What Is Different?

Power Line – Unemployment in the Great Recession

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Looking at this chart, what occurs to me is the difference between the current recession and the one of 1981. Look at the 1981 recovery and ask yourself, “what did they do then that resulted in such a strong recovery”, and is what we are doing now going to work as well?

What He Said.

RealClearMarkets – A Federal Budget That Insults All Budgets

The government has no resources. Everything it spends was created by private individuals and still belongs to taxpayers. All government can do is take from the industrious, the inventive, the hard-working and the frugal to dispense on the inefficient, the lazy, or the irresponsible. Government spending bites the very hand that feeds it.And these resources no longer exist. We’re now over $12 trillion in debt. Including future unfunded liabilities and those Washington assumed as a result of assorted bailouts and other mischief, the average family owes $471K and counting courtesy of government. The resources are gone.

Democrats wasted them on silly, self-defeating welfare programs and Republicans wasted them on silly, self-defeating foreign policies. Sometimes in fits of bipartisanship, they combined to waste them on even greater concepts. Government has no remaining resources, but to our peril it does have a printing press.

No matter what grandiose terms our elected leaders couch it under, there are only three ways to pay for this largesse. Certainly they can deprive productive enterprise of the resources necessary to generate economic growth via confiscatory taxes. But the disincentives ensconced in progressive taxation render it self-defeating. Washington can borrow, thus diverting capital from those endeavors actually prospering society. Another economic retardant. Or, they can inflate their way out of the mess by debasing our currency.

But remember; “Things appear to be the darkest just before they go completely black.”

It’s going to be like the 2008 crash. No one will see it coming until it’s here. Then it will seem obvious.

Yeah, it’s Bush’s fault. As well as every President since Herbert Hoover. We heard the story of killing the golden goose but never understood it.

In Wake Of Tax Vote; Chicago Shopping For Oregon Jobs.

Why Chicago Loves Portland

For virtuous tax competition, we usually think of Hong Kong. But who would have thought of Chicago as a lower-tax refuge?

The bright idea comes from Chicago Mayor Richard Daley, who is looking to lure employers from Oregon after that state’s voters approved a huge tax increase last week. The tax hike in Oregon “will help our economic development immediately. You’d better believe it,” Hizzoner told the Chicago Sun Times late last week. “We’ll be out in Oregon enticing corporations to relocate to Chicago.”

Oregon raised its top income tax rate to 11% from 9% and its corporate rate to 7.9% from 6.6%, while doubling many small business tax charges and fees. “What happened in Oregon is not good news for Oregon,” explains Mr. Daley. “They believe that anybody who makes $125,000 or more [annually] or businesses or anyone who makes $250,000—they’re gonna start taxing them. They call them ‘rich people.'”

Mr. Daley isn’t buying that. “I’ve always thought America stands for [rewarding success]. You finish high school. You work hard, go to college and you hope to succeed in life. I never knew it’s a class war—that those who succeed in life are the ones that have to bear all the burden. I never realized that. It will be a whole change in America that those who succeed and work hard, we’re gonna tax ’em more than anyone else.”

It’s nice to think that SOMEONE knows there’s a link between higher taxes and higher job losses.

But Chicago has other taxes that are just as onerous. I think the States like Texas or Idaho will stand a better chance of scooping up those jobs.

Heck’ava Job Obama.

Obama unveils 2011 budget with $3.83T in spending

US deficit to hit record 1.56 trillion dollars in 2010

TaxProf Blog: President Obama’s Budget Contains $1.9 Trillion in Tax Increases

US consumer spending is weaker than expected in December

Construction spending drops sharply in December

US economic rescue failing to meet key goals:auditor

Conclusion: We Are So Screwed

Hmmm. This May Explain Why The Stock Market Is So Crappy Right Now.

Strategies – How Political Leanings Can Affect Investing – NYTimes.com

YOU’RE likely to feel more confident about the economy when your political party is in power. That’s no surprise. But a new study has found that your feelings probably affect the way you invest your stock portfolio.

The study, which has been circulating in academic circles since December, found that when an investor’s favored political party held power in Washington, he or she generally increased holdings of risky stocks, shifted from foreign to domestic companies and traded less often. The opposite occurred when the preferred party was out of office. And the patterns held whether an investor was a Republican or a Democrat.

