Phony Jobs Claims

The Media Fall for Phony 'Jobs' Claims
06/09/09 - Online.WSJ by William McGurn

The Obama Numbers Are Pure Fiction.

[edited] "Saved or created" has become Barack Obama's signature phrase. Obama declared yesterday that the stimulus had already saved or created 150,000 American jobs.

He announced faster stimulus spending so he could "save or create" an additional 600,000 jobs this summer. Obama promised earlier that his recovery plan would "save or create three to four million jobs over the next two years."

Tony Fratto was a senior member of the Bush administration communications office. He sees a double standard at play.

We would never have used a formula like "save or create". To begin with, the number is pure fiction. The administration has no way to measure how many jobs are actually being 'saved.' If we had tried to use something this flimsy, the press would never have let us get away with it.

The inability to measure Mr. Obama's jobs formula is part of its attraction. Never mind that no one actually measures "jobs saved". Neither the Labor Department, the Treasury, nor the Bureau of Labor Statistics does it. The New York Times delicately reports that Mr. Obama's jobs claims are "based on macroeconomic estimates, not an actual counting of jobs." Nice work if you can get away with it.

Harvard economist and former Bush economic adviser Greg Mankiw writes:

The expression "save or create" is political genius. You can measure how many jobs are created between two points in time. There is no way to measure how many jobs are saved. Even if things get much worse, the President can say that there would have been 4 million fewer jobs without the stimulus.

Economists Surprised That People Read the Paper

The Grand Unification Theory of Sucking
06/07/09 - VodkaPundit by Stephen Green

[edited] Big Government Spending Programs are Having an Opposite Effect

The Federal Reserve announced a $1.2 trillion plan three months ago designed to push down mortgage rates and breathe life into the housing market.

But this and other big government spending programs are having the opposite effect. Rates for mortgages and U.S. Treasury debt are now marching higher as nervous bond investors fret about a resurgence of inflation.

Well, duh! Stimulus spending can’t work, because these things happen, and I’d say we will indeed get all three:

1. Extra spending means extra taxes, which means the whole thing is a wash. It is a big, fat lie that Government spending has a “multiplier” effect different from consumer or business spending.

2. Extra spending means extra debt, driving up interest rates and choking growth.

3. Extra spending means printing money. Resulting inflation makes any growth an illusion.

This is a great comment by Shannon Love who posts at ChicagoBoys

[edited] Leftist economists don't understand that people read the paper.

The problem with their stimulus theory starts with their assumption that everyone will behave just as they would have without a stimulus, up to the point that the stimulus spending reaches a critical mass sometime next year.

However, people read the newspaper, see the tsunami of taxes, regulation, and inflation coming their way, and they alter their behavior immediately. Passing the stimulus bill today and planning to raise taxes tomorrow, alters people’s behavior right now. The expectation of paying for the stimulus later drives down economic activity now, long before the stimulus can hope to have any effect.

Obama’s team can’t see this because they have an ivory tower model of the economy. They think people do not make economic decisions until they actually receive money. They can’t seem to grasp that the economy results from the choices of real, live, human beings who can and do make plans based on their predictions of future conditions.

Obama expects people to stand around passively until Obama does something that makes them react. Instead, they’re anticipating him.

+ + + +
Stimulus Does Not Cure a Recession
Jobs change when people change what they want to buy or can afford. This takes time and adjustment. Businesses won't hire because of a short-term boost to their income that is being borrowed from later taxes.

Why Spending Stimulus Plans Fail
Government spending merely transfers jobs and income from one part of the economy to another.

Econ 201: The Myth of the Economic Multiplier
Government spending doesn't multiply anything. It takes resources from taxpayers and applies them to government projects. You get a bridge or some paperwork, that is it.

Stimulus Shrinks Economy

Stimulus Package Shrinks Economy, Destroys Private Sector Jobs
05/31/09 - OpenMarket by Hans Bader

This is only the last part:

[edited] A provision in the stimulus package that blocked a mere 97 Mexican truckers from U.S. roads "caused Mexico to retaliate with tariffs on 90 goods affecting $2.4 billion in U.S. trade", destroying 40,000 American jobs.

