Another Big Bailout of Banks

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Unleash Prosperity Hotline
Issue #729
03/13/2023
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1) Another Big Bailout of Banks
In the wake of the failure of the Silicon Valley Bank, the feds will now insure all “non-insured” deposits in banks. The financial markets seem to like this bailout, but the moral hazard problem here – as with all government bailouts – is immense. Bailouts only reward bad management and the dumb and often very risky investment strategies that caused the crisis in the first place. Here is a history of FDIC coverage of bank deposits (not adjusted for inflation), which were once supposed to protect the little guy investors, but now insure EVERYONE, even millionaires and billionaires. And, yes, the bailout amount is headed to infinity.

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2) This Project Isn’t in Anyone’s Backyard
We were struck by this New York Times photo showing a ConocoPhillips drilling platform on the North Slope in Alaska. Notice there is nothing within at least dozens of miles from this facility. Yet the Biden administration keeps holding up drilling in this area for environmental reasons.

Imagine a postage stamp on a football field. That’s roughly how much land space would be taken up by more drilling in Alaska. Why is Biden holding up drilling in places like this?

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3) Will Biden Raid Americans’ Pension Funds With Green Energy Investment Requirements?
Biden is in an excruciating predicament. He will have to choose between his party’s woke progressives or the tens of millions of American workers with pension funds.

On Thursday, Speaker Kevin McCarthy signed the first enrolled bill of his speakership – HJRes30, which would reinstate the Trump-era Department of Labor rule which prohibits pension fund managers from pursuing ESG objectives when doing so undermines financial returns.

The obvious risk in politically-motivated investing by pension managers has been elevated by the collapse of the notoriously woke, pro-ESG Silicon Valley Bank. We mentioned last week that SVB devoted $5 billion to ESG projects last year. That didn’t work out so well for the depositors.

We think ESG is a clear-cut violation of pension fund managers’ fiduciary duty. If you agree with us follow our new hashtag #Handsoffmypension.

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4) California’s Little Engine That Couldn’t
Another of the left’s grandiose green plans — high-speed rail — has crashed into financial reality.

In 2008, California voters approved $9.95 billion for high-speed rail from Los Angeles to San Francisco.

The Hoover Institute’s Lee Ohanian notes that 15 years later the route is not exactly LA to SF, but rather Bakersfield to Merced. Call it the train to nowhere. Oh, the price tag has more than tripled, costs nearly $35 billion, and it will still take 10 more years. Other than those snafus, everything is going exactly according to plan.

It’s time for the pols in Washington and Sacramento to issue last rites to this absurd choo-choo. We already have a government-run train and it’s called Amtrak. It has lost money every year for 50 years.

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5) Quote of the Day – The Left Thinks the Profit Motive Raises Prices
The lack of a profit motive allows the [health] system I work in to focus on providing quality care while cutting costs.

As Donald Berwick, a former administrator for the Centers for Medicare and Medicaid notes the “glorification of profit… is what drives up medical costs.”

Ricardo Nuila, an internal medicine doctor in an op-ed in The New York Times.

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Even for The New York Times, this may be one of the dumbest statements we’ve read in a long time. In reality, the lack of a profit motive in government healthcare programs has caused healthcare costs to explode.

All innovation, cost reduction, and economic growth across all industries derive from the “glorification of profits.”

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6) Krugmanomics

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