Thursday, February 12, 2009

What Exactly Is Economic Stimulus?



To listen to some high profile politicians, stimulus is spending money to create a job.  Not only is there no scope associated to performance of spent dollars, but there is an assumption that any money spent should be considered stimulative.

I'm sure that there are a number of things in the package which are short term in that they provide an instant job that will perform a task and then end.  At the end of that particular "job", the money is gone, and a product such as a road or government building is the result.  This does not scale in terms of long term economic growth.

Equally stimulative (in many ways) would be to create short term jobs by providing politicians with an account for hiring prostitutes.  It would create "short term" jobs while creating no lasting stimulative effect as there was no scalable product produced.  The prostitutes would be getting paid, the politicians would be getting something of interest, and the money would work it's way back into the market.

Are we still supposed to believe that ANY spending by the government to hire somebody to do something constitutes stimulus that will recover our economy?

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The Mortgage Crisis

The mortgage crisis could not have been an accident. The people that "approved" the mortgages KNEW that:

  1. Were going to have prohibitive payments in 12 to 24 months
  2. Were going to be on property worth far less than what they sold for within 12 to 24 months
  3. Would be forclosed on because they couldn't sell for the amount of the mortgage

Bankers blame it on homeowners making bad decisions or not having foresight. However, those bankers get very uncomfortable when you point out that these mortgage were all approved by bankers that get PAID to know the market and it's trends.

When you point out that regular people like you and I saw this coming back in 2004/2005, they start to tap their fingers and look around nervously.

The short answer is that they set us up and we don't know "why".

Mortgages traditionally require people prove they can make the payments even when the market is not headed down. The banks knew exactly what they were doing...

The Media On It's Knees

Why is it that the mainstream media is clamoring on their knees in front of Obama as if their unwarranted affection will somehow lower his zipper and give them what they so desperately seem to want?