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Wednesday, February 17, 2010

One Year Ago I Saved The Economy

Barack Obama is claiming credit for "saving" the economy from a full-blown depression based on passage of the stimulus plan.

As with most Obama claims of success, Obama simply is exhibiting his prowess at using strawman arguments.

Obama compares where the economy is now, versus where the economy would have been on some hypothetical downward spiral assuming government did nothing. The "some say doing nothing would be better" paradigm is classic Obama.

But the alternative to the Obama stimulus plan and ramped-up budget deficits was not nothing, but a lowering of the tax and regulatory burdens on businesses and individuals which would have created real, economically sustainable jobs.

Instead, at most, we had subsidies to state governments to perpetuate completely unsustainable budgets drowning in union-related labor costs and pensions, and infrastructure projects notorious for cost overruns. No jobs were created or saved; unless of course the federal government is going to continue to subsidize these jobs indefinitely.

Obama confuses association and causation. Just because two events occurred (the economy did not go into a full-blown depression and Obama passed the stimulus) does not mean that the stimulus saved the economy. It is the intellectually lazy person's idea of logic, since it is much, much more difficult to compare what was to what could have been.

Now to the point of this post. Using Obama's logic, I saved the economy.

On February 20, 2009, I wrote The Last Bull Capitulates. In that post I wrote about the damaging effects of Obama deliberately talking down the markets to create a crisis atmosphere necessary to pass the stimulus (as in Rahm Emanuel's "never let a crisis go to waste"):
For the first time in my adult life [yes, h/t MO], I am convinced that we have a President who sees capitalism and markets as the enemy. There is no other explanation for the hyperbolic rhetoric Obama has used to create a sense of economic crisis far in excess of reality. We are in a recession, but as others have documented extensively, to compare the current economy to the Great Depression is damaging.
The result of my analysis was that the time had come to take some money off the investment table until Obama stopped talking down the markets (which he did in fact do in April 2009 when he needed to pass his expansive budget).

But I recognized that I probably was a counter-indicator, the so-called "last bull" capitulating, and that my capitulation probably signalled we had hit bottom:

There's an old saying on Wall Street that a bear market has not bottomed out until the last bull capitulates. News flash. The last bull has capitulated. Me....

I hope I'm selling at the bottom, because that will mean the markets and the country will have recovered from the worst economic policies since the Great Depression.

And so it came to pass.

I capitulated, and the economy did not sink into depression. Therefore, I saved the economy.

So please give credit where credit is due.

Unless, of course, we continue to stay at or near 10% unemployment, in which case it's all Bush's fault and there was nothing I could do about it.

Related Posts:
The Fierce Urgency of Sow
"Some Say" Obama Is A Shorter
Government Must Control Everything or Nothing
Obama's Infrastructure Plan Is A Road To Nowhere

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  1. "Obama confuses association and causation"

    its not only Obama, its the whole of the left that does.

    they also confuse "arguments of emotion" with "arguments of reason."

    their whole agenda is dependent upon these two means of argument. which in turn one can conclude that the left declares that the ends justifies the means type of morality.

  2. Heh, heh, heh.

    Terrific post.

    Except for one little thing. In a Spartacus moment, I would like to point out that it was I who saved the economy. ;-)

  3. Brilliant! You have dissected the leftist "logic" that has deluded and obfuscated for so long. You may not have saved the economy (unemployment is still 9.7, as you say), but it is YOU we need to thank.

    No "bull." :D

  4. Don't beat yourself up for cashing out last April. Just about everyone else did too, including the big institutional investors. The rally was staged using the $2 trillion of freshly printed government money directed through Goldman Sachs and into the "high frequency trading programs" that essentially firehose real investors out of the market while grinding the broad market upwards.

    This has been a very low trading volume market dominated by the program traders using taxpayer money to re-inflate the bubble hoping to assure investors that all is well. The serious investors, including pension funds, endowments, private equity funds etc..., never bought into it which is why the Fed is now in a corner trying to capture its phony book profits while testing the waters for an exit. There is a very good reason why there is so much "cash on the sidelines". We aren't stupid.

    It's all one big house of cards and the Fed (taxpayers) is about to take a big hit as they find that without taxpayer money inflating their bubble, the value of those assets on the Fed balance sheet can only be sold at the true market value, not "mark to make believe".

    You haven't missed anything.

  5. I would point out to Mr. O-6bama that job losses were decreasing starting in April of last year and continues to decrease to this last month. The Stimulus was not even spending money when we had our worst month and it still hasn't even spent 50%. I see no change in the jobs trend lines from before Stimulus to after Stimulus.
    Complete BS of course and with the 9.7 number staring everyone in the face (and sure to rise once the gimmicks wear off) he's toast in 2010.

  6. Why do you think this has anything to do with logic? It was a pure political ploy as is typical. Did you notice that today's jobless numbers were once again "unexpectedly" high?

    I think the Obama ploy on the stimulus working was timed to distract from the real mess that he and his team are making of our economy.

  7. We must have been working in tandem. I ordered a Denny's Grand Slam breakfast that same day. While I was sure that my actions turned the economy around, you seem to make an interesting case. I think that our actions combined turned the economy.

    Care to fix another crisis? I am planning to get the Gyros plate to solve the Greek meltdown, should we coordinate our plans?

  8. Excellent article as usual, Mr. Jacobson. President Pinochio is going to go down in history as the most incompetent, mendacious president in our history.

  9. > Care to fix another crisis? I am planning to get the Gyros plate to solve the Greek meltdown, should we coordinate our plans?

    Sorry, I refuse to frequent Plato's Retreat just to save the economy...