“Second Thoughts On Stimulus”

From “The Daily Reckoning” in an article regarding the stimulus, TARP II and the supposed loss of confidence in the economy being a big issue.

“Or, as economist Dr. Roger Garrison writes in a chapter on the Austrian theory of the business cycle, “The loss of confidence comes from the realisation that the economy is overextended, asset values cannot be supported, and decisions about how to allocate capital have been based on a false cost of capital and the false level of demand it ‘stimulated.’ You don’t fix any of that with new stimulus.”

Consider that thought when the government tries to help restore confidence in our economy by printing money and throwing it at the banks.

How to cure a credit hangover – more credit

Comment on article by James Stewart:

 “What It Would Take For Stimulus To Work“

Mr. Stewart,
I’ve long read your articles and admired both the writing and your ability to (almost) always be making money buying and selling various securities. Good for you.

(Now I go off-topic for just a moment.) Then you whined about Auction Rate Securties and demanded that the government make you whole. You who, if anyone, qualifies as a sophisticated investor complaining about an investment you made with your eyes wide open. But for fractions of a point in extra yield you ignored the risks and when your money got trapped you whined for government to save you.

In the same vein (back on-topic now) now you are whining for the government to save the economy. Our economy is suffering a credit hangover and your prescription is more of the same. As other posters made clear, Keynesian spending did not cure the 1930’s depression and it sure as heck hasn’t helped Japan.

We have not even reached the recessionary depths of the 1980’s when Reagan and Volcker killed inflation yet you and a whole host of smart people are stomping your collective feet for a multi-trillion spending program THAT YOU HOPE will “cure” this recession.

I do not admire President Obama nor his Democrat colleagues nor the three LIBERAL Republicans for passing this monstrosity. I do admire the few Democrats that opposed it, I do admire the majority of Republicans that opposed it and yet it will pass. It is a political instrument designed solely for the 2010 elections to preserve and protect the Democrat majority. While I am as angry at President Bush as anyone there is no hope for any positive change from President Obama. This nation, my child and my grandchildren will pay an enormous price for my generations failure to pay the bill for the services we abused.