Already Stimulating?

With all the talk of a desperately needed stimulus from the federal government one would think that the feds aren’t spending enough money, that perhaps the budget is balanced.
Alas, that is not the case. Looking back over the past 4 months, all bush legacy, it is clear that the federal government is spending at a rate dramatically higher than what they are taking in. From

The Senate passed its $838 billion stimulus legislation today, setting the stage for negotiation with the House to draw up a final package. While they debate, the government appears to be losing a couple billion dollars a day in tax revenue.
With a deep economic contraction underway, federal tax revenue declined by about $88 billion — roughly 10% — in the first four months of the fiscal year (which started Oct. 1) compared to the year-earlier period, according to a Congressional Budget Office analysis. Almost half the decline — $43 billion — came from a 43% drop in corporate profit taxes. Tax withholding from paychecks declined $19 billion due to lost jobs, while estimated tax payments declined by $12 billion.
In all, the CBO estimates the Treasury Department will report a deficit of $563 billion over the four-month period, or $474 billion higher than the four-month deficit through January 2008. Even remove the $284 billion in outlays for the Troubled Asset Relief Program and that’s $190 billion in higher spending or lower taxes so far this fiscal year.

At the rate of the past 4 months the deficit will be $1.68 trillion over the next 12 months.

Just why do we need the paltry additional $838 billion of deficit spending?

Thumbs in the Dike

David Brooks replays geithner:

But the big uncertainty is not inside the banks; it’s in the broader economic climate.
“People are enormously uncertain about the depth of the recession,” Geithner says. “They’re enormously uncertain” about how their assets will perform in this environment. But this is not like the savings-and-loan crisis of the ’80s and ’90s, or like Sweden, where banks themselves were dead, he said, adding that we’re trying to repair “a system that is largely alive and will largely survive but is still burdened by systemic market failure, systemic uncertainty.”

What neither Brooks nor geithner acknowledge is that this failed market is not the free market of myth. Rather, it is a market built by government and poorly repaired many times over by government.

Continuing to mess with what they do not understand will continue to have consequences that are not pretty.

Keynes Is Still Right

Paul Krugman quotes a clearly correct statement from Keynes:

“The resources of nature and men’s devices,” Keynes wrote, “are just as fertile and productive as they were. The rate of our progress towards solving the material problems of life is not less rapid. We are as capable as before of affording for everyone a high standard of life. … But today we have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand.”

It is still …a delicate machine, the workings of which we do not understand and the obama administration is no more clueful than the previous occupants.
Local and world economies would work much better, perhaps as well as ant colonies, if giants did not continually step in them. Alas, governments have been stepping on the operation of economies for 100s of years and we still have not learned the lesson that we must keep them out; restrain them to their possibly appropriate role of fighting fraud and the use of force.
All the bail out and stimulus schemes already hatched and yet to be born are no better than throwing mud on the wall to see what sticks.

It will be painful to disengage the government gangs but, really, if you want any chance at all of these cycles not continually repeating on ever larger scales we must do so.

Ignorance or Intentional Lying?

When I’m out in the car on a Saturday afternoon I usually check into the discussion on Ring of Fire for a while. Kennedy and Papantonio often have interesting interviews although Papantonio reminds me of a lefty Hannity.
I tuned in this afternoon and landed in the midst of the two hosts touting the supremacy of the European economic models over the failed soviet model and, I paraphrase closely, the just collapsed/failed American laissez-faire capitalism model.
Kennedy repeats the mantra, failed laissez-faire captalism many times, apparently wanting his listenners to pick this up as a phrase to be repeated.
Unfortunately, the laissez-faire thing did not collapse, did not fail; has not existed in years, if ever. The thing that has recently failed, that is causing so much havoc around the world, is yet another iteration of state capitalism.
I do not believe Kennedy is so ignorant as to not know the differences. Therefore I can only conclude that he is simply lying.
Otherwise, he would be reporting that both the republicans and the democrats do little other than continue to support variations on the plans and programs that brought us both the first great depression, the current mess and most, if not all, the failures that so-called progressives love to rant about.
An honest speaker would tell us that there may be some programs, some stimulus, some spending, that might reduce some of the symptoms for a while but that until the entire system is unraveled and rebuilt we will not cure the disease.

Until that happens we will continue to get change that is more of the same.


Cisco’s John Chambers finally gets it:

“It is now clear that we are in a global economic slowdown,” Chief Executive John Chambers said Wednesday in a call with analysts. He said …

I wonder where he has been for the past 2 years.

That quote is taken from a Wall Street Journal article only partially available to non-subscribers. There is a longer story available at the New York Times but it does not have the above quote in it.