Monday, August 30, 2010
Getting a Big Picture
The market eases down to start another week, hovering around the symbolic benchmark of 10,000 but almost certain to drop well below by Friday when more dismal job info will be released. The revision last week of the second quarter growth figures to under 2% makes the decline a virtual certainty.
Yet, the Bamster blames Bush. He views the cliche line in his speech so important that he gives it a couple of times accompanied by microphone taps to check if his sound system is still working. It must be the product of a government procurement contract awarded to a firm in Chicago with connections.
What he can't seem to absorb is the very basic concept that government doesn't create jobs. Government creates bureaucracy and regulation and a black hole which consumes money, taking it out of the economy and precluding investment or productivity. Government can only create an environment in which the private sector can create jobs.
Government can clear obstacles. Government can remove uncertainty. Government can promote profit-making. Government can enable entrepreneurship by standing aside.
When the future is unclear. When debt mounts without hope of repayment. When economic reality is ignored such as today when the government announces intention to provide refinancing on home mortgages for people who are unemployed, then you don't get jobs created. You get a reluctance to build business, invest in the future or create a job.
Two thousand page legislation which no one reads before enactment and no one understands afterward can't provide certainty. There is doubt about whether a business will be allowed to make a profit. There is concern with liquidity rather than potential for success. Credit is withheld in favor of cash in hand awaiting the next round of regulation, audit and arbitrary confiscations.
Stimulating by throwing money at favored political supporters is ludicrous. It won't work. In fact, the better course would be to propose a parallel to FDR's Bank Holiday. This time, it should be a Government Holiday. It should be long, it should be complete and it should be started immediately. Take off for a year. Adjourn and let the country function. Stop redistribution. Stop propping up failure. Stop mandating. Stop over-spending. Stop doing anything beyond the most basic of required services. At the federal level that takes us to defense and security and not much else. The postal service is dispensable. That should get the recovery stimulated more than adequately.