The Government's Job Plan: The Blind Leading the Clueless

While apropos of the current times, this is probably better directed towards our Government than Wall St at this juncture.

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After all, this is the group of people that is complaining that the banks aren't lending out the cash infusions they need to be solvent, an action that would put the banks right back at square one or worse. These are the folks who are endlessly prattling on about resolving the foreclosure problem via loan modifications (proven to be infective), cash infusions into the banks/buying mortgage securities (how does this even impact someone who can't afford their mortgage) and who are unwilling to accept the fact that a key driver of the foreclosure crisis is people who could never really afford their mortgages in the first place.

This is also the government that thinks it can create jobs via giving companies tax credits for each job created, a premise that makes zero sense since the cost of the job will exceed the benefit provided by the tax credit. Just think about it: what value is a $3k tax credit vs. a $30k salary? If an employer doesn't have the productivity to justify a $30k salary (on top of employer's taxes and benefits), a $3k tax credit isn't going to change the situation so that creating a new job provides a net benefit back to the employer.

The only true way to create jobs is to generate/stimulate enough productivity so that new jobs are needed investment in order to sustain growth, tax credits are simply not going to provide employers with the productivity boost and ROI they need to justify creating new jobs.

I wonder if the behavior of the politicians in Washington is a function of their ignorance, a misguided attempt to cater to the electorate and/or clueless political pundits, or an unwillingness to confront the true reality of the current crisis.

Either way, until the nation as a whole wakes-up and confronts the true nature of the crisis, not only are we going to be unable to develop any effective solutions, it's likely that the solutions we do create will either prolong the crisis and/or create new problems for the future.

Comments

[tdillian:]

great article!!!!

yep.. I was against the TARP bailout, I am against all these bailouts!!!

I feel like Wall Street has completely taken over Washington, and the 3 stooges, Obama, Pelosi and Reid will all do Wall Street's bidding whenever a bank cries "we are too big to fail"

And then I get the sense all the bank's rich clients, being made whole again, by our tax dollars, are quickly getting out of the the slowly-turning-worthle...

it really is like the Titanic... all the wealthy "its too big to fail" are getting the lifeboats.. and all the harding working shmucks are "too small to save" and are stuffed in the steerage and are going down with the ship

Hope, change?? what a bunch or crock!

Jan 14 07:47 AM

[faithmore:]

Here we are with a government who overspent in the trillions, about to overspend in the trillions again to stimulate the economy by getting us further in debt, then being told the banks don't want to lend the 350 billion gift given for toxic deals that nobody wants to identify, or can't value, or can't identify...then eveything will be OK.

Did it ever occur to those encouraging more and more stimuluous that the whole concept is rediculous? Governments don't create jobs. They only spend money from people who create jobs. Give me a break!

Our savior Obama is headed in the wrong direction. If he wants to be like Lincoln, he should listen to what Lincoln says: "Governments gets in trouble when it spends more than it earns." Duhh

Jan 14 10:40 AM

[OldLimey:]

Interesting article and comments. I try to avoid commenting on US domestic politics, but one thing about the evolution of this stimulus proposal has struck me. Given that as far as I am aware neither the precise numbers nor details of how funds will be targeted have yet been finalised, the jobs saved/created number coming from President-elect Obama's team seems to have ratcheted up with each deterioration in announced unemployment figures. As I recall, the figure has inflated from two to four million in recent weeks and, I think I'm correct in saying, the last quote I read was 'at least three million'. It smacks to me a little bit of 'pick a number....any number'.

Jan 14 11:28 AM

[Smarty_Pants:]

This JUST IN!!

"WASHINGTON – President-Elect Barack Obama called on Congress to quickly pass a new fiscal stimulus package that would provide nearly $100,000 trazillion gaquillion frijillion in an effort to revive the U.S. economy, which some experts believe has entered a recession."

Read the entire parody here:

www.lewrockwell.com/ba...

Jan 14 09:13 PM