WSJ: Obama and the Economy

The Wall Street Journal had an excellent opinion piece in regard to the President and his advisors and their economic policies. One of the most telling items was in the subtitle:

As the Dow keeps dropping, the President is running out of people to blame.

This was no partisan screed. It was documentation of the impact that Obama's policies are rapidly having on the only economic indicator that can react to events close to when they occur.

As 2009 opened, three weeks before Barack Obama took office, the Dow Jones Industrial Average closed at 9034 on January 2, its highest level since the autumn panic. Yesterday the Dow fell another 4.24% to 6763, for an overall decline of 25% in two months and to its lowest level since 1997. The dismaying message here is that President Obama's policies have become part of the economy's problem.

While it is clear that Nancy Pelosi and Harry Reid along with the Obama Administration have incited absolute class warfare. The problem is that they are doing it by scaring away the people they will need to fuel the programs they insist are so important. And what's worse is that they are hiding behind the economic situation to push their agenda through hoping that no one is noticing. But the market is clearly paying attention.

So what has happened in the last two months? The economy has received no great new outside shock. Exchange rates and other prices have been stable, and there are no security crises of note. The reality of a sharp recession has been known and built into stock prices since last year's fourth quarter.

What is new is the unveiling of Mr. Obama's agenda and his approach to governance. Every new President has a finite stock of capital -- financial and political -- to deploy, and amid recession Mr. Obama has more than most. But one negative revelation has been the way he has chosen to spend his scarce resources on income transfers rather than growth promotion. Most of his "stimulus" spending was devoted to social programs, rather than public works, and nearly all of the tax cuts were devoted to income maintenance rather than to improving incentives to work or invest.

His Treasury has been making a similar mistake with its financial bailout plans. The banking system needs to work through its losses, and one necessary use of public capital is to assist in burning down those bad assets as fast as possible. Yet most of Team Obama's ministrations so far have gone toward triage and life support, rather than repair and recovery.

Read the entire article here.

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Biden is 'tanking' worse than the economy

There was a headline on the Drudge report yesterday referring to Joe Biden telling George Stephanopoulus that the economy was tanking. From ABC news:

Vice President-Elect Joe Biden said the U.S. economy is in danger of "absolutely tanking" and will need a second stimulus package in the $600-billion to $700-billion range.

"The economy is in much worse shape than we thought it was in," Biden told me during an exclusive interview -- his first since becoming vice president-elect-- to air this Sunday on "This Week with George Stephanopoulos."

"There is no short run other than keeping the economy from absolutely tanking. That's the only short run," Biden told me.

The interesting thing about Biden's comment is that there is no interesting thing. His analysis is based on nothing and contains no reference to anything intellectual as the basis for his line of reasoning. Try this quote:

Every single person I've spoken to agrees with every major economist. There is going to be real significant investment, whether it's $600 billion or more, or $700 billion, the clear notion is, it's a number no one thought about a year ago," he said.

"Every single person" agrees with "every major economist". This statement is the classic Joe Biden rubbish. Doesn't he remember that a child he told his mother that "everybody" was doing it, and she probably responded with "name three". And his sweeping generalization wouldn't be as bad if this were not so important and his statements so obviously wrong.

The Volokh Conspiracy refers in this post to a summary of economists and their opinion of the original congressional bailout. As you will clearly note in this article and this document from the leading economists, there is no clear agreement. And that was in October. I guarantee you that the "agreement" has severely deteriorated since then.

While Biden's childish reasoning may be acceptable in a debate of global warming "everyone believes it and if you don't you are a neanderthal" among his ultra liberal social circuit, it doesn't cut it as a Vice President-elect. He better figure out soon that while he can make up stories when debating a Republican Vice Presidential candidate who the press hates and get away with it, he can't do it in the real world.

Note to Joe: Grow up and get serious.

Read the ABC article here.

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