Tuesday, February 10, 2009

Stimulating nothing but fear, big government and Obama's left wing addictions

Behind the Great Man stands Pelosi, Reid and the entire US left wing-Marxist machine. Hope and Change ?

by StFerdIII



Obama is turning out to be worse than originally predicted. Pushed by the most left wing US Congress and Democratic party in history, the Black Messiah, savior of the planet, will extend and widen, the miserable spending record of GW Bush – the highest spending President since the 1960s. The US Federal Budget will go from $3.3 Trillion in spending [which means a $ 1 trillion deficit in 2009]; to over $4.5 Trillion under the new Moses in 2010. This expansion of government – for that is what a stimulus is since most of the money goes to government agencies – is going to deepen the recession and partially neuter US power, if not bankrupt the US state. All hail the Messiah !

Obama's fear mongering about the current state of affairs is greater than even Bush's. He constantly uses 'catastrophe'; 'worst climate ever'; 'need to do something now!'; and the refrain of impending calamity including rising sea levels and drowning polar bears; if $1 Trillion is not passed to 'stimulate' government which in turn, will apparently stimulate the private economy. Such a lie and such a distorted view of how economies actually work is rather typical of statists, and marxists.

Obama was and still is, the most left wing Senator in recent US history. He and his fellow travellers such as Pelosi, Clinton, Reid, et al. are largely ignorant and dismissive of trivialities such as markets, individuals, choice and supply side economics. Like Bush and the 'compassionate conservatives', Obama believes in demand management or stimulating consumers to borrow more money to fund purchases. The fact that such a policy preference over 60 years led to the current financial mess is somehow lost on his holiness. Obama's ideological desire to control, regulate and foster goverment as the main arbiter of life and choice is rather obvious and supersedes what needs to be done to actually create jobs and wealth. Due to this he and his party will deepen the recession and cost millions more, their jobs and wealth.

It is clear that the economic troubles now visiting the world economy – caused by governments in large part – are being used by politicians and Obama, to heighten public fear in order to extend the power of government. Obama and his political supporters have every vested interest to convince people that without big government the world will succumb to godly destruction and ruin. Recessions and contractions are however, necessary and cannot be avoided. After 60 years of government inspired leverage, debt accumulation and speculation, a correction was mandatory. We need it, so let the correction run its natural course. Using government to yet again distort prices and markets will only make matters worse.

Witness the failure of past 'stimulus's'.

Bush's original 'stimulus' package was a failure. In fact he originated two. One was the incredibly dumb idea of mailing people cheques and calling it tax relief. Mailing money from a government bureaucracy is not a tax cut. It is a welfare payment. A tax cut is when governments lower capital gains; dividends; payroll, income or corporate taxes to stimulate investments and job creations. Of the $180 billion Bush mailed out, very little – perhaps 30% - was used by consumers to buy something. The rest was saved or used to retire debt.

The second government stimulus package was the $700 billion imbroglio to rescue banks, Wall Street and auto companies – high paying and financing friends of both US political parties – and print another $4 Trillion worth of US dollar bills. Tens of billions of dollars from the $700 billion package has been wasted and now the US finds itself with a slew of partially state owned banks and finance houses and too many dollars chasing too few goods. Obama will now spend the second half of what has not been wasted from this non-stimulus measure to ensure that the state owns more of the banking sector – all covered with nice phrases about stability; moral duty; fighting off a catastrophe; ensuring survival etc.

Obama and friends will also keep printing money. This printed money sold as bonds and debt to foreign buyers will only cause future inflation and higher tax levels. It does nothing to help the economy. In fact the original idea was that all this printed money would be sent to banks and then redirected to stimulate consumer borrowing is again a mark of lunacy. Consumers who don't have enough income cannot and should not, borrow money. Period. Printing money has had very little real economic impact – except the future negatives which one day will appear.

Waste, fraud and corruption have been endemic since this 2nd stimulus – in which Bush and his friends yelled and screamed was necessary to save the world -- was passed and half of it spent. It did nothing to halt stock market declines or associated share prices. The car firms are still broke and will be back for more money. Ditto many banks. The idea that it 'saved' the world economy is preposterous. We now have artificially resuscitated banks and a huge debt, in the form of $4 Trillion of printed money owed as bonds to foreign states. It is madness. At some point the $5 trillion in total needs to be paid back – either by raising taxes and killing the economy – or by complex debt restructuring, or by simply going bankrupt. US bankruptcy is a distinct option.

So now we have – as predicted – 'stimulus 3'. And this will be followed by 'stimulus 4' and so on, until the US government is satisfied that it now controls most of the US economy. Obama's stimulus 3 will cost another $800 or 900 billion and it will imitate the errors of Bush policy. It will be followed by more stimulus packages – rest assured. With stimulus 3 over 70% of the money will go to government spending programs and government bureaucracies – all to support government preferences.

These government groups are supposed to 'stimulate' the economy through make-work projects and public building or through the expansion of bureaucracies such as health, education and road building. Building contracts for example, are supposed to be given to private firms through market based competitive contract bidding. That is laughable. As with all governments, the stimulus money will be wasted on administration, bureaucracy, and contracts will be given to friends and supporters of the government. Little has changed since the days of Rome, when one looks at how government actually spends and wastes precious tax money.

Obama was and is a radical leftist. He is simply using a necessary recession, one which was the inevitable payment for over-leveraged consumer and business spending; to expand government. Government programs rarely diminish in size – they usually grow in intolerance and ferocity as well as in funding. Obama's great state expansion will not be temporary. Most of it will be permanent. Under the last Bush budget the US was predicted to run a $1 trillion deficit. It will now be much larger.

With government revenues at about $3.0 Trillion and declining due to a fractured economy, combined with the new Messiah's current and future spending the $1 Trillion current predicted deficit, will grow to $1.5 trillion in 2009 and in 2010. In other words US government spending will top $4.5 Trillion in 2010 or about 30% of the US economy – $1.5 Trillion above its federal revenues. Add in state spending and the US government[s] will have a Canada-styled economy with about 45% of the total economy under the control of government.

Hope and change ? Only for those who hate the individual and laud the state. Yes Obama is turning out to be worst than imagined on a whole range of issues – but his addiction to government might literally bankrupt the US. It will certainly worsen the recession and wipe out trillions more in real wealth.