The vague "buy American" provisions of the stimulus, doing little to promote purchases of U.S. products, managed to ignite a trade war with Canada.

Obama's policies echo those of Herbert Hoover, who helped spawn the Great Depression through his protectionism and tax increases.

One of Obama's advisers admits that “the barrage of tax increases proposed in President Barack Obama’s budget could kill any chance of an early and sustained recovery.” Even the Washington Post, which endorsed Obama and once supported his auto bailouts, now has soured on them and their waste of taxpayer money.

Bailouts by John Stossel

20/20 and Reason: “Bailouts & Bull”
03/14/09 - QAndO.net by Jason Pye

John Stossel of ABC's "20/20" program asks questions about the bailouts. At the end, he asks Democratic House Majority Leader Steny Hoyer if the stimulus will work. "I hope so" replies Hoyer. Video 1:00 to 7:46.

[edited] There are six videos. In the first one, Stossel talks to 18 economists about why the “stimulus” was a bad idea. He asks House Majority Leader Steny Hoyer if debt got us into this recession, then why is creating more debt going to get us out? One economist says that one dollar taken out of the economy is one less dollar to be spent in the private sector.

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Why Spending Stimulus Plans Fail
They take a dollar to give a dollar.

A Short Argument Against Stimulus
Economist Henry Hazlitt reminds us that you can't help an economy by spending when you have to hurt the economy with taxes or inflation.

Let's Counterfeit Our Way to Wealth
If the Obama team is right about economics, then counterfeiting should be a way for us all to become rich.

A Tested Stimulus Plan
The housing bubble was a giant stimulus. We are now living in the post-stimulus economy. How do we like it?

The Government Bailout IS the Problem

The Failout and Krugman
02/29/09 - Angry-Economist by Russ Nelson

The economy is bad because no one can predict the future with a big government elephant stomping around. The elephant can't solve the problem, and it scares away the elves who can solve the problem. The elves are small, but they are smart and there are a lot of them. The economist Paul Krugman has spun a theory for recovery. Will he bet on its success?

[edited] The problem here is simple: credit is scarce because nobody wants to lend and nobody wants to buy. The Federal Government is threatening to borrow and spend a TRILLION dollars.

If you are bank, would you loan money if you knew that an A-grade customer was going to be spending a TRILLION dollars soon? Of course not. Even if they choose not to get their loan from you, the price of lending is going to go up. It must go up when a TRILLION dollar buyer is showing up. So nobody is lending now.

And why would anyone buy anything now. You want to be positioned correctly for the TRILLION dollars which is going to enter the market soon. You don't want to invest your money in something, only to find that the market has shifted and your investment is toast.

The failout is not the solution to our problems. It is the CAUSE of our problems, merely by being threatened as a government action.

Why is this not obvious to everyone? I blame Krugman.

I wonder if Paul Krugman has borrowed huge amounts of money and spent it already? If he hasn't done it, then why should we do it? If he doesn't trust his own theory for his own household, then why should we trust his theory for our country?

Of course he hasn't done it, because his theory requires that many people behave differently together than each person would for himself. The group is made up of individuals, so how can that be?

Krugman's theory has no legs. That dog don't hunt.

The Housing Crisis in a Nutshell

The Housing Crisis, in a nutshell
02/24/09 - Angry-Economist by Russ Nelson

[edited] Pretend that you are a bank.

