share of subprime loans and mortgage losses are turning out to be located at Freddie and Fannie. Even one year ago, if you had asked me, I would have told you to expect at least 2/3 of the losses to be at companies like Citi and Bear, with less than 1/3 at Freddie and Fannie. It now looks quite different. Conservatively, 3/4 of taxpayers losses will be at Freddie and Fannie. Perhaps as much as 90 percent of taxpayer losses will be there.

Given the large role of Freddie and Fannie, it makes sense for politicians to create as large a diversion as possible. Hence, the brouhaha over bonuses at bailed-out banks.

Incidentally, the debate over the "public option" in health reform also can be viewed as an exercise in symbolic politics and diversion. The point is to divert attention away from the bankruptcy of Medicare.

I argued last week that all the electric vehicle talk we heard so much of at Chrysler and GM during their restructuring (remember all those GM electric car ads on TV, which have now disappeared?) were just a honey trap for Obama.  Auto makers knew that they were not designing a car for the masses, but for one man, to get him to put taxpayer money into their companies.  Now that they actually have to think about selling these cars to the public, the ads have disappeared and now Chrysler is ending its EV program.

I want to take you back to their restructuring plan.  The plan had 7 steps, listed in priority order.  The first and second priority was restructuring.  The third priority was a deal with Fiat.  The next priority, ahead of any others beyond the initial restructuring and Fiat deal, was their EV car program.  Here is the page from their plan (click to enlarge)

In fact, this was very clearly a business plan aimed at Obama.  Look at the #4-7 priorities and their order.  Only one potential investor in the whole world would appreciate these priorities.  Any private investor would find these priorities nuts:

4) Commitment to Energy Security and Environmental Sustainability

5) Compliance with Fuel Economy Regulations

6) Compliance with Emissions Regulations

7) Achieving a Competitive Product Mix and Cost Structure

So "achieving a competitive product mix and cost structure," arguably the problem that drove them into bankruptcy, is their dead last priority!  Welcome to government motors, where commitment to energy security is more important than having a competitive product mix or cost structure.

Those of us who accused Chrysler and GM of hyping their electric car programs merely as a honey trap to capture money from the Obama Administration were accused of being ridiculous cynics.  But...

Chrysler has disbanded a team of engineers dedicated to rushing a range of electric vehicles to showrooms and dropped ambitious sales targets for battery-powered cars set as it was sliding toward bankruptcy and seeking government aid.

The move by Fiat SpA marks a major reversal for Chrysler, which had used its electric car program as part of the case for a $12.5 billion federal aid package.

As late as August, Chrysler took $70 million in grants from the U.S. Department of Energy to develop a test fleet of 220 hybrid pickup trucks and minivans, vehicles now scrapped in the sweeping turnaround plan for Chrysler announced this week by Fiat CEO Sergio Marchionne.

I don't know if you remember, but during the GM bankrupcy deliberations, the airwaves were flooded with commercials for the Chevy Volt.  Seen one lately?  It is clear in retrospect those messages were political ads seeking subsidies, not marketing ads seeking to sell cars.

The civil courts of Maricopa County (which includes Phoenix) are being overwhelmed by photo-radar cases from state photo-radar trucks on state highways.

In the 2008 fiscal year, ending June 2008, the total annual filings in the justice courts amounted to 435,014, which included DUI, traffic, misdemeanor and civil cases, according to the county. Since November 2008, speed-camera cases have flooded the justice courts, averaging 42,326 cases a month, accounting for 50 percent of the filings. Administrators for the justice courts expect the total might reach 600,000 this fiscal year.

Of course the solution proposed is not to get rid of the photo radar but to raise fees to cover the administration.  But you could have guessed that without me telling your, couldn't you?

Because when they defend this practice, they put themselves on record that they have absolutely no integrity in the process:

About two-thirds of the 14,506 jobs claimed to be saved under one federal office, the Administration for Children and Families at Health and Human Services, actually weren't saved at all, according to a review of the latest data by The Associated Press. Instead, that figure includes more than 9,300 existing employees in hundreds of local agencies who received pay raises and benefits and whose jobs weren't saved....

But officials defended the practice of counting raises as saved jobs.

