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President Obama seized on the one-year anniversary of the American Recovery and Reinvestment Act (ARRA) as an opportunity to take credit for the belated and tenuous economic recovery.
But the economy always recovered from recessions, long before anyone imagined that government borrowing could "create jobs." And we didn't used to have to wait nearly two years for signs of recovery, as we did this time.
A famous 1999 study by Christina Romer, who now heads the Council of Economic Advisers, found the average length of recessions from 1887 to 1929 was only 10.3 months, with the longest lasting 16 months.
Recessions lasted longer during the supposedly enlightened postwar era, with three of them lasting 16 to 21 months.
Keynesian countercyclical schemes have never worked in this country, just as they never worked in Japan.
The issue of "fiscal stimulus" must not be confused with TARP or with the Federal Reserve slashing interest rates and pumping up bank reserves.
One might argue that those Treasury and Fed programs helped prevent a hypothetical depression, but it's impossible to make that argument about ARRA.
The "fiscal stimulus" refers only to a deliberate $862 billion increase in budget deficits. Importantly, only 23% ($200 billion) was spent in 2009, with 47% in 2010 and 30% in later years (according to the Congressional Budget Office this January).
How could the initial $200 billion have possibly had anything to do with the 5.7% rise in fourth-quarter GDP?
The Keynesian fable presumes that faster federal spending and consumers spending their federal benefit checks were the driving forces in the rebound.
Yet the GDP report clearly said the gain "reflected an increase in private inventory investment, a deceleration of imports and an upturn in nonresidential, fixed investment that was partly offset by decelerations in federal government (defense) spending and in personal consumption expenditures."
Since federal spending accounted for exactly zero of the only significant increase GDP, how could such spending possibly have "created or saved" 2 million jobs?
The bill was launched last year amid grandiose promises of "shovel ready" make-work projects.
In reality, as the CBO explains, "five programs accounted for more than 80% of the outlays from ARRA in 2009: Medicaid, unemployment compensation, Social Security ... grants to state and local governments ... and student aid."
In other words, what was labeled a "stimulus" bill was actually a stimulus to government transfer payments — cash and benefits that are primarily rewards for not working, or at least not working too hard.
Big Government: "Pay as you go" — it's the new code phrase for raising taxes even more to pay for the inefficient and in many cases unsound, failure-prone government programs pushed relentlessly by progressives. Great-sounding slogans. Great-sounding promises, claims and speeches. But ...
In December 1993, Steve Ells opened Chipotle, a small Mexican restaurant, with the idea of turning it into a fine dining establishment. "I only intended to open one Chipotle and figured it would provide me the cash to fund a full-scale restaurant," Ells said. His plan failed, in a manner of ...
Top salespeople don't play games with clients. The sales talent is clear about what it can deliver, says executive adviser Patrick Lencioni, author of the new book "Getting Naked." The title refers to being open, honest and vulnerable with clients. To unmask: Skip selling; consult. During sales ...
Forget the competition. That mental trick helped figure skater Tara Lipinski leap into the record books as the youngest individual gold medalist in Olympic Winter Games history. It was 1998 in Nagano, Japan, and Lipinski's teammate Michelle Kwan held first place heading into the ladies' long ...
In the past week, a lot of IBD 100 stocks appeared to be forming the right side of bases. That's a good sign, as is the fact that the IBD 100 index ended the week up 3.6%, outpacing the major indexes. But as you study these stocks, be choosy and focus on those with the best chart patterns. For ...
Posted By: Brownknows(1505) on 2/21/2010 | 6:29 PM ET
Here's a thought; take the unspent stimulus money estimated at $600 billion, put with repaid and unspent tarp estimated at $400 billion, totalling 1 trillion dollars then round up all the investorloonies/armchairfirebrands and provide them travel vouchers (one way) to the socialist country of their choice?
Posted By: Nope 2012(405) on 2/21/2010 | 11:33 AM ET
Hey Armchair, Even Bayh seemed to concur with Scott Brown.... Oh yeah, and so does every business man that I know. But if Barry and Joe claim that 2M jobs were created while unemployment went from 6 to 10%, it must be true.
Posted By: investorLoonie1(130) on 2/21/2010 | 9:44 AM ET
Who believes this IBD rubbish anyway . Zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz
Posted By: Serfdumb(680) on 2/20/2010 | 11:54 PM ET
Once the government infuses public funding, it has the power to dictate the conduct within the market and business decisions. The real purpose of using Keynesian Economic Theory is to undermine economic stability, creating a constant and steady need for government intervention that will eventually destroy the actual free market, leaving a Socialist market economy. The goal is the transformation of a free market economy into an official government economy.
Posted By: novama(30) on 2/20/2010 | 7:09 PM ET
To armchairfirebrand: are you insinuating that the Demokleptos do not have a propensity for propaganda? You can fool yourself but not everyone else. Also, do you realize that the New York Times is losing readers precisely because their left-wing tendencies and contempt for America, and because they are lapdogs for the Obama administration just like MSNBC, CNN, the Huffing post and on and on. It has been decided that the above are not very reliable.
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Without exception, sell your stock if it drops 7% - 8% below your purchase price.
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