Forexrazor
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During trying times politicians of all stripes are compelled to do something, failing to consider that their hasty legislation is often harmful with unintended consequences. A crisis affords them the opportunity to appear on TV, boast about their knowledge, assure the public everything is under control, and blame the other party, or some big business type for the problems. They never acknowledge that big government’s actions usually conceived by lawyers, who never had to make a payroll, were the cause of the problems. Does the Fannie Mae, Freddie Mac mess come to mind?
Currently our legislators are considering an 825 billion dollar package which Democrats claim will stimulate economic activity. This is no small program. Germany, with a population of about 83 million, has a proposed stimulus bill that is providing $29 billion. Included in the German plan is a credit toward the purchase of a new car, for those citizens who junk their older cars. This sounds like a much more effective stimulant than Nancy Pelosi’s multi millions for abortion and family planning, or 4.19 billion for Acorn and its “neighbor stabilization activities.” Acorn is best known for fraudulent voter registration, mostly in the intercitys, and for the rewrite of loan standards that preceded the demise of the Fannie Mae and Freddie Mac. Unless this 825B plan is cleaned up, focused on economic activities rather than political hand outs, positive results cannot be expected.
This legislation should be renamed The Spending Bill, with FDR activities of the 1930’s as the precedent. To enhance Roosevelt’s reputation, history was rewritten to prop up his legacy. Unemployment in the US went from about 4% in 1929 to 24.9% in 1933. By 1939 after years of Keynesian pump priming the rate was 17.9%. In retrospect the tinkering of the economy by FDR did not end the recession, but probable extended it. Sadly, there are those who naively believe the altered version of history, and because the media is willing to promote anything Obama does, markets may initially respond favorable to the spending bill. FDR tried everything but the free market, and it looks like Obama will do likewise.
There is nothing wrong with spending if it buys something worthwhile at a reasonable price, and funds are available. The spending charade as currently proposed amounts to over $2700 per US citizen, but goes to the loudest political groups favored by Obama. Effective capital utilization and job creation efforts will take the back seat, enabling supporters of those in power to get money for their most favored pork projects.
Massive government spending will stir up some economic activity but this will not be sustainable, nor will it maximize the use of capital. To pay for this record breaking government expansion, the fed will initially print the money. Later as deficits mount, they will need to borrow massive amounts of money.
The Chinese have been one of our biggest creditors, reportedly owning more than 650B of treasuries at the end of Nov. 2008. Our new Sec. of the Treasury Timothy Geithner, during his congressional testimony for the job, said that the Chinese were manipulating their currency levels to stimulate exports. Now Geithner has to be a pretty bright guy, because there are few people around today that know how to neglect paying their income tax in full for a number of years, and then pay up without even a penalty. The Yuan has appreciated 21% against the dollar since 2005 but if Geithner is right, the Chinese currency has more to go against the dollar. Why then will the Chinese want to continue financing the Washington spendthrifts by buying more treasuries in a currency that may well depreciate further.
Looks like Washington has a plan to party now with their most favored. Later we will all pay with higher taxes and higher prices on imported merchandise because of a deflated dollar.
Currently our legislators are considering an 825 billion dollar package which Democrats claim will stimulate economic activity. This is no small program. Germany, with a population of about 83 million, has a proposed stimulus bill that is providing $29 billion. Included in the German plan is a credit toward the purchase of a new car, for those citizens who junk their older cars. This sounds like a much more effective stimulant than Nancy Pelosi’s multi millions for abortion and family planning, or 4.19 billion for Acorn and its “neighbor stabilization activities.” Acorn is best known for fraudulent voter registration, mostly in the intercitys, and for the rewrite of loan standards that preceded the demise of the Fannie Mae and Freddie Mac. Unless this 825B plan is cleaned up, focused on economic activities rather than political hand outs, positive results cannot be expected.
This legislation should be renamed The Spending Bill, with FDR activities of the 1930’s as the precedent. To enhance Roosevelt’s reputation, history was rewritten to prop up his legacy. Unemployment in the US went from about 4% in 1929 to 24.9% in 1933. By 1939 after years of Keynesian pump priming the rate was 17.9%. In retrospect the tinkering of the economy by FDR did not end the recession, but probable extended it. Sadly, there are those who naively believe the altered version of history, and because the media is willing to promote anything Obama does, markets may initially respond favorable to the spending bill. FDR tried everything but the free market, and it looks like Obama will do likewise.
There is nothing wrong with spending if it buys something worthwhile at a reasonable price, and funds are available. The spending charade as currently proposed amounts to over $2700 per US citizen, but goes to the loudest political groups favored by Obama. Effective capital utilization and job creation efforts will take the back seat, enabling supporters of those in power to get money for their most favored pork projects.
Massive government spending will stir up some economic activity but this will not be sustainable, nor will it maximize the use of capital. To pay for this record breaking government expansion, the fed will initially print the money. Later as deficits mount, they will need to borrow massive amounts of money.
The Chinese have been one of our biggest creditors, reportedly owning more than 650B of treasuries at the end of Nov. 2008. Our new Sec. of the Treasury Timothy Geithner, during his congressional testimony for the job, said that the Chinese were manipulating their currency levels to stimulate exports. Now Geithner has to be a pretty bright guy, because there are few people around today that know how to neglect paying their income tax in full for a number of years, and then pay up without even a penalty. The Yuan has appreciated 21% against the dollar since 2005 but if Geithner is right, the Chinese currency has more to go against the dollar. Why then will the Chinese want to continue financing the Washington spendthrifts by buying more treasuries in a currency that may well depreciate further.
Looks like Washington has a plan to party now with their most favored. Later we will all pay with higher taxes and higher prices on imported merchandise because of a deflated dollar.
