Tuesday, July 14, 2009

More Obama “Stimulus” Spending?! Because the First $789 Billion Didn’t Work

Last Friday, July 9, in a discussion on the Obama Administration's just-floated idea to use TARP money for Small Business Administration loans, Larry Kudlow said on his CNBC show: “This [TARP money] is one of the greatest slush fund operations of all time. This TARP money was never intended for this purpose.” Kudlow then stated he believed such a move was another indication that Obama and his people are “panicking” over the continuing economic struggles and the rising unemployment rate, which the Obama team said would never get anywhere near as high as it now is if their massive “stimulus” spending plan was enacted. Well, their plan was enacted, and now things are much worse. And now some Obama people are talking about a second “stimulus” spending plan, because the first didn’t work.

Guest Joe Lavorgna, chief US economist for Deutsche Bank, had the guts to admit he was wrong in succumbing to the big-government-spending-is-the-solution fallacy and hysteria, saying: “The stimulus package, which I initially was all for, has not played out the way I thought. I think a second stimulus package would be really terrible... The first one wasn’t very effective – it’s vulgar Keynesianism as you [Larry] said before.” Even now, though, he says “not very effective.” How about “not effective at all”? From common sense and the opinions of realists, the economy in general and the banking system in particular have stabilized because of the massive Milton Friedman monetary stimulus and the long-called-for significant softening of the “mark-to-market” accounting rule that was destroying banks’ technical solvency.

The hubris and vanity of the liberal elites leads to their fatal attraction to command and control. They believe they know better than the masses who didn’t attend their Ivy League schools. For them, the ‘stimulus” was never about the economy, it was about ever-bigger government pursuing the liberal agenda. But for the saps who were snookered into believing massive government spending and further government control would help the economy, it was a triumph of hope over common sense, of quasi-religious faith in central planning over all human experience, of Obamamania over rational thought.

JM Greco

Previous related posts:

The So-Called “Stimulus” Is “About Politics and Power, Not Sound Economics”

Re: The "Stimulus": Economics As the Dismal Science -- Keynesians Say 1+1=3, Milton Friedman & Common Sense Say No Way

"Great Powers" Historian Paul Kennedy Warns Against the Planned Economic “Stimulus” Package That We’ll Need Foreigners To Pay For