"If I give you a raise, it is going to save a portion of your job," HHS spokesman Luis Rosero said....

More than 250 other community agencies in the U.S. similarly reported saving jobs when using the money to give pay raises, to pay for training and continuing education, to extend employee work hours or to buy equipment, according to their spending reports.

Uh, right.  So does this mean that the Administration's pay Czar is destroying jobs by reducing salaries?  Seems like one would have to take this position to be consistent.  And wasn't, by the same logic, AIG actually creating jobs with the now-infamous bonuses earlier this year?

And by the way, it seems like those ACORN-like community organizers are returning the favors Obama has extended them by applying to the jobs reporting system their famously rigorous accounting standards they bring to their own finances as well as to voter registration .

Other tidbits from the article are also priceless:

President Barack Obama's economic recovery program saved 935 jobs at the Southwest Georgia Community Action Council, an impressive success story for the stimulus plan. Trouble is, only 508 people work there.

There is also another impression one gets from the article, other than seeing all the fraud, they is not highlighted by the reporter -- all of the jobs created seem to be government bureaucrat jobs or community group jobs.  Not one example of jobs actually producing something someone is willing to buy.  Except maybe for this example:

How did Kentucky shoe store owner Buddy Moore save nine jobs with just $889.60 in federal stimulus money? He didn't, and that's turning into a big headache for him.

Moore's store in Campbellsville, Ky., filed one of 156,614 reports from recipients of stimulus dollars designed to show how money from the $787 billion program is being spent, and how many jobs the funds have created or saved.

Moore's slice of the stimulus came in an $889.60 order from the Army Corps of Engineers for nine pairs of work boots for a stimulus project....

Paula Moore-Kirby...couldn't work out how to answer the question about how many jobs her father had created or saved. She couldn't leave it blank, either, she said. After several calls to a helpline for recipients she came away with the impression that she would hear back if there was a problem with her response, and have a chance to correct it. So with 15 minutes to go before the reporting deadline, she sent in her answer: nine jobs, because her father helped nine members of the Corps to work.

This was sent to me by a reader, something called the "Environmental Justice Small Grants Program."  Over the last 20 years, socialists who realized their message wasn't selling anymore remarketed themselves under the green "global warming" banner.  Coincidentally, all the exact same things socialists wanted 20 years ago are what we need to do to fight global warming.

It appears that ACORN may be getting a second life using this same strategy.  I can't bear to read all this leftish public policy psychobabble in the document, but did note this early on:

The primary purposes of proposed projects should be to develop an understanding of environmental and public health issues and to identify ways to address these issues at the local level, and educate and empower the community. The long-term goals of the EJSG Program are to help build the capacity of the communities with environmental justice concerns and create self-sustaining, community-based partnerships that will continue to improve local environments in the future.

There is a well-established scientific consensus that climate change will cause disproportionate impacts upon vulnerable populations. [1] Thus, the program is adding emphasis this year on addressing the disproportionate impacts of climate change in communities with environmental justice concerns. The goal is to recognize the critical role of grassroots efforts in helping shape climate change strategies to avoid, lessen, or delay the risks and impacts associated with climate change. An overarching goal of including this emphasis is to help increase the number of underrepresented communities and ensure equitable green economic development in ways that build healthy sustainable communities.

This translates to "we have found a way to hand out government money to leftish groups like ACORN to do things that are impossible to measure and thus bear little accountability by calling it all "Green."

By the way, the little footnote to prove the statement above is this:

[1]  As stated in the Technical Support Document for the Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act (April 2009), "Within settlements experiencing climate change, certain parts of the population may be especially vulnerable; these include the poor, the elderly, those already in poor health, the disabled, those living alone, those with limited rights and power (such as recent immigrants with limited English skills), and/or indigenous populations dependent on one or a few resources. Thus, the potential impacts of climate change raise environmental justice issues."

Given that cap-and-trade is almost certainly going to impose a very large regressive tax disproportionately on the poor, I wonder why no one ever discusses environmental-solution justice issues?  Maybe it really has nothing to do with the poor, but just with power.

