Many in the financial media have been pointing to the government's stimulus package aka the “American Recovery and Reinvestment Bill of 2009″ as the solution to our country's economic woes. I was even somewhat excited about the prospect of the government riding to the rescue of the economy on a white horse...until I looked the gift horse in the mouth. The more closely I look at the proposed stimulus package, the less I like it.
The package will not be nearly the boon for infrastructure companies that many believe: The small percentage of the total package that will actually be spent on infrastructure projects will be spread out over a number of different industries and some of the spending will not occur for years. I highly doubt that the new government spending will come anywhere near making up for the tremendous loss of private capital that had been flowing into the sector.
Anyone who really believes that things in the government are different now that Obama is in office really needs to read the following New York Times article: Defense and No Apologies From Author of Fiscal Bill.
I hope that Obama will eventually be able to bring the best ideas from both political parties together and eliminate the waste and pork that has existed in Washington for years, but doing so will take time. The government, and probably rightfully so, wants to put the stimulus package in action ASAP. As a result, it is going to be filled with all sorts of garbage and pet projects of the bill's authors rather than things that would really simulate the economy.
I realize that Republicans are always going to feud with Democrats and that it is not surprising that they are bashing the stimulus bill in its current form, but Representative Paul D. Ryan of Wisconsin, the senior Republican on the Budget Committee, makes a valid point with this quote about the bill and its author Representative David R. Obey:
"This is 1936 economics,” Mr. Ryan said. “But it reflects David’s ideology and his economic doctrine. They took everything in their file cabinet that has been piling up for 100 years, threw it in this bill and called it economic stimulus.”
In what is now being called "Bloody Monday" another est. 70,000 jobs losses were announced. A trend that many economist say is likely to continue. As more corporations continue to contract or cease operations. The Government & banking industries failure to free credit markets and curtail the sub-prime mortgage debacle. Most likely will turn into a much larger crisis in the Commercial Loan industry as more businesses & retailers close doors defaulting on leases, leaving office buildings and strip malls vacant. This economic collapse seems to be creating an excellent opportunity to create a New Financial Order as evident in the following quotes from one of the longest standing envoys in America Henry Kissinger.
Should we take comfort in knowing that deviant Henry Kissinger approves of Obama and looks forward to having Obama take us into world government? In Europe, the joke is that when Henry Kissinger visits your country, you should "Quick, hide the children!" Better watch out, Obama, when Uncle Henry visits the White House! Henry Kissinger, like David Rockefeller and the Zbig, are all seditious traitors with a vision of a world government. They intentionally created all the problems you see unfolding before you, but would instead have you believe that some of the most intelligent people on the planet made some astounding errors in judgment that have destroyed the world economy and financial system, with America now being to blame for the whole debacle, meaning that America is no longer qualified to lead the world politically and economically, and that we must have world governance with everyone putting their two cents in. What gall they continue to demonstrate as they attempt to move us toward their One World Order or Order Out of Chaos.
The following paragraph extracted from Herny Kissinger's latest article, entitled "The Chance for a New World Order:"
"At the same time, the magnitude of the debacle makes it impossible for the rest of the world to shelter any longer behind American predominance or American failings."
"That opportunity involves a seeming contradiction. On one level, the financial collapse represents a major blow to the standing of the United States. While American political judgments have often proved controversial, the American prescription for a world financial order has generally been unchallenged. Now disillusionment with the United States' management of it is widespread."
"Every country will have to reassess its own contribution to the prevailing crisis. Each will seek to make itself independent, to the greatest possible degree, of the conditions that produced the collapse; at the same time, each will be obliged to face the reality that its dilemmas can be mastered only by common action."
"Even the most affluent countries will confront shrinking resources. Each will have to redefine its national priorities. An international order will emerge if a system of compatible priorities comes into being. It will fragment disastrously if the various priorities cannot be reconciled."
"In the end, the political and economic systems can be harmonized in only one of two ways: by creating an international political regulatory system with the same reach as that of the economic world; or by shrinking the economic units to a size manageable by existing political structures, which is likely to lead to a new mercantilism, perhaps of regional units."
"The extraordinary impact of the president-elect on the imagination of humanity is an important element in shaping a new world order. But it defines an opportunity, not a policy."
So basically, Uncle Henry thinks there are only two options -- their way, or the highway. Either we all get together and sing "Kum ba yah" with Obama and the leaders of all the other countries in One World Bliss, or we suffer fragmentation and disaster. We would like to suggest that there is a third way, however. In fact, we can't wait for the fragmentation to start, as that would give us the opportunity to finally "get it on" with Henry Kissinger & Company. We can't wait! Hope you will join us in exploring the third option!
Signs of larger losses underscore the importance of the Obama administration's measures to halt foreclosures that are feeding a downward spiral in the housing market, already in its worst downturn since the Great Depression. Until the declines in house prices are broken, the cycle will continue and the economic recession could get worse, economists say as many news outlets are now even mentioning the "D" word.
While they are nice and they help people, things like $30 billion to subsidize health insurance for those who lose their jobs and $15 billion to increase college Pell Grants will do very little to stimulate the economy right now, which is what we need.
The State of California budget crisis is so bad it announced the suspension of welfare checks, state tax refunds and student grants starting Feb 1st. This alone could lead to increased crime rates and civil unrest as millions are cut off from their only form of income. Others states are also facing budget shortfalls. Earnings reports from many others industries continue to offer a bleak assessment with large 4th qtr losses,.
Even the tax cuts in the proposed bill stink. More than half of the cuts in their current form are $500 tax credits for people who earn less than $75,000. Didn't we learn our lesson when the government sent out the stimulus checks last year? Studies have shown that one-time tax breaks are more likely saved than spent. They don't do nearly as much to stimulate economic activity as permanent tax cuts do. This type of tax cut is ignorant. It will not get spent with consumer confidence sitting at such a low level and the jobless rate rising.
This sort of tax credit doesn't cut it. By nature, the government is wasteful, just like any other large organization is. A very valid point that government spending does not really stimulate demand because every dollar spent by the government must be eventually paid for with taxes that are taken out of the economy. One could argue that deficit spending to help us out right know when the economy really needs it is necessary. Fine, but it you're going to do it, do it right. Either give Americans a real tax cut and stop wasting money on pet projects OR spend the money on real projects that provide a lasting benefit for the country and create real jobs like modernizing the power grid improving railroads, building mass transit, etc...