• You make a loan to somebody, say with no down payment at all.
• Because you're loaning money to everyone that doesn't run away fast enough, everyone thinks they can own a house.
• The price of houses rises 20%. The loan you originated is now only a loan for 80% of the value of the house, so your risk has gone down.
• In fact, your risk has gone up; way up.
• But because there's a school of thought that says that your risk has gone down, people are willing to buy your risk and turn it into a stock.
• All sorts of people bought "80%" risk mortgage stocks that were really 100% risk mortgage stocks; people who shouldn't have been investing in anything that risky.
• And because these mortgages were intermingled with real 80% risk mortgages, nobody knows which of these stocks is worthless, so nobody realy knows how much money they have.
• Time is the only cure for this, but during that time nobody really knows how much money they have, so nobody will want to spend anything.
• What will the stimulus do to change this? Nothing. In fact, it will make the problem worse because if the feds are borrowing that much money, nobody has any incentive to loan to more risky folks (which is everyone).

You Will Pay, With the Rich

The 2% Illusion
02/26/09 - Online.WSJ.com OpinionJournal

Take everything they earn, and it still won't be enough.

[edited] If taxes took 100% of the taxable income of everyone earning over $500,000 in 2006, this would have given Congress an extra $1.3 trillion in revenue. That's less than half the 2006 federal budget of $2.7 trillion, and only one-third of the $4 trillion Congress will spend in fiscal 2010.

Taking every taxable "dime" of those earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.

The bottom line is that Mr. Obama is selling the country on a 2% illusion. Unwinding the U.S. commitment in Iraq and allowing the Bush tax cuts to expire can't possibly pay for his agenda. Taxes on the not-so-rich will need to rise as well.

Mr. Obama's climate-change plans will hit all Americans with higher expenses. Selling cap-and-trade permits to emit greenhouse gases amounts to a steep new tax on most types of energy and so on all Americans.

Mr. Obama portrays his agenda as center-left pragmatism. But pragmatists don't ignore the data. The only way to pay for Mr. Obama's ambitions is to reach deeper into the pockets of the American middle class.

I Won't Do the Paying

Comment of the Week
02/25/09 - CafeHayek by Russel Roberts
Comment by Methinks

The problem with high income people is that they can make plans and act on them. They are better than most people at finding loopholes in government. In my opinion, if they have to, they will buy the government. That is what things were like in the 1960's.

[edited] I'm in the target group, the top 2% of taxpayers to do the paying for the trillion dollar spending. I won't do it.

I own my business and have the option to work as much or as little as I like. At some tax rate, the marginal dollar won't be worth earning. I'll fire some employees, scale down the business or retire altogether and stick my money in tax advantaged municipal bonds, and do all the traveling and relaxing I can't do now. The tax advantage of muni bonds will NEVER go away because municipalities will scream bloody murder.

If I'm not ready to retire and the tax rate gets too high, I may just immigrate to another country because it's very easy for me to get almost instant citizenship. I respond to incentives and I'm not incentivized by enslavement and neither is anyone I know.

The specialness of this country is the lack of totalitarian regime and individual liberty. Once that's gone, this country is no longer special. You can call me evil or "not doing my part" because I'm not willing to work myself into the grave for your family instead of mine, but the reality is that unless you plan to start a Gulag, you can't make me.

Why should I be expected to work and risk more than you to provide you with the lifestyle to which you have become accustomed?

Yes, it's sustainable to raise taxes on the most productive. However, it's not sustainable at a high standard of living. It's sustainable only at ever decreasing standards of living. France and Germany are good examples.

There's a difference between the natural altruism that occurs between family members and confiscation by the state. I feel great when I donate to charity. I feel really crappy when I write the check to the IRS. Maybe I should figure out how to receive one instead. Seems a lot less time consuming.

No Sports Economic Multiplier

Evidence against the multiplier
02/17/09 - CafeHayek by Russell Roberts

[edited] Almost all academic economists agree about the impact of subsidies and spending on sports stadiums. Building a stadium "creates" jobs, but the best estimates of NET job creation are ZERO.

From the survey paper "Do Economists Reach a Conclusion on Subsidies for Sports Franchises, Stadiums, and Mega-Events?" (PDF), 09/2008 :

Sports subsidies are unwarranted, based on economic intuition, a survey of economists, and a review of the literature on the economic impact of professional sports. There may be some local economic benefits, but the empirical findings strongly reject sports subsidies due to a lack of economic benefits.