My vote:  mandatory income tax withholding.  Taxpayers never see most of the money they pay the Feds.   They don't have the shock of seeing the amount of money going to the government in one big check.  Since most formulas lead to over-withholding, people are actually eager to file their tax returns to get refunded the money that was withheld in excess of liability (e.g. interest-free loan to government).  Employers, who live in fear of violating one of a hundred thousand different labor rules, are more than willing to withhold whatever the government asks - they certainly aren't going to stand in front of the tanks to protect their employees' money.

California is taking this law to the next logical level of abuse:  Increasing the interest-free loan that citizens must give the state.  If free credit markets won't lend you money at a rate you can afford, force your citizens to lend it for free:

Starting Sunday, cash-strapped California will dig deeper into the pocketbooks of wage earners "” holding back 10% more than it already does in state income taxes just as the biggest shopping season of the year kicks into gear.

Technically, it's not a tax increase, even though it may feel like one when your next paycheck arrives. As part of a bundle of budget patches adopted in the summer, the state is taking more money now in withholding, even though workers' annual tax bills won't change.

Think of it as a forced, interest-free loan: You'll be repaid any extra withholding in April. Those who would receive a refund anyway will receive a larger one, and those who owe taxes will owe less.

I am starting to feel a sort of anti-irredentism for California.

...because nearly every day I get another letter from some near-bankrupt city, state, county, or other taxing authority which says basically:

"we have this vague, non-fact based hypothesis that your company owes us a lot of taxes you are not paying.  To avoid the determination that you owe us lots more money for some unproven or unspecified reason, you must send us approximately a two-inch stack of information that it will take from 8-10 hours to prepare, including..."

The most recent of these just came from the state of Michigan. There are several taxes that I don't pay because they clearly do not apply to me, but I just got a letter saying basically they will assume I owe them unless I fill out a four page form and send them a bunch of detailed financial information.

RRRRRRRRR.

From the AZ Republic:

GMAC, the former lending arm of General Motors Co., is in talks with the Treasury Department for a third injection of taxpayer aid, a further sign of the U.S. government's entrenchment in the U.S. auto industry.

The Treasury Department mandated earlier this year that GMAC Financial Services raise an additional $11.5 billion in capital after undergoing a "stress test" along with 18 other banks. While other banks deemed undercapitalized have been able to raise funds from private investors, GMAC has been forced to go back to the government.

Maybe the reason no one but Obama will give GMAC any money is that they know that every time GMAC gets any money, it simply starts shoveling it at every car buyer who walks within shouting distance of a dealership and can fog a mirror.

Immediately after GMAC became eligible for TARP money, GM reduced to zero the interest rate"¦ on certain models. ...

GMAC has begun making loans to borrowers with credit scores as low as 621, a significant relaxation of the 700 minimum score the company adopted just three months ago as it struggled to survive. America's median credit score is 723"¦

GMAC is a giant ponzi scheme to subsidize car sales.  Ponzi schemes last only so long as there is a sucker to keep putting in money.  No private funds are that dumb, but fortunately for GMAC there is the Obama administration.

This is an interesting video from the State Treasurer of Indiana about his state's experience as a secured creditor of Chrysler, and how their legal claims were pushed aside as the Administration moved more politically-favored constituencies (e.g the UAW) ahead of the secured creditors in line.

One side issue here.  Early in the video he explains that the State of Indiana held a lot of Chrysler bonds because Chrysler is a big employer and they try to support companies with a big footprint in the state.

Isn't that terrible risk management policy, closely akin to Enron employees putting all of their savings in Enron stock?  If Chrysler goes down, this means loss of investment returns in key retirement funds at the same time there is a large loss of tax money that will likely be the source of replacement funds.

I liked TJIC's response to the story of the pregnant woman who could not find any available supplies of the government-provided flu vaccine:

Man, it's a good thing that the flu vaccine isn't being left in the hands of the free market "“ we might have the same horrible production and distribution bottlenecks that we run into with Coke, pizza, books, and pajamas "“ you can't find those things anywhere.

And, hey, on the bright side, socialized medicine is coming!

This is just so typical.  In response to demands for transparency, the Norwegian government starts publishing ... tons of private data about its citizens.  I wonder how much detail they put online about how the government spends the tax money?   Via maggies farm.

In general, legislative responses to the recent financial crisis just amaze me, and I am a fairly jaded observer of Congress with very low expectations.

