More Reasons The 'Stimulus' Is A Bad Idea

Well, let's see here... The House of 'Representatives' (and I use that term loosely) passed an $819 Bn 'Economic Stimulus Package' better known as the American Recovery and Reinvestment Act of 2009. The Senate bill swelled to a whopping $963 Bn, before a few of the senators suddenly thought that that might be too big of a pill to swallow for your average American, and they trimmed it down to $790 Bn on Friday... but by the time they voted and passed the bill today, a mere four days later, it had once again swelled to $838 Bn.

Think about that number for a minute- Eight Hundred Thirty-Eight BILLION Dollars. I'm sure by now several people a lot smarter than me have thought about a half a dozen different ways to put that number into perspective. Personally, its just one damn big number.

Even before Obama took office, he's been pushing to get this bill passed, and passed quickly. Now, I've said before that nobody should sign anything without reading it. But our President does not want to give lawmakers time to make an educated decision; stooping to name-calling, referring to those calling for more discussion as "obstructionists". What is it your mother used to say about peer pressure?

It seems to me that our new President may be taking a play from the previous President's playbook. And I just love the irony of Obama referring to "Revisionist History" in his speech last night, while at the same time creating his own, placing the blame for our current economic crisis on ex-President Bush, while totally ignoring the subprime mortgage meltdown that predated our 43rd President. At the same time, he used fear, just like Bush did to further his 'War on Terror'; something that Obama himself and members of his staff have criticized Bush for doing at pretty much every opportunity over the last two years of the Presidential Campaign. Meet the new boss, same as the old boss.

And the results are not guaranteed, so this new package isn't exactly exuding confidence. On the day that the Senate passed their version of the Stimulus package with the help of three Republicans (who ought not be re-elected for the part they played in this fiasco), the Dow Jones Industrial Average dropped almost 382 points. At this point, the Dow is lower than it was on the day Obama took office. Some would argue that Obama has not yet been in office long enough to influence the markets, but with all of his economic eggs in this basket, its no wonder that if he does not manage to get this bill passed, then his administration may as well be over almost before its begun.

So how are we going to fund this stimulus package, anyway? The answer- we sell our debt. Who's buying? China. That's right, China. But they aren't exactly lining up waiting for the chance. China, the biggest foreign holder of U.S. debt, is now looking for guarantees that the value of its $682 Bn in holdings of U.S. Government debt will not be eroded by "reckless policies" (in the words of Yu Yongding, former adviser to the central bank). http://www.bloomberg.com/apps/news?pid=20601087&sid=aXWQEydhsoUI&refer=home

“The biggest concern for China to continue buying U.S. Treasuries is that if Obama’s stimulus doesn’t work out as expected, the Fed may have to print money to cover the deficit,” said Shen Jianguang, a Hong Kong-based economist at China International Capital Corp., partly owned by Morgan Stanley. “That will cause a dollar slump and the U.S. government debt will lose its allure for being a safe haven for international investors.”

Why is this an issue? Easy. If China won't buy our debt, then Obama's stimulus package is essentially dead in the water. This is it, folks. All of our government's credit cards are maxed out, our broker is dialing the phone for our margin call, and the bookie is knocking on the door looking for the vig. Meanwhile, we're calling another bookie trying to get them to buy our action on the long shot that can't lose.

We can't spend our way out of trouble. We shouldn't even try. Why is it that our Government thinks something will work when just about every member of the lower or middle class could tell you that it won't?