President Barack Obama outlined major new government stimulus and jobs proposals on Tuesday, saying the nation must continue to “spend our way out of this recession.”
Without giving a price tag, Obama proposed a package of new spending for highway, bridge and other infrastructure projects, deeper tax breaks for small businesses and tax incentives to encourage people to make their homes more energy efficient.
“We avoided the depression many feared,” Obama said in a speech at the Brookings Institution, a Washington think tank. But, he added, “Our work is far from done.”
That makes about as much sense as this:
Area partygoer Joe Sixpack outlined major new beer and whiskey purchases on Tuesday, saying that the party must continue to “drink itself sober.”
Brushing aside concerns about liver poisoning, Sixpack proposed a package of excessive new drinking of Budweiser, Coors, other cheap alcohol, and harder mixed drinks in a variety of drinking games to encourage partygoers to get totally plastered.
“We avoided the hangover many feared,” Sixpack slurred in a half-coherent rant. But, he added, “Our work is far from done.”
What got us into this mess? Out of control spending on every level—individuals, corporations, and government all spending more and more and more, assuming that future gains would somehow magically make everything work out.
So now, in order to fix things, we’re going to… spend… more?!?
Oh, and if Obama’s nonsense sounds a little familiar, it may be because we’ve heard similar talk before…
While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States – that is, prosperity.
President Herbert Hoover, May 1, 1930 (i.e. – 1 year into the 10-year Great Depression)
I can’t help but feel we’re going to “rapidly recover” in the same way today.
Hat Tip: Karl Denninger
[Addendum]
I’d like to briefly address a few of the comments that are coming up on this post.
First is the notion that somehow since the subject of this site is real estate, discussing politics should be off-limits. In an ideal world yes, real estate and politics would be totally separated. Unfortunately, that is far from the case today.
With the capital gains tax exemption for home sales, mortgage interest deduction, home equity loan interest deduction, deductability of points paid on mortgage, $8,000 tax credit for first-time buyers, Fannie & Freddie lending, FHA lending, government manipulation of interest rates, etc… real estate and politics are inextricably intertwined. It is inevitable that politics will come up once in a while on a blog dedicated to real estate.
So far this year, a whopping 25 out of 379 total posts (not counting open threads) have been related to politics. In other words, 93% of posts here are apolitical. Considering how intertwined politics is with real estate, it doesn’t seem unreasonable that we would bring politics into the discussion 7% of the time.
Second, name-calling (e.g. – “Obama is a fascist!” or “you just want to see the economy fail”) is pointless and counterproductive. Let’s drop the nonsense implications that anyone who disagrees with your politics must want bad things to happen to the country.
You’ll notice that nowhere in my posts or comments have I accused any politician of acting out of a secret desire to intentionally destroy the economy. I’m operating on the assumption that they genuinely want what’s best for America, I just strongly disagree with their ideas of how to get out of this mess.
How about let’s start from the assumption that we all want what’s best for America? We obviously have disagreements on the best methods, but why don’t we discuss those methods instead of jumping into name-calling and tired political stereotypes?
[Addendum 2]
Thought I’d add this comment that I posted below.
Allow me to at least briefly explain why I think [Obama's comment] is relevant [to real estate].
The comment that we must “spend our way out of this recession” to me is indicative of an overall strategy of spend, spend, spend by the administration that demonstrably includes moves such as the $8,000 tax credit, which is estimated to have cost $15.2 billion through November (compared to an original estimate of just $6.6 billion).
If the government’s plan is to “spend our way out,” who is to say we won’t see even more home buying incentives, spending more money we don’t have to entice people to spend money they don’t have on homes that are still overpriced?
The strategy of spending loads of borrowed government dollars in an attempt to get people and corporations back into their debt-fueled free-spending bubble habits is a dangerous one that is likely only to lead to further problems down the road, including a possible re-inflation of the housing bubble.
That’s why I think Obama’s statement is relevant for discussion here.
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By mydquin @ 198:
It’s not a non-issue economically. It’s incredibly stupid. Although these banks are not the type that typically do a lot of lending to small business, you can’t simultaneously complain banks need to do more lending, while setting policies that encourage banks to pay back the government loans ASAP.
If I were a bank exec meeting with Obama, after his “fat-cat” statement yesterday I would have contacted all the other bank exec and organized a boycott of the meeting, and then issued a statement that we didn’t want to waste our time meeting with someone who is more interested in pandering to voters than helping the economy.
I think it was Geithner a month or two ago that had to squirm a bit in explaining why he didn’t think the pay czar thing was a bad idea.
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IMO, rescuing banks is not a bad thing. I think and most of my partners, and friends agree that leaving banks in the same structure that they are right now, is the bad thing. Banks need to be broken up into entities that do not have systemic risk to the economy or financial system, I think too big to fail is still going to be coming back and haunting us. If you look at B of A now it is even larger then it was before the crash.
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RE: Kary L. Krismer @ 201 – I don’t see how you are showing that exec pay is economically relevant. It might be politically relevant, but exec pay is peanuts compared to the real issue. The exec pay issue is just a distraction from the real issues (e.g., fraudulent credit ratings, excessive leverage in commercial banks).
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By mukoh @ 202:
Exactly. People should have their panties in a knot about the lack of regulation, not about the rescue package or the stimulus. We need to remember where this whole mess started (i.e. credit rating agencies being allowed to issue fraudulent AAA ratings on mortgage-backed securities) instead of where it ended up (i.e., the rescue).
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RE: mydquin @ 203 – It’s not the pay that is relevant. It’s the banks paying back the TARP funds early so that they can avoid government interference in their businesses that is relevant. The TARP dollars are much bigger. They could be used to be loaned out, where they should create some jobs, but instead the funds are going back to the government, and no longer earning the government interest.
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RE: Kary L. Krismer @ 205 – I thought TARP was not ment to be used for lending out more money?
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RE: mukoh @ 206 – I don’t recall that at all, but maybe. I seem to recall complaints that they couldn’t demonstrate where the money had gone, and that I think would be lending.
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Privatize the gains, socialize the losses… Nice mantra floating around here.
The banks took taxpayer money to post record profits, without any accountability and without the taxpayer getting any reasonable claw backs.
The model has not been fixed, we merely gave them a bundle of money without fixing what caused the problems in the first place.
The financial reforms passed so far are a complete joke.
The banks paid themselves huge bonuses to assume huge risk in a giant insurance fraud scheme, and came begging for a bailout when it came crashing down. They took my money, turned record profits, and now its biz as usual.
The banks own this country, if you are ok with that, SOLD TO YOU!
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Kary,
BTW, the banks weren’t lending any money when the got TARP assistance, and they aren’t lending money now that they have paid it back.
0 X 0 = 0
WHAT IS THE DIFFERENCE??????
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RE: Matthew @ 208 –
There’s Gold in Them Thar Stock Hills
At least for 2009, or until the stimulus welfare to the banksters runs out?
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I’d say #208 is a fine example of “populst” analysis getting to the heart of the matter. Well said Matthew.
Bailouts without clawbacks and defined conditions only delay the inevititable. I would rather see a SHORT, sharp, crash, than a long extended decline. The latter only really benefits the wealthy.
Restructuring the banks is a good idea, and is more “populust” than at first meets the eye. the chances of that happening at this point, seem less than zero.
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RE: Matthew @ 208 – A World Crisis No Bailout Can Stop
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RE: Matthew @ 209 – Your stats might be incorrect, the banks are not lending to mainly secured real estate loans, they are however lending in other aspects.
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