First, Congress responds to a crisis caused by too much debt and overleverage by ...borrowing a trillion or so dollars and deficit spending.

Second, Congress responds to a crisis caused by too much subsidiazation of  home ownership by ... subsidizing home ownership

Now, Congress has apparently responded to a crisis where risky debt was mispriced by... passing a law to reduce debt costs for the riskiest borrowers and shift that cost to the least risk.

Nice job.

Steve Chapman via Ilya Somin:

Watching Washington policymakers in action, I sometimes think they make mistakes because of unrealistic goals, flawed thinking, blind obedience to party, or dubious information. And sometimes I think they make mistakes because they are"”how to put this?"”clinically insane.

There is no other way to explain what is going on at the Federal Housing Administration, which provides federal guarantees for home mortgages. Given the collapse in real estate prices, the weak economy, and the epidemic of foreclosures, banks are acting with more caution than before. They now commonly require home buyers to make down payments of 20 percent to qualify for a loan. But the FHA often requires only 3.5 percent.

That's the equivalent of playing pool with a guy named Snake, and it's had two predictable effects. The first is that the agency is insuring about four times as many home loans as it did just three years ago. The other is that the number of FHA-approved borrowers who are not repaying their loans is climbing. Since last year, the default rate has jumped by 76 percent.

Another likely consequence looms: you and I eating the losses. A former executive of mortgage giant Fannie Mae told a congressional subcommittee that the FHA "appears destined for a taxpayer bailout in the next 24 to 36 months." Commissioner David Stevens had to assure the subcommittee that it would not need help"”well, unless there is a "catastrophic home price decline." But who says there won't be? It's not as though anyone at the FHA foresaw the housing bubble or the housing bust. Yet now it feels confident betting its $30 billion cash reserve that prices won't fall.

Somin comments:

Unlike Chapman, I don't think the policymakers are "insane." They are responding rationally to perverse incentives. If another mortgage crisis occurs, they hope to shift the blame to a supposedly insufficiently regulated private sector "“ which is more or less how many of them managed to escape blame the last time around. The public did punish the Republican Party in the 2008 presidential election. But most of the members of Congress and federal bureaucrats who supported the GSEs got off scott-free. Moreover, the full negative effects of risky government-backed lending may not become evident for years to come "“ perhaps at a time when some other administration and Congress will be in office. In the meantime, the administration, the FHA, and key members of Congress can reap the political benefits of getting support from grateful borrowers, real estate developers, and other interest groups that benefit from easy credit.

The Bill of Rights were originally restrictions on government power.  Period.  Many people do not want to read them this way today, because they have a strong interest one way or another in the increase in government power.

Take the First Amendment.  "Congress shall make no law..."  In other words, there can be no justification of any kind for the government taking away free speech, press, association, religion, etc.

Unfortunately, forces have been at work for decades from both political parties to undermine this hard and fast protection.  Our most recent assault comes from the Democrats in the guise of the hate crimes bill:

Republican Sam Brownback offered an amendment to the Senate version which said the bill could not "construed or applied in a manner that infringes on any rights under the First Amendment" and could not place any burden on the exercise of First Amendment rights "if such exercise of religion, speech, expression, or association was not intended to plan or prepare for an act of physical violence or incite an imminent act of physical violence against another."

With that amendment, GOP Senators supported the final bill. However when the bill went to the conference committee, key changes were made to the Brownback amendment by the Democrat controlled committee:

Where Brownback had insisted, and the full Senate had agreed, that the bill could not burden the exercise of First Amendment rights, the conference changed the wording to read that the bill could not burden the exercise of First Amendment rights "unless the government demonstrates "¦ a compelling governmental interest" to do otherwise.

That means your First Amendment rights are protected "” unless they're not.

"A compelling governmental interest" leaves the door wide open for your free speech rights to be trampled on the government's whim. Where the First Amendment was designed as a limit on government power (as was the entire Constitution), this law is a blatant attack on those limits and an attempt to expand government power.

So, the government's power is checked unless there is a "compelling governmental interest" in not having its power checked. We're doomed.

Evan Bayh pretty much gives away the game.  We rob from the unpopular and give to the popular.

You can sort of see this coming. The savings from the pharmaceutical companies and the insurance industry, you can kind of count on that because they're not very popular.

