Dealing From the Bottom

I’m not sure I’ve ever seen such blatant manipulation by our government. It came as no surprise when President Obama took the reins that he was deeply committed to the “bread and circuses” school of leadership. That’s the one that promises candy for everyone, even if he knows it rots your teeth. Soon we all become dependent upon our periodic dispersal of government largesse and the inevitable outcome is that a party of hard work, individual effort and success without guarantee is laughed out of the marketplace of ideas.

What’s the manipulation? You might think back to last October/November. Then the outgoing Bush administration aggressively shepherded a bailout package for the banking and mortgage industry which was designed to correct the temporary drying up of credit. No credit was available because defaulted mortgages shorted cash flow to the lenders. No credit meant no floats for business to manage inventory, no investments in new construction, no durable goods purchases and no housing starts. Restore availability of credit and you get recovery.

The package is called TARP. It’s generically estimated at $750B, but actually came through at around $900 billion. Most of the funds fell to the Sec. of the Treasury to manage. Now, here’s the manipulation part.

If the money flowed into the system, the credit would begin to recover. Notice, however that the Democrats couldn’t allow that to happen. If the economy recovered, even a little bit, how could they justify a huge give-away of taxpayer dollars? So, rather than authorize the whole amount for infusion into the economy, they’ve held back half. Even now, they still hesitate to authorize release. It ruins their strategy.

Now, if you are a lender and you are promised a huge cash infusion you get ready to roll. But, if the actual funds are only half what was promised then you are going to be cautious and reluctant to open your credit accounts to borrowers. That allows the Reid/Pelosi folks to tell us it didn’t work. The sky is still falling.

Remember FDR’s famous quote from his first inaugural: “the only thing we have to fear is fear itself.” Now contrast that to the Messiah’s wailing from the mountaintop that if we don’t give away our future to the salivating throngs we are doomed to catastrophe. That’s leadership, new style.

The current “stimulus” bill ought to be the thing to fear. The encouragement is to spend. That’s the road to recovery. We are going to be given money and we should squander it. We’ll all be little federal governments, spending what we haven’t earned for no long term benefit. We all like to spend. I know I do. But, for long term economic stability, I know that I should save. I should invest. I should plan. I should build.

There is very little meaningful in that regard in this huge pork-laden behemoth of a give-away. The fact is that it will pass. There’s no stopping it. But, if we could…and if we released the last of the TARP money…and if we waited six months…we would see recovery because we have fundamental economic strength.

Unfortunately we are being manipulated. And it is being done purely to fuel the hysteria about economic catastrophe. “Free the TARP millions….!”