When an economic bubble bursts, normalcy can only return if the price excesses created during the bubble are wrung out of the market. A recession is often a painful but necessary market mechanism that corrects the pricing distortion and consequent misallocation of capital that occurs in a bubble. When government intervention prevents the mispriced asset class from fully deflating, capital continues to be misallocated and economic malaise lingers on. This is the takeaway message from Peter Schiff’s Wall Street Journal editorial.
Archive for the 'Fiscal stimulus' Category
Given that this is the slowest recovery from the deepest recession in the modern era, any argument on what impact the stimulus package or the Obama administration did or did not have on the duration or depth of the recession or recovery can only be made on a counterfactual basis. Despite the massive expenditures, you can’t say this recovery is more robust than any that has gone before, so all that can be said in defense of administration policy is speculation that the recovery would have been even more tepid without the stimulus. Problem being, a case can also be made that the uncertainty created by this administration’s wild spending, insane deficits, threatened increases in health care taxes, likely increases in health care insurance premiums on employers, an energy tax (cap & trade), repeal of the Bush tax cuts, increases in the minimum wage, uncertainty created in the health care, financial, and energy industries with the imposition of radical government mandated top down changes in industrial policy – all contributed to increasing uncertainty in the private sector and made the recession worse.
Yesterday, in a background briefing, the administration announced a three year spending freeze on portions of the budget. Since departments with the fastest growing government expenditures like Defense, VA, the State Department, and entitlements are excluded from the “freeze”, it will have a negligible effect on the ballooning deficit. One cannot help but wonder if the administration is trying to be all things to all people, and risks representing nothing to no one.
A new website for the controversial, popular program is up and it includes some things you need to know if you’d like to take advantage. Your vehicle must be less than 25 years old on the trade-in date Only purchase or lease of new vehicles qualify Generally, trade-in vehicles must get 18 or less MPG [...]
Thanks to Justin and company for welcoming me on here as a regular contributor. I will be posting on a number of issues, but one area you can expect that I will regularly be tracking is technology related developments and how they interact with the political world and policy. I also live less than ten [...]
Talked about this recently when Biden admitted that there might be need for a second stimulus package at some point, but that the administration wanted to see how the first round would suss out. Still, looks like Dems need to get their stories straight because they aren’t saying the same things. Read more at True/Slant. [...]
Over at The Atlantic, Megan McArdle supported Barack Obamaâ€™s candidacy because of his economic team. Now, she worries that support may have been misplaced. Namely, she thinks Obamaâ€™s budget numbers are insane (her words) and the stimulus package was far too ideological. The budget numbers are just one more blow to the credibility he worked [...]
The Obama Administration might be talking about fiscal responsibility, but such wisdom doesnâ€™t look likely to arrive in Washington this year. On the heels of the massive stimulus package comes the next wave of spending. On Wednesday, the House will consider a proposed $410 billion spending plan for the rest of fiscal 2009 — and [...]