The hospitals are a different story.  People, you know, like their hospitals; they tend to trust their hospitals. The hospitals have pledged big savings. I can easily forecast at some point in the not-too-distant future the hospitals coming in and saying, "You know what, this isn't working exactly the way we expected. Please spare us from this," and them getting a good hearing in [Congress].

Readers will know that I am not a fan of publicly-funded stadiums.  Had the mayors of the 40 largest cities in the US signed a no-public-funding pledge 30 years ago, and stuck to it, we would still have the same number of sports teams in roughly the same places, but without all the taxpayer subsidies.  It is rivalry among cities the creates a sort of prisoners dilemma problem and we end up with rampant public subsidies.

What I hadn't realized was the role of outright bribery and kickbacks in this process.  Apparently, it is routine that city and county officials take compensation, in terms of free personal access to luxury boxes, in return for approving these public stadiums

In late August, when the Mobile City Council and Mayor Sam Jones first toured the $2.5-million addition to Ladd-Peebles Stadium, including 11 new skyboxes, District 6 Councilwoman Connie Hudson said she was surprised to hear the city council would have a suite separate from the mayor's, which is located just between the 40- and 50-yard lines.

"It was announced to me on the day we toured," Hudson said. "We've always shared, like we do with the Baybears."

The 11 new skyboxes bring the total at city-owned Ladd-Peebles Stadium up to 14, as three were built in 1997 in part of the press box addition. In addition to the two skyboxes available to the city, the Mobile County Commission also has a suite, which brings the total of skyboxes for local government use to three, or 21 percent of the skyboxes in the 61-year-old stadium.

Speaking generally, and taking into consideration the differences between facilities in other cities, Bud Ratliff of the Mobile Bay Sports Authority says most stadiums have only two skyboxes reserved for city and county use, but doesn't see a problem with the current arrangement at Ladd-Peebles.

Apparently, Chrysler is toast.  Which is what a lot of us were saying before taxpayers put billions of dollars into it.  (ht:  Maggies Farm)

Rumors, credible rumors, are beginning to circulate in the car industry and the automotive press, that Chrysler may not make it another year primarily due to its falling sales and growing financial losses at partner Fiat....

The Congressional Oversight Panel has already said taxpayers will not see most of the $81 billion that they put into the American car industry. The $14.3 billion put into Chrysler is more and more likely to be lost completely. The biggest single loser if Chrysler cannot survive is the UAW which owns 55% of the company.

I struggle to cry much for the UAW with that last part.  They only own 55% because the President intervened to give what should have belonged to the secured credit holders over to the UAW in exchange for being so helpful in getting him elected.

In January 2009, Chrysler stood on the brink of insolvency.  Purporting to act under the Emergency Economic Stabilization Act, the Treasury extended Chrysler a $4 billion loan using funds from the Troubled Asset Relief Program (TARP).  Still in a bad financial situation, Chrysler initially proposed an out-of-court reorganization plan that would fully repay all of Chrysler's secured debt.  The Treasury rejected this proposal and instead insisted on a plan that would completely eradicate Chrysler's secured debt, hinging billions of dollars in additional TARP funding on Chrysler's acquiescence.

When Chrysler's first lien lenders refused to waive their secured rights without full payment, the Treasury devised a scheme by which Chrysler, instead of reorganizing under a chapter 11 plan, would sell its assets free of all secured interests to a shell company, the New Chrysler.  Chrysler was thus able to avoid the "absolute priority rule," which provides that a court should not approve a bankruptcy plan unless it is "fair and equitable" to all classes of creditors.

I had more here.

Update: A firsthand account from a hosed secured creditor (pdf)

Details of the bankruptcy were unprecedented. For the first time in American history and totally counter to all established laws of bankruptcy, secured creditors would receive less than nonsecured creditors....

Indiana's legal filings in the Chrysler, LLC bankruptcy sale made three essential points: First, the bankruptcy laws which have been in place protecting the rights of secured creditors cannot be arbitrarily overthrown by an act of the Executive. This is a violation of Article I, Section 8 of the U.S. Constitution in that Congress is solely assigned the role to determine uniform bankruptcy law. Neither the Courts nor the Executive can do this arbitrarily. Our funds suffered a "taking" in violation of the Fifth Amendment in that there was no "due process of law". There was, and is in all financial arrangements between debtor and creditor, a contractual relationship, which is here being rendered null and void. If allowed to stand, this violation of two party contracts undermines a basic and essential tenet of debt financing in the capital markets.