There is a large and growing peer-reviewed economics literature done by economists, as opposed to that of scholars in public policy, urban development, and planning departments. This research is almost unanimous that stadiums, arenas, sports franchises, and sport mega-events have no consistent, positive impact on jobs, income, or tax revenues for the associated communities.

Stimulus and Terpentine

The Stimulus Bill Smells of Turpentine
02/16/09 - AmericanThinker by Paul Shlichta

[edited] A farmer had a sick horse and wanted to call in a veterinarian. His neighbor said "You don't need no vet. Just feed him turpentine: two spoonfuls a day."

The farmer tried it, and the horse got sicker. The neighbor said, "You're not giving him enough; double the dose." The farmer followed the advice, increasing the dose several times, until the horse finally died. The neighbor drove by while the farmer was burying it. The neighbor hissed, "You didn't give him enough," and drove away.

The turpentine ploy provides politicians with a win-win situation. If their project succeeds, it's because of their brilliant leadership. If it fails, it was inadequately funded and needs more money.

No Effect On Unemployment

The Obama-Geithner Bear Market
02/13/09 - Forbes.com by Robert Lenzner

[edited] The spectacle of nasty political infighting between Democrats and Republicans must be disturbing to investors everywhere. They question whether the $787 billion stimulus plan is sufficiently robust or properly focused.

Robert Albertson is a principal at Sandler O'Neill and a former Goldman Sachs banker:

[edited] After 18 years of record spending, much of it on credit, consumers must and will save the next $1 to $2 trillion of income to reduce their debt. Only private businesses create job multiplication and true future spending power. That requires a savings and investment program, not a doomed spending program.

Spending programs ate up resources for six years during the 1930s Depression, with little or no effect on unemployment.

Audacity to Do Nothing

The Audacity of Doing Nothing
02/11/09 - Blogs.Law.Harvard.edu by Philip Greenspun
(via Peter G. Klein)

Our prosperous society is built on predictible law and consequences. This is already a shining accomplishment in an uncertain world. It does no good to, in effect, suspend the law and take extraordinary actions because some people made bad bets, lost money, and have political influence. Changing the rules and using naked government power makes things much worse. It removes predictability and rewards the people who took outrageous risks.

See also Rewarding Bank Management for Failure

[edited] The "real money" investors didn't want to invest alongside the government. If the bank loses money, they fear the government will take 100% of the value left in the bank and leave private investors with nothing, including recent ones. This happened to recent investors in Fannie Mae.

The "real money" investors didn't want judges to modify contracts, as when bankruptcy judges reset mortgage payments at a lower level and reduce the principal owed. A central tenet of the U.S. Constitution is that people are free to make contracts.

A foreclosure is greatly preferable to these folks than a modification. In a foreclosure, the most senior investors get what they expected, their money back. The holders of the most junior tranches [last to be paid], which carried a higher return and were known to be high risk, would get nothing. This is also what they expected. If mortgages are modified by government action, it is unclear how the obligations among the various private parties should be adjusted.

One money manager scoffed at the idea that the markets had failed. "The markets are working fine, but they're giving people answers that they don't like, so people cry market failure." Stocks and bonds low? That's because investors are afraid of a prolonged depression and continued government interference.

A house in a jobless region of Michigan is worth almost nothing. A place with 50% of its former jobs only needs 50% of its houses.

The government is a lot bigger and more powerful now than in prior recessions. Rich companies and people can put some of their wealth into lobbying. They demand that the government prevent them from getting wiped out or at least slow the process.

Survive "Obama Care"

How to Survive "Obama Care"
02/11/09 - MDOD by 911DOC
A doctor in emergency medicine gives some advice about healthcare as specified by Obama and the "stimulus" bill.

[edited] Buried in the "stimulus" package is a bit on health care. It's not making the news in the way it should. It is the equivalent of a bomb threat to American Medicine.

