Tuesday, February 10, 2009
Last year I railed against the stupid "stimulus" plan that congress and the Bush administration passed (Shove It), I said it was a sham that would not work, it didn't.
This current stimulus package is a boondoggle. It is stupid and wasteful. For years I have been outspoken about wasteful spending in congress, that is one of the major reasons I believe the Republicans were ousted in 2006. It appears no one has learned there lesson. This is a bad idea.
One of the things that turned a Great Recession into a Great Depression in the 30's was protectionism. Hoover and the congress passed legislation that started trade wars and killed our exports. This stimulus bill does the same thing, though thankfully not to the same extent - but it does risk starting a global trade war. We cannot afford protectionism.
The stimulus bill will not get us out of recession, fixing the banking industry and writing down loans (possibly a currency devaluation) will. Without first fixing the underlying problem we cannot recover. Fix housing and all the other bad lending, then you can build a base with which to build and move forward.
One last thing - congress keeps saying that the banks need to lend now that they've been given money.......that is stupid. Let's take a step back and think about this - should we require the banks to make loans to entities and people that shouldn't be given loans? If the answer is yes, then you are not allowed to be upset about the current crisis because that is how we got into it. We need banks to be healthy and consumers and businesses to be healthy and less leveraged so that lending can take place within reasonable guidelines. We shouldn't lend because congress says so, that is how we got into this mess in the first place.
Scott Dauenhauer CFP, MSFP, AIF