Second, money provided by the federal government to Chrysler is being provided illegally and clearly counter to the intent of Congress. When TARP was being debated then Secretary of the Treasury Henry Paulson testified the money was NOT for the auto companies. It was targeted to aid the ailing financial industry, i.e, those with "Troubled Assets" that needed a "Recovery Program." Evidence that the money was NOT intended to be an automotive bailout bill could not be more clearly illustrated than to review the failure of the separate automobile bailout bill presented in Congress in December 2008. If Congress had intended the TARP bill to cover the auto companies when it passed in October 2008, why were they even attempting to pass a separate automobile bailout bill just two months later? We believe both the Bush and Obama administration have acted illegally in this use of TARP funds.

Third, we argue that a sub rosa or "under-the-table-arrangement" between the Treasury and Chrysler prevented a fair valuation of the assets. In a legitimate auction sale, no potential bidder would be allowed to set the value of the assets being auctioned. But that is precisely what happened in this case as the Treasury was assigning values to creditors, determining which assets would be liquidated, what new parties, (i.e., Fiat SpA), would be brought into the deal, and how a new dealership network would be defined, etc. It was known from the outset that when the Chapter 11, Section 363 sale of the assets would occur, there would be only one bidder: the U.S. Treasury. Secured creditors could not have their rights protected or fairly valued in such an arrangement. Such an "insider-deal" reeks of impropriety.

Brad Warbiany has a great suggestion in response to new FTC rules requiring that

Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. In contrast to the 1980 version of the Guides "“ which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as "results not typical" "“ the revised Guides no longer contain this safe harbor.

Brad has suggested this disclosure is in order:

Barack Obama, Sept 12, 2008
And I can make a firm pledge: under my plan, no family making less than $250,000 will see their taxes increase* "“ not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your taxes.

* Results not typical. Families making less than $250,000 can expect to see rises in cigarette taxes, increased energy costs through cap and trade and/or gasoline taxes, soda taxes, and mandates to buy costly insurance plans they can't afford. They can expect to pay all the taxes levied on "corporations", as well as the cost of new regulations, who will pass those on in the cost of goods. Families can expect taxation through the form of inflation, eating away at the buying power of their paychecks. Firm pledges have not taken Viagra and should not be expected to last more than 4 hours.

Update: From Ann Althouse, couldn't have said it better myself:

The most absurd part of it is the way the FTC is trying to make it okay by assuring us that they will be selective in deciding which writers on the internet to pursue. That is, they've deliberately made a grotesquely overbroad rule, enough to sweep so many of us into technical violations, but we're supposed to feel soothed by the knowledge that government agents will decide who among us gets fined. No, no, no. Overbreath itself is a problem. And so is selective enforcement.

Having read this:

In his proposed budget for 2010, Chu wanted $480 million to start eight Energy Innovation Hubs, or "Bell Lablets," as he called them, to stimulate research in areas ranging from solar energy to new materials for the electric grid. Each would receive $35 million to get started, and $25 million more in each of the following 4 years.

Last week Congress poured semi-cold water on the idea....Its skepticism was no surprise, having been included this summer in reports accompanying the spending bills in the House of Representatives and Senate (House, Senate versions). In August, Science reporter Jeffrey Mervis described how Chu admitted to a mediocre job of selling the idea and overcoming congressional concerns that the concept was poorly thought out and not well-coordinated with other energy research at the Department of Energy. House appropriators were particularly unkind to the idea, noting:

A new set of centers with overlapping research goals risks adding confusion and redundancy to the existing fleet of research and development initiatives

So since everyone agreed it was a bad idea, they killed it right? Ha ha, cute idea, actually voting and spending money based on efficacy. In fact, they gave Chu quite a bit

Conferees to the Energy and Water spending bill approved funding for three of the centers, two in energy efficiency and renewable energy and one in nuclear energy.

If they really make no sense, how about "zero"