Survival

Stimulus, Recession, & Bailouts

I'm no expert, and I don't have specific facts and figures to support or refute these opinions; this is just my take on the general state of things based on what I believe is common sense, feel free to call me on any of it.

The Stimulus Bill:
When money is tight, it's time to start carefully monitoring spending, buckle down, and ride out the lean times in anticipation of prosperity in the future. It makes no sense to me to spend nearly a trillion dollars of money we don't have to overcome a recession. Some of the stimulus spending likely will create jobs, but in a recession, it seems extremely reckless to hurriedly pass a massive spending bill and pray some of it does some good. Spending should have continued to go through the appropriations committees, but with heightened scrutiny to ensure that every dollar spent is necessary and helpful toward bolstering the economy.

The Recession:
Recession is a natural reaction of the market to inflation and is part of the natural economic ebb and flow. Recessions 2-3 years in length (with the exception of the Great Depression) have occurred about once per decade for the whole of the 20th century. The numbers I've seen indicate that the current recession is far less severe than past ones and is actually quite mild. This is not the impression you would get from most media sources. It seems everyone flipped out about this downturn in the economy and started a panic which has fed on itself and led to the doom and gloom attitude of today. The severity of this panic lies squarely at the feet of the mainstream media. I believe the mainstream media leans sharply left, but I don't know if their exacerbation of the recession was politically fueled or was simply to sell papers and attract viewers, and I don't want to get into it.

Bailouts:
When Bush and Congress passed the bailout bill last fall, I held pretty much the same opinion about it as I do about Obama's stimulus bill. What would happen, I wondered, if the government didn't rescue the banks and just let them fail? Let the banks reap the bitter fruits of their greed, let them fail, let the loan sharks and boards of directors lose their jobs, that seems like economic justice to me. The banks' shareholders would draw a largely undeserved short straw in this situation, but anyone who invests in the stock market must realize that they are not guaranteed anything and must diversify their risk accordingly. When the car manufacturers started lining up for their bailout money, I was hopeful the companies would finally have a chance to escape the burden of the unions and overhaul their entire business structure. So far it seems the companies have done nothing but twiddle their thumbs for three months then come back to Washington for seconds. If Congress was convinced they had to rescue the car companies, they should have had the brass to set some unwavering conditions, namely, a salary cap on executive pay, a schedule for repayment of the money, and renegotiation of terms with the unions. I generally disdain salary caps and believe a man should be free to make all the money he legally can, but beggers can't be discriminate and the automotive executives should not be allowed to take the bailout money for themselves--they ought to have an attitude of indebtedness and work their tails off to turn their companies around.

The Housing & Credit Markets:
I believe the housing market is at the crux of this recession and should be the focus of any recovery legislation. So much of industry depends on new housing--lumber, fasteners, masonry, electrical, plumbing, etc.--that the economy will not recover until people can afford to buy and contractors can afford to build. This will not happen until credit again becomes available. I don't have a very strong understanding of the credit market, and I don't have any concrete ideas for restoring the flow of credit, but I would suggest asking economists and reputable bankers, not politicians. I do know this credit crunch could have been averted. The banks were stupid for making so many ridiculous loans, the people were stupid for taking the ridiculous loans, and the politicians were stupid for thinking it was their social duty to finance mansions for folks making $20,000 a year.