I guess the Democrats are confident right now that they’re going to smash the Capitalist system and institution a fairer system where rewards are based on Party Membership.

The Republicans are withholding their investments because they’re afraid that the Democrats and liberals might succeed. The Democrats are withholding their investments because they don’t want to support private enterprise.

Bottom line…little or no investment and no recovery.

As long as the economy is bad the Democrats think they can win by making things “fairer”; which means taking from those who have and doling it out to Democrat voting groups; unions; ‘non-profits’; and the ‘poor’.

The Only Surprise Here Is That The AP Analyzed And Reported It.

STIMULUS WATCH: Unemployment unchanged by projects – Yahoo! News

WASHINGTON – A federal spending surge of more than $20 billion for roads and bridges in President Barack Obama’s first stimulus has had no effect on local unemployment rates, raising questions about his argument for billions more to address an “urgent need to accelerate job growth.”

“Clueless” Describes Our Entire Intelligence Apparatus.

RealClearPolitics – Video – Napolitano Most Surprised By “Determination Of al-Qaeda”

Question: What was the most shocking, stunning thing that you found out of the review? And, Secretary, to you, as well.SECRETARY NAPOLITANO: I think, following up on that, not just the determination of al Qaeda and al Qaeda Arabian Peninsula, but the tactic of using an individual to foment an attack, as opposed to a large conspiracy or a multi-person conspiracy such as we saw in 9/11, that is something that affects intelligence.

You mean that the tactic of the “suicide bomber” surprised them?

I guess that’s not too surpising when you consider that our inteeligence agencies were taken by surprise by the the Iranian Revolution, the collapse of the Soviet Union, the rise of Hugo Chavez, pretty much anything the North Koreans do, the first WTC bombing, the embassy bombings, the USS Cole, Khobar Towers, 9/11, the lack of WMD in Iraq, the Iraqi resistance,…..pretty much any important development in the world in the past 50 years.

So, they didn’t see this coming? It probably would have been more surprising if they had.

Glad To See That Some Economists Agree With Me.

Why Government Spending Does Not Stimulate Economic Growth: Answering the Critics

Why Government Spending Does Not End Recessions

Moving forward, the important question is why government spending fails to end recessions. Spending-stimulus advocates claim that Congress can “inject” new money into the economy, increasing demand and therefore production. This raises the obvious question: From where does the government acquire the money it pumps into the economy? Congress does not have a vault of money waiting to be distributed. Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is merely redistributed from one group of people to another.[7]

Congress cannot create new purchasing power out of thin air. If it funds new spending with taxes, it is simply redistributing existing purchasing power (while decreasing incentives to produce income and output). If Congress instead borrows the money from domestic investors, those investors will have that much less to invest or to spend in the private economy. If they borrow the money from foreigners, the balance of payments will adjust by equally raising net imports, leaving total demand and output unchanged. Every dollar Congress spends must first come from somewhere else.

For example, many lawmakers claim that every $1 billion in highway stimulus can create 47,576 new construction jobs. But Congress must first borrow that $1 billion from the private economy, which will then lose at least as many jobs.[8] Highway spending simply transfers jobs and income from one part of the economy to another. As Heritage Foundation economist Ronald Utt has explained, “The only way that $1 billion of new highway spending can create 47,576 new jobs is if the $1 billion appears out of nowhere as if it were manna from heaven.”[9] This statement has been confirmed by the Department of Transportation[10] and the General Accounting Office (since renamed the Government Accountability Office),[11] yet lawmakers continue to base policy on this economic fallacy.

Removing water from one end of a swimming pool and pouring it in the other end will not raise the overall water level. Similarly, taking dollars from one part of the economy and distributing it to another part of the economy will not expand the economy.

This is basically what I have been harping on since the recession began.

I initially agreed with the first bailout, the one that was supposed to be used to buy “toxic assets” and keep the financial system running. I was OK with some corporations folding, but thought that while the economy can recover from the bankruptcy of normal companies it would be much harder for it to recover with the collapse of the financial system.

Unfortunately the Fed and Treasury changed their minds as soon as they got the funding, and the Congress was so panicked that they were ready to rubber-stamp anything that was put in front of them. It was basically the Tonkin Gulf Resolution all over again. Congress, whichever party controls it, is basically stupid and easily frightened. They’re first instinct is to “do something” and their second is to find a way to blame it all on the opposite party.