Archive for bailouts
Three contractors are bidding to fix a broken fence at the White House. One is from Chicago, another is from Tennessee, and the third is from Minnesota.
All three go with a White House official to examine the fence. The Minnesota contractor takes out a tape measure and does some measuring, then works some figures with a pencil. “Well,” he says, “I figure the job will run about $900: $400 for materials, $400 for my crew and $100 profit for me.”
The Tennessee contractor also does some measuring and figuring, then says, “I can do this job for $700: $300 for materials, $300 for my crew and $100 profit for me.”
The Chicago contractor doesn’t measure or figure, but leans over to the White House official and whispers, “$2,700.”
The official, incredulous, says, “You didn’t even measure like the other guys! How did you come up with such a high figure?”
The Chicago contractor whispers back, “$1000 for me, $1000 for you, and we hire the guy from Tennessee to fix the fence.”
“Done!” replies the government official.
And that, my friends, is how the new stimulus plan will work.
Thanks to my mother-in-law for this fun little note. Comment with your own stimulus joke below…
Thomas Woods’s newest book Meltdown has officially hit the bookstores today, and I hope you will seriously consider picking up a copy for yourself. Woods is one of my favorite Mises Institute authors, a strong libertarian Christian, and a good friend. I first encountered his work with the Politically Incorrect Guide to American History, and I absolutely adored the book. I mentioned a few other books of his recently just before Christmas in a Top 10 list. All in all, Meltdown promises to be a great read.
Here is a short description of Meltdown from the Mises Institute.
Why the heck is this happening to us? What happened to mortgages, to banks, to large retailers, to retirement savings, to stock prices, to the availability of credit? How could so many errors have coincided?
To the media pundits and government officials, this is a market failing that requires the government to take trillions of dollars from you and run the money presses full time. Otherwise we are doomed.
But there is another way to look at the great market collapse of 2008: the whole thing, including the bubble that preceded it, is the fault of the government and the Fed. All attempts to “fix” the problem are like forcing the patient to swallow more of the poison from which he currently suffers.
Mises.org has been making this argument, and warned of the coming crash years ago. But where can you find the argument explained for the average person in a convenient package, without technical jargon and with logic and facts?
Enter Tom Woods with his blockbuster book Meltdown. It’s all here, all the information you need to understand what is happening and what to do about it. It is billed as a free-market response to the crisis but it is more precisely an Austrian School response.
He covers the problem of housing subsidies, of low interest loans, of the absurdities of the boom times, and how it was inevitable that they would come to an end. He puts the fault right where it belongs: with the government and the central bank.
He further blasts the political establishment for taking exactly the wrong path in response. Interest rates should be raised, not lowered. Government spending should be cut, not increased. Tax should be reduced. Regulations should be cut, not expanded. On the current path, the bozos in Washington are going to wreck whatever hope for recovery there is.
The great thing about this volume is that it is rooted in serious ideas. We aren’t talking about some quicky investment book by a media talking head. Professor Woods is steeped in the ideas of Mises, Hayek, and Rothbard, and never misses a chance to explain the relationship between theory and reality. It contains what might be the clearest explanation of Austrian business cycle theory ever written.
This book is a fantastic weapon in the intellectual battle that is taking place right now. It needs to become a bestseller, and it could. You can do your part by distributing it as widely as possible. History really does hang in the balance.
I found out this morning that none other than the Village Voice, an alt-newspaper in New York City, discovered my Fear is the New Hope post. They didn’t seem to like it that much, so much so that I took the first spot on their laundry list of Barackritics:
But having no plan of their own with which to replace Obama’s — except for the traditional Republican miracle cure, tax cuts — they focused on an emotional appeal, claiming that the recession really isn’t anything to get excited about, and that the President was trying to terrorize Americans into supporting his plan. Their cue-card read “Fear,” and rightbloggers big and small scribbled it down:
“Fear is the new hope,” said Libertarian Christians…
I’m listed along with other bloggers such as Big Dog’s Weblog, Sheepdog’s Blog, The Freedomist, Wizbang, American Glob, and Desert Conservative. Seriously? As far as I can tell, all of these guys are hardcore Republicans (any of them are free to correct me if I’m wrong). Now, I’m sure that these bloggers are respectable fellows, but to conflate our ideologies pretty much means you either (a) don’t know what a libertarian is, (b) don’t know what right-wing means, or (c) didn’t read what I wrote. Now, I’m assuming that Village Voice is full of respectable fellows as well, so I assumed option (b) and left the following comment on their article. Hopefully they will allow it to be seen after moderation. So, here we go then, dear Village Voice…
To clarify: I am not a “right-wing blogger.” You guys seem to think that someone who is against Obama’s policies must by definition be “right-wing.” But on the contrary, historically I have criticized the right just as much as the left. That’s why the website is called *Libertarian* Christians.
In fact, if you scroll down a little in my article, you’ll note how I compare the fear-mongering of Obama to the fear-mongering of Bush. How could I be a right-wing blogger and say this stuff?<
And moreover, it is entirely inaccurate that neither I nor my fellow libertarians have offered legitimate solutions to the fiscal crisis. You can look through my writings on economics, or you can listen to Ron Paul, or you can read a host of articles on Mises.org to find plenty of ideas for how to make the pain of the recession last for the least amount of time.
