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Allentown, PA; A Microcosm of Ill-conceived Stimulus Money Spending

Posted by Steve Markowitz on April 21, 2010

Allentown, Pennsylvania is a typical mid-sized American city facing the challenges of the ongoing recession.  We have been through it before being the subject of the Billy Joel’s hit song “Allentown” in 1982 that made famous a previous downturn.  While the local steel mills did shut down Billy, the area rebuilt itself into a technology center and then a hub for distribution.  This time the rebuilding effort is being spearheaded by the Federal government instead of locally.

The city’s newspaper, The Morning Call, has reported on the how the government’s Stimulus money has been used locally.  It reports of the approximately100 local companies approved for no-fee small-business loans under the American Recovery and Reinvestment Act.  Major benefactors of these special loans are listed below.  Names have been left out since this Blog does not want to bring publicity to those who took the loans, only the knuckleheads that made these policies.

  • Local Brewery – $89,000
  • Local Fitness Club – $1,009,000
  • Local Salon and Spa – $907,000
  • Local Weather Company – $750,000
  • Local Employment Agency – $100,000
  • Local Home Improvement Company – $30,000
  • Local Laundromat – $1,750,000
  • Local Internet Apparel Retailer – $506,000
  • Local Auto Parts Retailer – $170,000

Note the lack of manufacturers in the list.  While spas, fitness centers and retailers are fine enterprises that can make their owners a good living, they cannot create the type of long-term jobs this country was built on and will require to be successful going forward.  This downturn has shown the weakness of depending almost solely on service jobs.

As John Fleming, team leader in the SBA’s Philadelphia office was quoted in The Morning Call: ”We can help a bank say ‘yes’ when they would normally say ‘no”’.  What a sad piece of honesty.  If these business were solid investments, commercial banks would make the loans without government backing.  The government is in essence forcing risky loans that would not be made using purely prudent business judgment.  More to the point, wasn’t it excessive and risky debt that got us into this mess in the first place?  Only the Progressives in government would double-down on that bet!

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One Response to “Allentown, PA; A Microcosm of Ill-conceived Stimulus Money Spending”

  1. Carl Hackert said

    It’s a slow day in the small town of “Pumphandle,” and the streets are
    deserted. Times are tough, everybody is in debt, and everybody is living on
    credit.

    A tourist visiting the area drives through town, stops at the hotel, and
    lays a $100 bill on the desk saying he wants to inspect the rooms upstairs
    to pick one for the night.

    As soon as he walks upstairs, the hotel owner grabs the bill and runs next
    door to pay his debt to the butcher.
    (Stay with this… and pay attention)

    The butcher takes the $100 and runs down the street to retire his debt to
    the pig farmer.

    The pig farmer takes the $100 and heads off to pay his bill to his supplier,
    the Co-op.

    The guy at the Co-op takes the $100 and runs to pay his debt to the local
    prostitute, who has also been facing hard times and has had to offer her
    “services” on credit.

    The hooker rushes to the hotel and pays off her room bill with the hotel
    owner.

    (Almost done…keep reading)

    The hotel proprietor then places the $100 back on the counter so the
    traveler will not suspect anything. At that moment the traveler comes down
    the stairs, states that the rooms are not satisfactory, picks up the $100
    bill and leaves.

    No one produced anything. No one earned anything. However, the whole town
    now thinks that they are out of debt and there is a false atmosphere of
    optimism and glee.

    And that, my friends, is how a “stimulus package” works!

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