I respect the fact that the president is a very intelligent man and he is impressive on a number of counts that I enumerated in an earlier post. But the man, those behind him, and those elected officials supporting him are totally wrong about the need for the stimulus, the effect it will have, and naive as to its potential for worsening the Great Recession.
Obama was a bit disingenuous last night when he stated that politicians were the only ones who disagreed over the need for "government intervention" on the economy; that there was little or no serious disagreement among economists.
As the inset on this post indicates, nothing could be further from the truth.
The fact is there is a genuine concern among many highly respected economists that the current stimulus package will do more harm than good.
If you find yourself in a hole (admittedly not of Obama's making) stop digging. The truth is no one really knows what the consequences of the government spending trillions of dollars will be - other than to drastically raise the public debt even further. Obama is being bold, but let's hope his boldness doesn't get the better of us all.
On the other hand, the situation might already be beyond government's ability to repair. In his daily comments last night Richard Russell wrote: "The fact is that this country has been living the grand life ever since WW II courtesy of debt, credit, inflation and fiat money. Now the markets, merciless and unemotional as they are, are correcting 64 years of living beyond our means. Meanwhile, the Fed and the Treasury are fighting inflation and over-spending with the greatest program of inflationary spending in world history.
"So I ask myself again, what's happened to the country I grew up in? And the answer is that the people have simply been imitating their government -- inflation, monster debts, and endless production of fiat money -- all the while ignoring the US Constitution on money creation -- it's been a long, wild fantasy ride, and now it seems payment is due. I've said for years that the last two or three generations of Americans have never seen hard times. I've warned that a 'hard rain' is coming. Now it's time to get our umbrellas out. Because it's raining, and the bills are coming due."
Once more, my personal opinion is that raising the public debt in order to generate wealth is fundamentally flawed. Things are bad right now. But, that doesn't mean we can't make them worse. Obama's plan most likely will make things much worse because this is the Great Recession, it will run its course, it is as "natural" an economic phenomenon as the great bull market that ran from 1982-2007. If anything, government machinations have done their fair share to make this mess.
Did anyone honestly think the good times would last forever? Or that the price of the good times wouldn't be a market correction to balance the ledger? What does history teach us if not that bear markets follow bull markets follow bear markets, etc.?
Obama wants to meddle with the natural ebb and flow of the global economy. Of course, Bush did too. Perhaps it is inherent that any president will muck this up. The recession of 2001 was not allowed to play itself out. We did not have a final capitulation due to government intervention. So, now that the Great Recession has emerged out of that misguided policy we do what? Create an even more towering mess in hopes of avoiding the inevitable yet again?
Recessions should lead to capitulation. New, genuine bull markets then emerge out of that. What we have had since 2003 or so has been an artificial bull market founded largely on the ill-fated housing bubble. Now the chickens are coming home to roost. The anguish of the people, the manipulations of the government, are ultimately no match for these forces which are beyond everyone's control.