Economics

The Secondary Market for Stimulus Funds

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Here's a beaut, care of the Pasadena Star-News:

With enough shovels….

A few area cities have found an alternate way to use their federal stimulus money: selling it to other cities for cash.

Metropolitan Transportation Authority has allocated a minimum of $500,000 in federal stimulus funds to each of the 88 cities in [Los Angeles] county for transportation-related projects. Unincorporated areas will benefit, too.

Several smaller cities, some without shovel-ready projects, are making deals with others to sell or swap such funds and replenish their general funds.

"The best way to see this is as a huge windfall for us because we do have the flexibility of using the general fund money now," city manager Shauna Clark of La Habra Heights said. […]

La Habra Heights, a city of 6,000, has sold its $500,000 in federal funds to the city of Westlake Village for $310,000 cash. Irwindale, population 1,500, also sold its $500,000 to Westlake Village, for $325,000 cash. […]

Part of the reason the MTA did not simply reallocate the unused money, said chief planning officer Carol Inge, was that "our board wanted to give every city at least a chance to benefit from the stimulus package."

Whole hilarity here.


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  1. thats awesome, a market for Stimulus spending is forming.

  2. So there’s at least one market that was stimulated.

  3. …..Yes, I am the highly suggestible type

  4. I’m going to now call this the Tardulus.

    Thank you Sofa King Wet Hard Head Obama.

  5. If they didn’t need the money, why di….ah fuck, nevermind. I don’t care anymore.

  6. It’s funny in a They’ll Do It Every Time kind of way, but I don’t really see the problem here. You can (you must) object to the stimulus spending in the first place, but what’s wrong with La Habra Heights or any other P.O.S. burg in L.A. County trying to make the most out of its payday? One of the many beautiful things about money is that it’s fungible; there is no fruit of the poisoned tree doctrine. Since it wasn’t the La Habra Heights City Council that approved the stimulus in the first place, this doesn’t seem different from a city cashing in on mineral rights or a common carrier easement or any other exchangable windfall.

  7. This is such a wacky news story that I’m sure Reason’s crack reporters can’t wait until tomorrow when they’ll hit Capital Hill – videocameras at the ready – in order to ask policymakers questions designed to discredit them and actually have an impact.

    Or not.

  8. If we can just move money around real real fast, we’ll all be rich!

  9. Shut the fuck up Lone Wacko!

  10. So there’s at least one market that was stimulated.

    Yeah, they’re as frisky as a pack of hyenas around a wildebeest carcass.

    -jcr

  11. This seems like a plus to me; if you’re giving the money away basically at random anyway you might as well let the market give you an efficient allocation. In fact, it could even work (in a sort of crazy way), to just give each person their share of the stimulus money, and let them buy stuff with it or lend it to people as they see fit. I feel like I’ve heard of this sort of thing before; they called it a tax cut or something like that.

  12. Shut the fuck up Lone Wacko!

    Ha ha ha! It’s funny every time!

  13. La Habra Heights, a city of 6,000, has sold its $500,000 in federal funds to the city of Westlake Village for $310,000 cash

    Wait…what? How is this a deal? Matt, will you sell me $20 for $16?

  14. Cash in hand, with no strings attached. That’s why.

  15. Keynes, meet Human Nature. It’s obvious you’re not familiar with his work. That guy over there? Oh, that’s Unintended Consequences. Just keep ignoring him, like you always do.

  16. Yo, fuck Human Nature.

  17. Keynes, meet Human Nature. It’s obvious you’re not familiar with his work. That guy over there? Oh, that’s Unintended Consequences. Just keep ignoring him, like you always do.

    Love it!

  18. OK, Matt, no more Mr. Nice Guy. The point of stimulus money is that it is to be spent, not that it is to be spent “wisely.” You may object to the whole idea of a stimulus, in which case you wouldn’t care if it was spent “wisely” or not. It would still be wrong.

    But to object because local governments aren’t spending the money the way you think it ought to be spent is beside the point. What really counts is that they spend it.

    No one is worrying about how I will spend the tax cut I’ll be getting as a result of the stimulus bill. If I spend it distributing the collected works of Karl Marx to every library in the country, well, it’s my money, isn’t it? And the folks who publish the “Little Lenin Library” will have more cash, and they will go out and hire some dude to bring out that (sorely needed) modern translation of that (sorely neglected) M&E classic, “Critique of the Gotha Programme.” And about damn time!

  19. I don’t know which is worse – these municipalities trading out project money for “whatever the hell we want” money, or the one down in Texas that’s using it to paint fire hydrants and plant trees along its roads.

    Yeah, that’s something that’ll increase our productivity. Pretty fire hydrants.

  20. “The point of stimulus money is that it is to be spent, not that it is to be spent “wisely.””

    Why then are there any strings attached?

  21. OK, Matt, no more Mr. Nice Guy.

    I’d be fine with that too. Ban away.

  22. OK, Matt, no more Mr. Nice Guy.

    First of all, when were you ever nice? Second of all, pointing out “hilarity” does not necessarily an “objection” make.

  23. What really counts is that they spend it.
    Um…they’re not. They’re profiting from it. They’re not using the money to ‘stimulate’ anything. They’re selling it so they can keep running normally. Which is not stimulating.

    It’s kinda like if your neighbor gets foodstamps. They go to the store, stand out front and sell their foodstamps for 75 cents on the dollar, then take that money to go buy a TV. It’s bullshit.

    In fact, if you’re not pissed off that they’re not spending YOUR money the way they were told, there’s something wrong with you.

  24. Bernanke’s helicopter is looking better all the time.

  25. Update: MTA cancelled the deals.

    You don’t think it had anything to do with the publicity do you?

    http://www.masstransitmag.com/online/printer.jsp?id=8157

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