Rationed care is on the way, and the folks who do the rationing will be government 'lifers' who can not be fired and just don't care. So here you go, get to work on these things quickly before the powers that be start watching you closely.

1. Obtain a second social security number and identification card that makes you ten years younger. Keep it well hidden and once you crack 70 years old, or whatever the new cut-off for 'extraordinary care' will be, you will not be kicked to the curb to die quietly at home.

The $500 you spend for this now may save your life later. And if you doubt that this will happen, I have a family member who left the UK twenty years ago because they would not do bypass surgery on her based on her age. She got it here.

(Read 2-5 at the link)

I can not conceive of the rationale for pushing this type of plan. It has been tried and has failed in the UK and, as we have detailed on this site, Canada has good primary care, but for those who do not get their brain cancer or breast cancer at a convenient time Canadians may wait until they die for their free care. They come here. That will stop.

Failure of the New Deal

Imitating Failure
02/08/09 - AmericanThinker by Nicholas J. Kaster

[edited]
Burton Folsom Jr. writes that the New Deal didn't work. He is a professor of history at Hillsdale College, and has published New Deal or Raw Deal? (Threshold Editions, 2008).

Folsom says the New Deal combined bad economic policy and a more corrupt central government.

Obama's so-called stimulus bill, a "new" New Deal full of massive spending, is based upon the conventional wisdom of the New Deal.It will ensure that today's bad economy stays with us for many years.

Henry Morgenthau was Secretary of the Treasury and a confidante of Roosevelt. He testified May 1939:

We have tried spending money. We are spending more than we have ever spent before and it does not work. We have never made good on our promises. I say after eight years of this Administration we have just as much unemployment as when we started and an enormous debt to boot!

Unemployment was 20+ percent in April 1939. This was nearly a decade after the 1929 crash and more than 6 years after FDR's inauguration.

During that time, FDR tried everything to end the crisis: cartelizing industry (the NRA), subsizing farmers (the AAA), creating make-work projects (the WPA), promoting organized labor (the Wagner Act), and finally, launching the modern welfare state (social security, minimum wage laws, the AFDC). It was all funded by a combination of increased debt, excise taxes, and high progressive income taxation.

Most historians tend to overwhelmingly support the New Deal. Folsom says:

Historians sympathize with FDR's "progressivism" and judge him on his good intentions rather than on the results. In the progressive view, intentions and sincerity are among the noblest virtues a president can possess.

If we probe deeply into Roosevelt's popularity, we almost always discover the presence of patronage -- creating and manipulating federal jobs to strengthen his political support.

Spending Did Not Help Japan

What can we learn from Japan?
02/06/09 - CafeHayek by Russell Roberts

[edited] Most Japanese economists take a bleaker view of their nation’s track record, saying that Japan spent more than enough money, but wasted too much of it on roads to nowhere and other unneeded projects.

Dr. Ihori surveyed public works in the 1990s. The spending created almost no additional economic growth. Instead of spreading beneficial ripple effects across the economy, the spending led to declines in business investment by driving out private investors.

Critics said decisions on how to spend the money were made behind closed doors by bureaucrats, politicians and the construction industry, and often reflected political rather than economic considerations.

The Japanese Didn't Try Hard Enough?
02/07/09 - Blog.Mises.Org by Tim Swanson

[edited] This NY Times story discusses the Japanese government spending packages during the 1990's.

The story notes that most Japanese consider all of the plans to be resolute failures. Yet, a number of Western economists believe that Japanese taxpayers simply did not spend enough!

How much was not enough? Japan spent $6.3 trillion on construction-related public investment between 1991 and September 2008. [That is $6,300 billion.]

Read the "Stimulus Package Unveiled" from the WSJ and "Japan" by Benjamin Powell.

Will You Bet On Your Opinion?

Will $100 Shut People Up?
02/06/09 - Crime & Federalism by Mike

[edited] When people state a stupid opinion or false fact, I no longer argue. I say, "OK - I'll bet you $100 that you are wrong."

