I am deeply concerned with any talk of a stimulation package. Prior readers know that I vehemently opposed prior bailout packages, and deemed them “Fear Mongering” by the Federal Reserve and our own Treasury Department. I still feel so, and believe that our new President has been duped by the same economic advisers who led us into this crisis (yes “Timmay” Geithner). This country really is going to shit.
A quick and useful synopsis of the problem can be found in a small regional paper from Neuces County.
In one of history’s more candid reflections, Henry Morgenthau, Jr., Treasury Secretary under President Franklin D. Roosevelt, confessed, “We have tried spending money. We are spending more than we have ever spent before and it does not work.”
Just six years after crafting the New Deal, Morgenthau declared that their efforts to create jobs and restore America’s depression-ravaged economy by expanding the federal government to unprecedented levels had been a failure. By Morgenthau’s own assessment, the New Deal saddled our country with “as much unemployment as when we started…and an enormous debt.”
More than 75 years have passed since FDR signed the New Deal into law, and many noted economists are studying the Great Depression and trying to learn from the experience. In 2004, a team of UCLA economists concluded that the policies of the New Deal, which suppressed competition and kept unemployment in the range of nine to 16 percent, actually prolonged the Great Depression by seven years.
Amity Shlaes, an economic scholar and Great Depression historian, has argued that the sheer “arbitrariness” of the New Deal actually exacerbated the crisis.
The crux of the problem is that once you start arbitrarily trying to assign a value better than the collective wisdom of markets, you create a process of compensating factors. Yes, markets will react only temporarily to any stimulus and will eventually revert to its given path. Any stimulus will have been wasted.
Yes, payments to “new homeowners” is an arbitrary effort, almost all of whose profits will go to homebuilders (who led us into this mess with overbuilding due to overstimulus) and bankers (who also led us into this mess with overlending due to overstimulus).
I will state categorically that from an economic standpoint, the best thing for the federal government to do is to spend its money on permanent solutions to permanent problems. Trying to prop up housing prices only leaves us further in debt and beholden to our own currency. This will not end well, and is getting worse with every dollar given to the Federal Government.
I am outraged at President Obama’s approach. Unfortunately, it appears that we will have at least 4 more years of unmitigated idiocy, this time aided and abetted by our own Congress. There is no incentive in America to work hard, do what is right and pay your bills. Indeed, it seems, never was there a time where it was more prudent to default than now. You will get to keep all of your past gains, and the government will continue to fund your gains in perpetuity. I’m frankly disgusted that my tax money is going to scum-of-the-earth bankers and homebuilders.
We could really do well to take our tough medicine now and get it over with so we have some growth. Instead, we have special interests running this country with threats of financial terrorism (give me billions or I’ll blow up your economy and myself) and an out of control President just weeks after taking office.
I’ll give the President a suggestion: Give me the money and I’ll find a better way to use it. I’ll set up a bank that will RIGHT NOW hire people, lend to people at below market rates AND make shitloads of money all at the same time. This absolute garbage of giving current banks TARP money was from the beginning doomed to failure. I’d like to have loans at 0% that I can then compound 10 times and sell on the open market at 4.5%.
President Obama, I’m ready. I’m willing. Just give me the money.
PS, if I happen to take the money and skip town, chalk it up to learning a lesson about giving billions to an anonymous internet blogger.
