Showing posts with label Stimulus. Show all posts
Showing posts with label Stimulus. Show all posts

Tuesday, October 12, 2010

Can Stimulus Destroy Markets?

When I was Vice President of Sales in a public company, the vast majority of our sales was in the final week of the quarter.  This was because of the rush to get contracts into our fiscal quarter so we could report it in our quarterly results.  Prospects knew exactly how to play the game.  The longer they waited, the more discounts or other perks they could earn.  There were many cases where we would practically give the sale to get it into the quarter.  If we had waited just a few more days, we would have sold it at full price.  The artificiality of the system destroyed the natural ebb and flow of buying and selling.

That is exactly what the artificial stimulus of the Obama administration did to the markets.  Cash for Clunkers, Cash for Caulkers, Homebuyer Tax Credit, even extending unemployment tax benefits all completely mess up market timing.  You get short term spikes that do very little to actually improve economic behavior.  Look at the Homebuyer Tax Credit – do you really think that people actually bought a home because of this credit?  It may have moved timing up, but simply used taxpayer money to mess up market timing.  Every time government interferes with private sector in this way, it does little positive and can actually do a lot of harm. 

This administration understands very little about how free enterprise actually works.  Could it be because there is not a single representative from the private sector in the Cabinet?  We have barely scratched the surface of what harm they can do without that experience. 

Monday, September 6, 2010

No Labor Day

Today is Labor Day.  I understand the meaning of most holidays, but I really don’t understand Labor Day.  I had to look up in Wikipedia what really Labor Day is.

Labor Day is a United States federal holiday observed on the first Monday in September (September 6 in 2010).

The first Labor Day in the United States was celebrated on September 5, 1882 in New York City.[1] It became a federal holiday in 1894, when, following the deaths of a number of workers at the hands of the U.S. military and U.S. Marshals during the Pullman Strike, President Grover Cleveland put reconciliation with the labor movement as a top political priority. Fearing further conflict, legislation making Labor Day a national holiday was rushed through Congress unanimously and signed into law a mere six days after the end of the strike.[2] The September date was chosen as Cleveland was concerned that aligning an American labor holiday with existing international May Day celebrations would stir up negative emotions linked to the Haymarket Affair.[3] All 50 U.S. states have made Labor Day a state holiday.

Traditionally, Labor Day is celebrated by most Americans as the symbolic end of the summer. The holiday is often regarded as a day of rest and parties. Speeches or political demonstrations are more low-key than May 1 Labor Day celebrations in most countries, although events held by labor organizations often feature political themes and appearances by candidates for office, especially in election years. Forms of celebration include picnics, barbecues, fireworks displays, water sports, and public art events. Families with school-age children take it as the last chance to travel before the end of summer recess. Similarly, some teenagers and young adults view it as the last weekend for parties before returning to school, although school starting times now vary.

I appreciate having Labor Day to celebrate.  Our tradition has been to go to the Geauga County fair and look at the animals and indulge on onion rings, gyros and 4-H milkshakes.  It is the one time of the year that we purposely gorge ourselves on stuff that is hopelessly bad for us. 

In this country having a place to work is viewed as part of the fabric of the society.  We are a country that is used to going to work.  The industriousness of our labor is what built us into the economy we have.  That is why it is depressing to see an unemployment rate of 16%.  You saw that correct – if you actually counted people who are out of work and have given up, you would see that number, not 9.6%.  This recession has taken a toll on the psyche of the American worker.  At the rate we are going, it will be many years before we even get close to a historical unemployment rate of under 5%. 

Have you seen these signs?

IMG_0132I have ridden my bike past this one on the corner of  Mennonite and Page Roads many times and I have yet to see a single worker.  The Obama administration chose to devote billions of our taxpayer dollars to “generate or save jobs”.  The most recent rhetoric is no longer that the stimulus actually generated jobs, but saved jobs and the unemployment rate would have been far worse if they hadn’t.  This is because virtually every statistic shows that this taxpayer money was one of the grossest misuses of money ever.  Who are they kidding? If that money had been put to use in the private sector, it would have made a difference.  Now we are looking truly at a jobless recovery and our deficit is all the worse because of fiscally irresponsible and shortsighted decisions like this one. 

Our economy will recover I believe and our unemployment rate will get back to under 8%.  However the days of 5% unemployment are a thing of the past.  This country is in a hole financially, one that will be very hard to dig out of, particularly with entitlement programs like Social Security and Medicare looming large. 

This is still the greatest nation on earth.  It is our work ethic that got us here.  I pray we can return here.

Have another onion ring!

Thursday, July 22, 2010

Stimulus Was a Grand Waste

The Obama administration claims that the stimulus and bailout efforts have "saved or created" 2.5 million to 3.6 million jobs.  The truth is that U.S. businesses have shed 3.1 million jobs since Obama became president.  Only 13% of Americans believe Obama's plans have helped the economy.  Remember the stimulus was supposed to somehow drive unemployment below 8% and not the 9.5% it is at now.  Consider the "shovel ready", bailouts, and Fed money-creation now total close to $3 trillion.  Public sector spending has been shown by two Harvard economists to actually have a negative effect, not a positive effect on GDP due to waste, inefficiency, and dead-weight loss of removing money from productive uses in the private sector.  The "medicine" of the stimulus has turned out to be poison.  Now factor in excess regulation and government involvement in the economy is overwhelming.  U.S. Chamber of Commerce CEO Tom Donohue states it well when he says we have moved from a "government of the people to a government of the regulators".