The Sell Job Stinks
- We are lead to believe things are really bad, and swift government intervention in the form of a stimulus package is imperative.
- I keep hearing the same rhetoric, "It's urgent; if we don't pass this bill the consequences are unthinkable."
- Earlier this month, the front page of the Wall Street Journal (Jan. 10) headline shouted "Yearly Job Loss
Worst Since 1945." If the WSJ (Rupert Murdoch...) says it, it must be true, right ? They got it half right. More
people lost jobs since 1945 but the unemployment rate is only 7.2 percent. Bear in mind during the great depression the unemployment rate was more than 25 percent.
- In reality, things aren’t good. Jefferson must attempt to speak with the voice of reason and say during a crisis, rash acts more times that not, create a bigger problem than the original disaster.
- It sounds sort of like a car salesman pressure tactics. "I can offer you this price for the car if you buy it from me today." Yea yea. You are asking me to spend 40 percent of my annual income on this car without the opportunity to sleep on it?”
- The same thing, put another way, as it relates to the annual federal budget: you want to spend over half of the annual federal budget with the stroke of a pen and don’t offer more than one alternative?
- Let’s start with what we do know:
• The economy has a normal cycle that oscillates between a high and a low every four to seven years.
• Loans were made to people who couldn’t afford them.
• On the up swing, the economy flourished far beyond its sustainable growth. The economy peaked and started to correct (downward).
• Many people defaulted on their loans.
• Lots of banks/insurance companies lost lots of money.
• Banks/Insurance companies played "economic possum" and got a piece of the "bailout pie".
• Lots of people lost their jobs.
• The American citizens bore the cost ($2,500 each) to fund the "bail out".
• More companies among the likes of the auto/transportation makers like Harley-Davidson are also trying to jump on the "All American Apple ( bail out) pie" bandwagon.
• More people lost their jobs.
• Bail out money was dispensed.
• The Federal Reserve lowered the interest rates banks pay them.
• Banks didn’t lower interest rates. Banks hoarded the cash and didn't loan the money out.
• The banks aren't stalling the sale of defaulted houses because they want to see if there will be further handouts. (If you feed the kitty, it will always come back).
• More people defaulted on their mortgages.
• Recipients of the bail out cash had the audacity to pay huge bonuses. The most disturbing thing about this is the unmitigated gall to reward the same behavior that was the proximate cause of the company's near demise. b) Other Americans are losing their jobs and these folks are having a banquet at our expense. c) Clearly, the rapidly designed bail out legislation failed to give the American people their money's worth. (Remember the don’t be in a panic rush thing I warned us about last issue ?).