2009-03-06

That's not encouraging

Another eye-catching headline from the Associated Press;

While the stock market tumbles, unemployment shoots higher, gas prices are rising again but The One "knows" he did the right thing. See, here let me explain to any Democrat philosophy major who has never had a job or a business or invested in the stock market how those things work (because I have a little experience at all three) - those things do well, or poorly, based on the expectations of future performance. That's why businesses have sales targets and staff economists to project that stuff.

If it looks like business will be bad, businesses will cut labor - the most expensive part of doing business. If investors think that government is making unfriendly gestures towards the economy, they won't invest and the market tumbles - businesses shed more jobs so they can stay in business. If taxpayers think their taxes will rise, they'll stop spending their money to make those balloon payments they expect next year from the IRS.

The economy today is a result of what people with money think the future looks like. The reason the economy did well under Clinton and Bush is because they knew what the future looked like. The market tumbled after 9-11 because it added uncertainty into the market. Uncertainty that lingered for more than a year until it became apparent that Bush was going to keep the country safe.

I listened to Obama today yammer on about how change is good for us. That he's tired of dealing with people who want to do things "the old way", or words to that effect. Um, "the old way" is the reason we're the most prosperous and powerful nation in the history of the world. Maybe the people who want to do the things "the old way" are right. "The new way" doesn't seem to be panning out so well. Change isn't always good - history is littered with spectacular failures that were considered good ideas until they weren't so good anymore. Things like New Coke and dirigibles.

Folks used to criticize Bush because they said he was pig-headed and never admitted when he was wrong. Obama is being a bit pig-headed, too. Jobless rates rising and the stockmarket tumbling while he chants "I know I was right" is not encouraging. Not in the least. I think that'll reflect in Monday's market.

4 comments:

Oldrightie said...

I'm surprised how similar his package is to Brown's since Oba seemed less than enamoured of our shit one.

Elizabeth said...

You make a good point, LT...you make a very good point.

...about how things work, I mean...

We are in this global mess precisely because 'expectations of future performance' have been so low over the last many years that said expectations have been locked in at zero and headed backwards.

But, this is the part I liked the best,

"If investors think that government is making unfriendly gestures towards the economy, they won't invest and the market tumbles."

Ain't that the truth! And, when government refrains from making unfriendly gestures toward the economy - kind of like when there is virtually NO regulation - those same "investors" make us freakin' nostalgic for a tumbling market.

Elizabeth said...

...well...ahem...I forgot for a moment that there are 3 other horsemen on this site!

Anonymous said...

President BuhWheat say; Everyting OTAY!