Feeding the flames of recession

Since the coronation of Barack Obama as Savior and Messiah it has become obvious that all the economic programs he is advocating are in fact social programs that will accomplish nothing, except prolong and deepen what might have been a relatively short recession.

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Take the proposed “bailout” of mortgagors who are in default and stand to lose their homes. The $275+ billion program Obama is pursuing to provide funds that will allow so-called responsible mortgagors in default keep their homes will do much more harm than good. First and foremost, the mortgage bailout will keep housing prices artificially high, as mortgagors in default would otherwise lose their homes, which would then be offered on the market under power of sale. Subsidizing those mortgagors with taxpayers’ money and allowing them to keep their homes is hiding the real problem and keeping real estate prices from reaching their natural levels, not to mention the gross lack of fairness. The program also adversely affects lenders as they are forced through government mandate to keep bad loans on the books and in some cases lower the amount of principal and/or interest on those loans. What’s more, it also keeps potential homebuyers with money and a job who might otherwise qualify to buy a home from purchasing because of the government’s refusal to allow home prices to reach their own natural level. But the housing sector isn’t the only area of the economy in which Obama’s meddling will have serious long-term effects. Since being elected the stock market has lost close to 3,000 points, which is more than was lost during last autumn’s panic sell-off. Clearly, the investment community is not confident that the president’s agenda will engender the promised results. Alan Beaulieu, an economist and cofounder of the Institute for Trend Research, predicts that the stock market will not begin to recover until 2020. He pointed out at a recent seminar that since the Dow Jones Industrial Average peak of last May (nearly 14,000) the stock market has lost a whopping 52% of its value, with the majority of losses occurring since the election of Obama. Then there is the issue of increased taxes. Obama has promised to increase the taxes of the richest 2% of Americans, those earning in excess of $250,000 per annum. Problem is that includes the majority of small business owners who are responsible for more than half of all jobs in the country. By increasing taxes on this cohort the net effect will be to reduce economic activity among them, which translates into their hiring fewer people, which will keep the unemployment numbers in the private sector high. And if you think that government jobs create wealth, I have a lovely piece of land in the Florida Everglades that I’ll sell you at a good price. The bailout of America’s ailing automakers is another landmine that will cause grievous future damage, as the business model American automobile manufacturers are following is unsustainable. We’ve heard all the arguments in favor of a bailout; the potential collateral damage done to other industries that currently depend on GM, Ford and Chrysler being able to stay in business creates a kind of corporate blackmail that will have American taxpayers continuing to fork over billions of dollars in perpetuity to keep the automakers afloat. The simple truth is that regardless of how desirable and energy-efficient Detroit’s cars of the future might be, if the cost of producing these vehicles is prohibitive because of onerous union contracts, then the vehicles will not sell. Whose fault is it that the unions have these sweetheart deals? The automakers’, of course, so why should American taxpayers be stuck with the responsibility of bailing them out? Evidence that American automakers can’t continue to operate as they have been surfaced fairly quickly after GM received the first installment of $13.4 billion in bailout money and now they’re back asking for another $16 billion and change. A Chapter 11 bankruptcy would have been much more effective and less expensive and would not have incurred the magnitude of economic damage that Obama predicted. But then, this flurry of economic largesse that will eventually create universal misery and inflation bordering on a Zimbabwean scale isn’t really about fixing the economy. It’s about taking care of Democrat voters and in the process attempting to create more. Dick Gephardt famously claimed that for every 100 points the stock market drops the Democrats would pick up a seat in the house. That kind of claim is proof that Democrats relish bad times because they tend to do well at the polls. So it appears that the Messiah is ensuring that Americans will live under tough economic times for many years to come in hopes of permanently bolstering the Democrats hegemony. The only problem is that there is an inherent fallacy in that line of reasoning. Americans aren’t as stupid and helpless as the Obamanites believe and sooner or later there will be a reckoning. And while the Democrats like to portray those who gainsay Obama’s economic acumen as knuckle dragging, right wing, racist bigots, charges of this sort are meaningless in the face of a failed economy.