07/03/2009 (7:44 am)
I’ve been quiet about economics for a while, because it’s just a gloomy topic these days, but the Democrats in Congress, the White House, and the Fed have been busily stimulating this and that for 9 months or so, so let’s check on them. How’s it going, kids?
One data point is not enough to indicate a change in direction, but the job loss curve might be beginning to top out. Of course, then there’s this from Karl Rove, showing how many jobs we’ve lost relative to President Obama’s predictions:
So we know that the stimulus package is not doing for jobs what it was advertised to do. This is not news.
Meanwhile, there’s no end in sight to the downturn. Headlines this morning suggested a gloomy prognosis and more losses for everybody:
Not only are consumers still losing jobs and income at prodigious rates, but also their net worth has dropped 21 percent since the end of 2007 because of big drops in the value of their largest assets — homes and stock portfolios.
…while this article explains in terms that I deem mostly accurate why what we’re seeing is only the beginning of a long, slow decline into stagnation, with inflation to boot:
An economic train wreck is coming. Its cause is simple and straightforward: the breathtakingly bad monetary and fiscal policy during the past six to nine months – in other words, too much money and too much federal spending.
Simply put, spending gazillions that we don’t have on programs that benefit Democratic campaign donors does not improve the economy, it kills it. The levels of government spending under Obama-Pelosi rival the largest spending of WWII when expressed as a percentage of national output, and they’re still cooking up new spending plans. Meanwhile — and this is where the stagflation article I linked to, above, is wrong — interest rates of T-bills are creeping up, not because investors are wary of possible inflation, but because nobody wants to buy our debt.
And the debt is going to get worse. Whatever Obama cooks up regarding health care will cost more than we could have afforded even before the stimulus wave. Obama still has not launched his “I’ll pay for everybody’s college education” program, but that’s coming sooner or later, as will more “I’ll care for your every need” legislation. Cap-and-trade will raise taxes, but the economy will shrink under its weight, and the net will be lower tax revenue. So we’ll have to borrow more at ever-higher rates, crowding out investment capital…
I don’t believe Nancy Pelosi knows any better; she genuinely thinks all this spending is good for the economy, and is probably thinking “Wow, this must have been worse than we thought. We’re going to have to spend even more.” I do think President Obama knows what he’s doing, though, and the economic hardship he’s deliberately creating will give him more opportunities to seize things, especially the liberties of free citizens.
Allahpundit waves towards a hokey ad from House Minority Leader John Boehner that’s a small start on a campaign that could, on a long shot, give the House back to the Republicans in 2010. There’s got to be more and better where this came from. And then, if we somehow got the House back, we could conceivably start ratcheting back some of the destructive nonsense; but even if we did that, the reversal would be slow. It’s Great Depression II on the way, folks.
Take it away, John Boehner.
3 Comments »
Comment by Marcy Casterline
16.5 % of the American labor force has no reason to get up in the morning and nowhere to go. Lives are being wasted, families ruined, and whatever contribution these people might have made is lost forever.
Beat Them Like Circus Monkeys
Comment by Benson
Your right it will take a long time to undo what has been done if Repub’s take back the Congress. But in my opinion there’s only one reason it would. No guts. Unless we get some new blood in there the ones we’ll have are politicians. Politicians don’t like to undo stuff. They like to compromise and be sure their own backside is covered, etc. It could be done swiftly if they have the guts to do it.I use the word guts a lot…sorry. Even an ordinary person knows the way to fix a budget is to cut out unnecessary spending. Every program that’s been instituted by Dem’s and Obama needs to be over turned as a start. Then they need to cut gov’t, the Education dept and others need to be terminated. Then they give business and taxpayers a 3 month holiday from taxes. The only thing that will overcome the instability of our economy is the private sector. There are many other steps they can take in the short term to get things going again. Then they can handle the long term programs like Medicad and Social Securty which I certainly don’t have an answer to. We need knowledgeable business men (conservative) to join with the Congress maybe as a board to give suggestions on how to handle government more efficently. What politicians would have the guts to do this? Good question, but that’s what we need.
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