“Lance Armstrong sued by U.S. for post office sponsorship funds.” CNN.com offers the particulars…
“The Justice Department late Tuesday formally filed its case against Lance Armstrong and his company Tailwind Sports for millions of dollars that the U.S. Postal Service spent to sponsor the cycling team.
‘“The USPS paid approximately $40 million to sponsor the USPS cycling team from 1998 to 2004,’ the court document says.
“The government said it was intervening to recover triple the amount of the sponsorship funds under the False Claims Act, which could bring a total of more than $100 million in damages. The complaint filed in U.S. District Court for the District of Columbia charges that the use of prohibited drugs constitutes a breach of contract with the Postal Service.”
Obviously, Armstrong shouldn’t have cheated by using performance enhancing drugs. What’s more, he shouldn’t have lied about it all these years. But what we want to know is what the heck the U.S. Post Office – a bankrupt federal agency – is doing sponsoring bicycle riding teams…and why they found it necessary to throw away $40 million of taxpayer dollars?
Wide and Observant Eyes
Do you know why the U.S. Post Office sponsored Lance Armstrong’s bicycle team? We don’t know why. Did they at least get their logo on a T-shirt?
Naturally, this is the sort of delightful head scratcher that makes living in a fading democracy so entertaining. Like when the unemployment rate went down earlier this month because 496,000 Americans left the labor force…you just can’t make this stuff up.
Here at the Economic Prism we look around with wide and observant eyes. What are we looking for? While we’re often greeted with fabulous absurdities, we are mainly after clues and inklings as to what way the economy will go. We’re also on the lookout for ideas on how to profit from the clues before they become obvious.
Is the economy growing or is it slowing? Should you sell in May and go away? Are people becoming richer or poorer?
Looking at just the headlines, we read of a world where the economy is generally improving. A one year chart of the S&P 500 illustrates a raging bull market. But what’s really going on?
All it takes is a quick glance around to observe the world’s at sharp odds with what’s being reported…or what the stock market says. Perhaps the economic recovery wasn’t much of a recovery at all. Did it generally improve people’s lots in life? We want to know…
Seeing Through the Mirage
On Wednesday we got an answer. New data was released by the Pew Research Center offering some possible reasons for the apparent disconnect…
“During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7 percent of the wealth distribution rose by an estimated 28 percent, while the mean net worth of households in the lower 93 percent dropped by 4 percent, according to a Pew Research Center analysis of newly released Census Bureau data.
“From 2009 to 2011, the mean wealth of the 8 million households in the more affluent group rose to an estimated $3,173,895 from an estimated $2,476,244, while the mean wealth of the 111 million households in the less affluent group fell to an estimated $133,817 from an estimated $139,896.
“These wide variances were driven by the fact that the stock and bond market rallied during the 2009 to 2011 period while the housing market remained flat.
“Affluent households typically have their assets concentrated in stocks and other financial holdings, while less affluent households typically have their wealth more heavily concentrated in the value of their home.”
Since 2011, the stock market’s continued its near uninterrupted march onward and upward. Housing’s even bottomed out and started to rise. Maybe this means the lower 93 percent of the population will see their paper wealth balloon up in the years ahead…before the next bust. Regardless, this highlights one very inconvenient fact…
The economy’s dependent on inflating asset prices.
In other words, the appearance of rising prosperity is one great big mirage. In fact, if you look past the headlines…you can see right through it.
for Economic Prism