Government Spending: Food for Economic Zombies

Coming soon…a Zombie Apocalypse…

You must be getting tired of hearing us talk about zombies. And maybe we are getting a little obsessed by them. But we see them all around us. And they’re getting bold…brazen. They’re coming out in broad daylight.

Here’s an article that appeared last week in The Wall Street Journal:

The recipient of the Obama administration’s biggest loan guarantee for solar energy won federal money after an intense push in early 2011 that included hiring a former chief of staff to Vice President Joe Biden to lobby the administration, according to federal records and people involved in the approval process.

The lobbying blitz came as the $1.6 billion loan to BrightSource Energy Inc. – a centerpiece of the administration’s program to promote nascent green-energy projects – faced a do-or-die moment, and the company called on its Democratic connections to help push the deal forward, according to emails, records and those familiar with the loan.

The $16 billion federal loan-guarantee program became headline news in September when a recipient of a $535 million guarantee, solar-panel maker Solyndra LLC, declared bankruptcy. Solyndra’s chief backer was an Oklahoma industrialist who had bundled contributions for Mr. Obama’s 2008 campaign. The White House said there was no connection between the donations and the loan.

President Barack Obama has said the loan program was run fairly and that some failures were inevitable in the business of backing new energy systems.

Mr. Obama lauded BrightSource in a weekly radio address in 2010. The company, which is building a 392-megawatt solar-power plant called Ivanpah in the Mojave Desert, had several other Democratic connections, including its then-chairman, John Bryson, a longtime green-energy proponent whom Mr. Obama later named commerce secretary.

BrightSource spent more than $500,000 on lobbying in the third quarter of 2010 through the second quarter of 2011, according to federal records, on behalf of the loan program and its own loan. The records show that $40,000 of the BrightSource lobbying money went to Bernie Toon, who was chief of staff to Mr. Biden, then a US senator, in the 1990s.

Yes, dear reader, the zombies are everywhere. Lobbying. Spending. Getting disability and bailouts. Every US government program is full of zombies.

Why so many zombies? What you pay for is what you get. And with the “new” dollar after 1971, the feds could buy a lot of zombies.

Remember, zombies are people who take money from the productive sector of the economy and transfer it to themselves. As they grow more numerous and more powerful – thanks to the resources that go their way – the productive part of the economy is less and less able to support them.

Fewer and fewer workers…more and more zombies.

Fewer and fewer people producing things…while more and more people just consume them.

Everything is okay as long as the resources keep flowing. But the productive sector of society can only support so many zombies. Yes, the producers can be bamboozled into supporting more “education” and more “defense” when they are flush. But when times get tough, the zombies and the producers head for a showdown.

Scott Walker won a battle in Wisconsin. But the zombies’ power still grows – funded by cheap credit and government spending. A larger war lies ahead.


Bill Bonner
for Markets and Money

From the Archives…

The Avalanche and the Phase Transition of the Financial System
2012-06-08 – Greg Canavan

A Financial Crisis that Repels Private Capital
2012-06-07 – Eric Fry

Floating Towards Japan’s Economy on a Sea of Bad Debt
2012-06-06 – Bill Bonner

Pirate Politics to Save the European Union
2012-06-05 – Nick Hubble

China’s Economy?Where All is Not As It Seems
2012-06-04 – Greg Canavan

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail Markets and Money.
Bill Bonner

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