But I do thank you for the link. Good day and God bless. :-)
Link to my original article:
They hoped for change, but fear is the new hope.
“A failure to act, and act now, will turn crisis into a catastrophe.”
President Barack Obama, February 4, 2009
Many of you are keenly aware of the absolutely insane $780 BILLION spending bill that Obama has just pushed through the House and Senate. And yes, you can quit calling it a “stimulus package,” Obama has now admitted that it’s gone beyond just stimulus and is just another spending bill. Get this, Obama said the following at the Democratic retreat on Thursday:
Then there’s the argument, well, this is full of pet projects. When was the last time that we saw a bill of this magnitude move out with no earmarks in it? Not one. (Applause.) And when you start asking, well, what is it exactly that is such a problem that you’re seeing, where’s all this waste and spending? Well, you know, you want to replace the federal fleet with hybrid cars. Well, why wouldn’t we want to do that? (Laughter.) That creates jobs for people who make those cars. It saves the federal government energy. It saves the taxpayers energy. (Applause.)
So then you get the argument, well, this is not a stimulus bill, this is a spending bill. What do you think a stimulus is? (Laughter and applause.) That’s the whole point. No, seriously. (Laughter.) That’s the point. (Applause.)
This is really what he said (laughter). No seriously, this is on record at WhiteHouse.gov. (Silence.)
The Wall Street Journal is so flabbergasted that they don’t even believe Obama really thinks these things:
Mr. Obama is now endorsing a sort of reductionist Keynesianism that argues that any government spending is an economic stimulus. This is so manifestly false that we doubt Mr. Obama really believes it. He has to know that it matters what the government spends the money on, as well as how it is financed. A dollar doled out in jobless benefits may well be spent by the worker who receives it. That $1 of spending will count as economic activity and add to GDP.
Actually, I don’t think he has to know that. Rather, I agree with Mike Rozeff at the LRC Blog, Obama truly believes this garbage. It’s consistent with the rest of his person and education. He has no substantial knowledge of economics and he has admitted it – both explicitly and implicitly in his above statement. Yet, Obama, like Dubya, thinks that the government has the capacity to figure out how to make things work again. Seems like Thomas Woods’s brand new book, Meltdown, will be quite appropriate to describe both the economy and Obama’s presidency soon enough.
Face it, this guy is in another world. A world where it’s a good idea to take other people’s money and bailout failing businesses in the hopes that failed managers can stop failing. A world where theft is moral and debasement of currency is how to get us out of debt. A world where fools run the most coercive machineries ever to exist. A world where manipulation is the rule, not reason.
Like the political cartoon I posted, the irony of this situation is just painful. Consider: Obama promised change, hope, a new Washington, and a myriad of other utopian values. Not that I believed this garbage, but one might have expected him to at least stick to the most basic things that he said, like not hiring lobbyists for the cabinet. But wait, so far he’s hired six, count ‘em six, current or former lobbyists to work for him. How appropriate for a liar. He was neither a peace candidate nor a moral candidate.
Moreover, he is using the same tactics as Republicans – the politics of fear. Just frighten people enough and they’ll fall in line. Unbelievable. Fear is how the Republicans gained control over us in 2001. Fear of terrorism, fear of uncertainty, fear of our fellow American citizen. How else can you explain the encroachments upon civil liberties, the trampling upon the Constitution. Now, Obama is using the same fear to push his agenda. Fear of economic pain, fear of uncertainty, and indeed even fear of our fellow Americans once again. Once again, Obama is instilling fear that those who endeavor to be productive and make money are by default taking advantage of others – the complete antithesis of the concept of voluntary trade.
Fear is the new hope.
Charles Krauthammer may for once have it right:
[He called it a] catastrophe, mind you. So much for the president who in his inaugural address two weeks earlier declared “we have chosen hope over fear.” Until, that is, you need fear to pass a bill…
After Obama’s miraculous 2008 presidential campaign, it was clear that at some point the magical mystery tour would have to end. The nation would rub its eyes and begin to emerge from its reverie. The hallucinatory Obama would give way to the mere mortal. The great ethical transformations promised would be seen as a fairy tale that all presidents tell — and that this president told better than anyone.
I thought the awakening would take six months. It took two and a half weeks.
Thanks to my buddy Grant for the great title. Maybe this will get played up on social media sites (please submit to Digg, Facebook, Stumbleupon, or your favorite site). Remember, you heard it here first – Fear is the New Hope.
Comment below, what do you think of Obama’s new plans?
The irony in this editorial cartoon is excruciating.
The cartoon describes the situation perfectly, and quite profoundly as well. Banks have drowned themselves in bad debt, and those that were irresponsible are calling out for the government to save them from their own stupidity. They are requesting for privatizing whatever profits they have gained in the past, but socializing their losses now to us through the forceful arm of the State. And because the government is quite friendly with these folks, it is quite willing to go through with the plan.
Look at the cartoon again, think about how the events will unfold. Eventually, the water level will get below the valve and no more will go through. What will happen. You guessed it, both will drown.
A friend opined to me recently how these bailouts are like business-Viagra. But you can’t give Viagra to someone terminally ill and expect them to be “stimulated” (pardon the semi-crude statement), in fact it will probably make them worse. Likewise, you can’t absorb debt like this and expect no consequences. Sounds like another political cartoon in the works…
Hat tip to Chris and Young Americans for Liberty for posting this.