Not Getting It Department
Francis Cianfrocca explains why the Pork Package won’t work, to Paul Krugman and President Obama:
It will perform far below expectation. On top of that, its effects will not stimulate the economy in any permanent way, but will rather dissipate as soon as the stimulus does.
The standard argument against cutting or abating taxes as a tool of countercyclical policy, is that people will save rather than spend the money. Keynesianism targets current-period GDP as the measurement that matters above all, so saving more in a recession is a Bad Thing.
But the people don’t want higher GDP. They want stronger balance sheets, amid a sense that hard times are ahead. If anything, the stimulus debate has exacerbated this sense. Why? Because the people want to save more money, but they see their elected leaders proposing to borrow and spend more, and they think: “these people have no idea what’s really going on.”
Exactly. Re-read the first two sentences of that last paragraph. That‘s the mood of the country, and for good reason — our balance sheet is entirely out of whack.
First, we had a Republican Congress that spent like Democrats. Then we had a Democratic Congress that spent like Republicans always claimed Democrats spent. Now we have an entirely-Democratic government on a spending-bender the likes of which has never been seen in human history.
Unfortunately, that’s no exaggeration.
These days, cash is king — and our leadership would rather depose it than give it the respect it deserves.
Amen, brother. People won’t go out and spend more money until they’re fairly sure they themselves are in good shape to weather whatever hard times they’re expecting.
The first step to getting out of a recession is letting people identify and work toward that comfort threshold, so that eventually a few will feel confident enough to resume spending — and as consumer spending gradually ramps up, the key factor will change from being personally confident against hard times, to generally confident that hard times are passing.
Reagan and his econ advisers understood this. Hoover II and his fortune tellers do not.
They can’t even admit they contributed to the problem, let alone caused it by requiring unsound lending practices from the institutions they supposedly “regulated”. They’ve become illogical dummies who look upon themselves as brainiacs. Mores the pity.
Watching them fawning, shucking and jiving for the media these days is enough to briefly consider if the time has come to somehow reinvent the nation. Their botoxed congressional leader, meantime, has become a sad caricature of Raggedy Ann. Ridiculous [shakes head]
The unsound lending practices were not required. And even if they were, the related problems were caused by fiscal dildoes deciding that the riskier loans were Grade AAAdoubleplus Goldsuperduper-Rated SureThingplus Five-Star Security Instruments that were sure to make money as long as they are bundled into groups and thrown to the investment morons who gobbled them up like ravenous wolves, shit them out in even larger and better-rated financial instruments, pretended they were worth oodles more than they were, banks bought in and used them as collateral for loans, everybody was doing it, and pretty soon we were all relying on overpriced homes in sprawl areas as the basis of the American economy. Then people didn’t need any more homes in out of the way suburbs, people couldn’t afford to drive everywhere, and now we’re stuck with a bunch of crappy homes in ill-conceived exurbs that have no true value toward a healthy national economy. Without these homes, things like cars and toasters and clothes and ATVs aren’t going to be bought in the large quantities of yesteryear. So yes, we’re screwed.
What’s amazing is how many people think that the unsustainable sprawl growth model is what we need to return to. Obama pays lip service to it, while Republicans want to enshrine it, but it’s still dead. It’s a Terri Schiavo economic model, not a fucking new puppy.
Perhaps not — but thanks to Barney Frank and Chris Dodd they were strongly encouraged thanks to the perverse incentives that always result from government meddling in economic decisions.
The problem was caused by government yet we’re being told only more government can solve it. When the opposite is argued the pro-government types insist it was the market that failed, not the stupid-ass politicians who interfered in something they wouldn’t have known anything about even if they had half a brain cell among the lot of them.
You know, if I were allowed to keep more of my money that I work for (and $13/week is not enough) I would happily save 50% and spend 50%.