Obama has just proven that he and his administration are total jackasses with no concept of their abilities (i.e. lack thereof) and no concept of history. And this is the optimistic scenario! The pessimistic scenario is that they know exactly what they are doing and are trying to make sure this is a worse economic depression than the last one, perhaps in an attempt to move towards a regional or international currency to replace the U.S. Dollar?
A pay czar?! Really? So now we just openly refer to federal government positions as czarist, as in tyrannical or perhaps related to an emperor or king?
This meddling in the affairs of business will triple the severity of this economic depression that has already begun. GM, Chrysler, the banks, AIG, pay czars, TARPs with strings, too big to fail, nationalization, increased regulation and taxation. It's all completely counterproductive, has been every time it has been tried, and I know Obama is smart enough to know it, which is why I grow more cynical every day.
Hoover did the same thing in the early 1930s. Yes, Hoover, not FDR. Revisionist history claims that Hoover did nothing and the federal reserve acted too slowly in the 1930-1932 period, which is why the last depression occurred. Forget the actual facts and events of that era, as facts are no longer relevant in the United States. Just parrot whatever is said on CNBC when you're talking about "The Great Depression," as what they say is the only truth.
And of course forget the president who enacted an insane amount of interventionist policies during the 1930-1932 time period that forced most small business owners to run for cover and close up shop. This quote is from Hoover himself on the campaign trail in the fall of 1932, referring to his term from 1929 until the day of the speech:
…we might have done nothing. That would have been utter ruin. Instead [we enacted] the most gigantic program of economic defense and counterattack ever evolved…
Some… economists urged that we should allow the liquidation to take its course… We determined that we would not follow the advice of the bitter-end liquidationists and see the whole body of debtors of the United States brought to bankruptcy and the savings of our people brought to destruction.
Nice spin, eh? Instead of allowing the "bitter-end liquidationists" (i.e. free market supporters and those who value the laws of contracts and consequences) to have their way, Hoover ran up staggering deficits and expanded the scope of government in a way that was unheard of at the time. This scared away investors and entrepreneurs who were no longer confident to take risks in a system rigged and run by the government that only rewarded the incompetent and those who made the largest campaign contributions.
Sound familiar? By the way, the end outcome was that the "whole body of debtors of the United States" were brought to bankruptcy and the savings of the people were brought to destruction, but Hoover piled on a whole bunch of debt and red tape on top of it to make sure all the unemployed were not able to find a non-government job for another decade.
Many in the mainstream are quick to point out that the free markets caused the economic mess and that more regulation is needed. This is one of the many big lies people are told to swallow. No, what we needed was to let the free markets work! Let AIG fail, let JP Morgan fail, let Goldman Sachs fail, let Citibank fail, let the auto industry fail, let all those who should take losses take them.
But we couldn't do that - the system would implode, right? If our system is that unstable then we need to let it implode and take the culprits who designed that system along for the ride. There are plenty of smart, hard working, honest people in this country that could pick up the pieces. Would it be bad? Of course! Would it be difficult? Of course! Would it be over in a few years? Of course!
Now, however, "we" have committed to dying a slow Japanese economic death. We will stimulate ourselves until chafed and congratulate ourselves on "our" success every time there is a bear market rally (like now). And all the debt we incur during our stimulatory exercises will prolong the economic depression, just like last time in the U.S. and just like right now in Japan.
The Keynesian economists are the bane of a society attempting to have freedom and low taxes. Their ignorant and misguided policies have never worked other than to enrich central bankers at the expense of the citizenry and move nations towards socialism. The more reliant we are on our government, the more mediocre we become as a country.
When these policies are shown for the failures that they already are, confidence will evaporate once again. The debt, however, will still be owed. And that debt, as it accelerates higher and higher, will keep our economy in a nightmare haze for decades. Japan is at 19 years and counting with no end in sight. I can only hope it takes us less than 19 years to recover.
Instead of just "Yes we can," how about adding to the end: "but we shouldn't."
Downward plunge in the stock market dead ahead.