People never take the bet. What's up with that? It's amazing how something as small as $100 can test a person's convictions. Amazingly, if you will not put $100 on the line, why should I believe you? People want me to change my mind based on their assertions; yet their assertions aren't even worth $100 to them!

How about people who demand that the government provide a stimulus to the economy. Perhaps Paul Krugman will say, "I'll wager $10,000 with any of my critics that if x-stimulus occurs, y-economic effect will follow."

Why aren't these economists making huge bets? They are rather confident in their opinions. They should go win that money! If they are embarrassed by greed, they can set up a charity as the beneficiary of the wager.

If someone wants to spend billions or trillions of taxpayer dollars, but won't offer up a few thousand of their own, then what should we think of him?

Democratic Trickle-Down Economics

Democrats Try Trickle-Down Economics
Growing government won't stimulate the real economy.
02/05/09 - Online.WSJ.com by Carl Rove

[edited] As a presidential candidate, Barack Obama attacked "trickle down economics" as "bankrupt" and an "old, discredited" philosophy that "didn't work." He was wrong. Even worse, he and congressional Democrats are embracing a Democratic version of trickle-down economics that won't work.

The House-passed "stimulus" bill, H.R. 1, is deeply flawed, assuming that spending $1 trillion to grow government will trickle down to help people who lost jobs. The Democrats' spending is horribly mismatched with industries that have suffered job loss.

Democrats want to spend $88 billion to increase the federal share of Medicaid. What American will be hired by a small business, factory, retail shop, hotel, restaurant or service company because of this spending? The answer is very few.

In H.R. 1, there's $41 billion set aside for school districts, $1.5 billion for university research grants, $2 billion for Energy Department labs, and $3 billion for the National Science Foundation. Yet education is one of the few sectors that added jobs last year.

There's also $4 billion for health programs like obesity control and smoking cessation, $2 billion for the National Institutes of Health, $462 million for the Centers for Disease Control, and $900 million for pandemic flu preparations. Health care also added jobs last year.

White House adviser Larry Summers argued that any stimulus must be "targeted, timely and temporary." This bill does the opposite. Mr. Obama pledged to "scour our federal budget, line by line, and make meaningful cuts." His cuts are unspecific and fanciful, while Congress's spending will be real and record-setting.

Discretionary domestic spending will have nearly doubled by the time Mr. Obama stops dithering and starts scouring.

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Worst Talking Point Ever
11/06/09 - The Atlantic by Megan McArdle

McArdle: If this is the best the Democrats can come up with, they are in deep, deep trouble.

From Politico: Members fear their jobs are next.

House Minority Leader John Boehner (R-Ohio): Speaker Pelosi is trying to force her members to vote for a bill that the American people have soundly rejected.

Democrats counter that their agenda has kick-started a recovery on Wall Street, even if it hasn't trickled down to the job market yet, and that Republicans are putting at risk what Democrats have begun.

Macroeconomics is Astrology, Not Science

Macroeconomics 'Experts' Apply Astrology, Not Science
01/30/09 - RealClearMarkets by Frank J. Tipler, Professor of Mathematical Physics at Tulane University.

[edited] The inability of macroeconomic theories (about an entire economy) to make accurate predictions means that those economists do not know what they are talking about. Our leaders are being advised by macroeconomists, and they haven’t got a clue where they are leading us. Their actions may lead us out of the current recession, or they may lead us into a depression as bad as the Great Depression.

Franklin Roosevelt is often given credit for experimenting with the economy in a scientific manner. He did nothing of the sort.

Any experiment involving human beings has to be a controlled experiment, as in medicine. Half the patients are given the new medicines and the other half, the controls, either the old medicine, or a placebo. Then, and only then, can one tell if the medicine actually improves the condition over doing nothing (the placebo), or is making matters worse.

