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.
I think this is a given. The stimulus isn’t about stirring long term demand or economic growth, but rather is intended to ease the transition to the new economic reality. The system can handle a steady decline much easier than a rapid one, and the stimulus can keep it from over-reaching on the downside.
I’m not passing judgment one way or the other, that’s just how I see it’s effect.
LOL. I love the “financial terrorism” and “an out of control President”!
To be fair, Obama warned us during the elections that he’d be spending $ like a drunken sailor. So far he has kept his word.
The stimulus has nothing to do with helping the economy: Obama and Congress may be corrupt to the core, but they’re not idiots. A Trillion dollars of special-interest handouts, pork, deficit spending, attempted bubble reflation, and agenda pushing doesn’t help the economy, short-term or long-term. The only government spending which would help the economy (the “real” economy, not growth of the government and the Democrat agenda) is non-biased consumption from the private industry, or non-biased tax cuts, and those are both conspicuously missing from the massive wasteful spending bill which seems to have a line-item for damn near everything else. No, this bill is not designed to help the economy, and never was, and anyone who believes that line is insane (by the classic definition attributed to Einstein about doing the same thing and expecting different results), or an idiot, or both.
You are absolutely correct.
We are trying to pass a stimulus that will encourage banks to loosen up a bit and loan money to people so that they can buy homes at inflated prices which they could not otherwise afford!! Isn’t that what got us in this mess in the first place??!!
I keep hearing about “declining home values”! Why don’t we call it “home values coming back down to Earth”? I have seen values here in California double and triple between 2001 and 2005! My salary didn’t. Is that logical? Let prices drop back to the 2001-2002 values. Then they will become more affordable to the average American family. Subsequently, the housing market will be restored and jobs will be created.
“Say it ain’t so Sam”…. but your right on the mark. I keep hearing the same from the Chief Commander down the ranks that “we must stabilize the housing prices”???? What the ____!! Seems that Wall Street and some financial wizards have convinced some that we can somehow maintain the continued leveraged way of life….. It’s simple folks, median home prices have to be indexed with median incomes in the given areas. For those who are still speculating… this vehicle ran out of gas a long time ago and the tires were pulled off…. so good luck to those who are now writing the ridiculious ads about buying now before prices bounce back up….. damn fools. Catfish here still bottom feeding….