In contrast, today’s economic advisors to the President, like Roosevelt, propose to apply their economic medicine to the entire economy. This is astrology, not science. The professors of economics have no true, experimentally confirmed knowledge of macroeconomics.

The widely touted macroeconomic “experts” are no experts at all.

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Why Spending Stimulus Plans Fail
Articles about Stimulus

Sins of a Treasury Secretary

Venial versus mortal sins in a Treasury Secretary
01/22/09 - PowerLineBlog by Paul Mirengoff and John Hinderaker

The Senate is holding confirmation hearings to make Timothy Geithner Secretary of the Treasury, to run the IRS and manage the spending of $800 billion dollars and more in "stimulus".

John Hinderaker:

[edited] Geithner failed to pay his self-employment taxes for four years. I find it remarkable that the Senate is willing to overlook that fact, even though:

• The IMF, his employer, told him that he needed to pay these taxes.
• The IMF gave him additional compensation specifically earmarked for paying those taxes.
• He signed a form stating that he would use this compensation to pay those taxes.
• He paid those taxes for 2003 and 2004 after he was audited by the IRS.
• He still did not pay those taxes for 2001 and 2002 because the statute of limitations had run out for those years, so he couldn't be prosecuted.
• He paid the tax for 2001 and 2002 when Obama's transition team discovered the facts.

A Republican with the same tax-scofflaw record would not have the chance of a snowball in Hell of being confirmed.

Paul Mirengoff:

[edited] The conventional wisdom that exalts Geithner says that former Secretary of the Treasury Lawrence Summers could run Treasury at least as well as Geithner.

Unfortunately, Summers committed an offense far graver than non-payment of taxes. He expressed politically incorrect views about why there are more men than women in high-end science and engineering positions.

Labels: S_Government, S_Stimulus

An Hystoricle Day

An Hystoricle Day
01/20/09 - DocsOnTheWeb by Shrodingers Cat

Cat sees our current political and economic situation unfolding as it did in 1930, and for the same reason: government manipulation of the economy on a massive scale. The government just won't stand back and let the people (free market) clean up the mess.

[edited] You see, history seems to be repeating itself, and it is like watching a train wreck, knowing beforehand it was going to happen but unable to stop it.

Hoover was a meddling Republican president who felt he "had to do something" to help the economy of 1929 and 30. He consulted key business leaders and came up with the brilliant ideas of keeping wages high at a time of declining prices and profits for companies, ensuring increased unemployment. He increased taxes (top rate went to 63 percent) increased government subsidies to industry and agriculture, and increased tariffs.

He said, "We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic". (Not my kind of fiscally responsible conservative) That quote sounds awfully familiar... Then came the great FDR (BHO)
(Read more)

The irony is that our problems have been created by a runaway government program to make big houses available to everyone, able to pay or not. The government agencies that did this are called Fannie Mae, Freddie Mac, and the bond ratings agencies.

They pretend to be "private companies" while operating with government guarantees, government appointed boards, government appointed executive officers, government political pressures, and government "oversight" that encouraged them to borrow as much money as the entire US debt at the time, and distort the housing finance markets.

Now, we are being sold government programs to "fix" the problems, maybe, by spending $1,000 billion at a time.

See "We Guarantee It".

The last part of the post reports a parable of politics, performed in a third grade classroom.

[edited] Jamie and Olivia were picked to run for the top spot. Both candidates were good kids. I thought Jamie might have an advantage because he got lots of parental support.

The day arrived for their speeches. Jamie had specific ideas about how to make our class a better place. He ended by promising to do his very best. Everyone applauded.

Olivia's speech was concise. "If you will vote for me, I will give you ice cream." She sat down. The class went wild. "Yes! Yes! We want ice cream." She surely could say more. She did not have to. A discussion followed. How did she plan to pay for the ice cream? She wasn't sure. Would her parents buy it or would the class pay for it? She didn't know. The class really didn't care. All they were thinking about was ice cream.

Jamie was forgotten. Olivia won by a landslide.
(Read more)