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Recessions and depressions


By Col. Stan Gudmundson

Fri, Oct 12th, 2012
Posted in All Commentary

By Stan Gudmundson

Bill Clinton told us that the recession Obama “inherited” was too big for any president to solve in one term. Really? Earlier I noted that there is a simple explanation that precisely defines what recessions and depressions are.

Recessions and depressions are nothing more and nothing less than a misallocation of resources. The same can also be said about an economy that is stuck in only what can be described as lousy performance territory. As it is today.

History is also very clear about what happens when depressions and recessions occur. They are sharp and painful and don’t last very long. In a recent column, economist Tom Sowell reviewed just a couple of a couple of these. The first one was a depression in the early 20s that was over in 18 months or so.

Second, he reviewed the result of Reagan’s policies. Within two years after Reagan assumed office, the economy picked up and gained steam. What’s more, that expansion kept going for over 20 years and included Bill Clinton’s two terms.

Had he been honest, Clinton, in his speech to the Democrat Convention, should have made it very clear that he governed the country as a conservative economic supply-sider as Reagan and Bush-I did before him. Of course he had a little help from a Republican Congress but still, apart from rest of his seamy presidency, his economic policies were mostly effective.

I know how you liberals, ah sorry, progressives hate being reminded of this. But those are the facts.

Again, one needs to reemphasize that depressions and recessions do not last a long time. That is unless government “helps” by charging in with six guns blazing away.

The Great Depression itself lasted as long as it did because liberals, ah sorry again, progressives of the day, kept interfering with the markets ability to reallocate resources properly. Government does not have the knowledge or capability to reallocate maladjustments in the economy. Moreover, as our world becomes more complex the gap between what government thinks it can do and what it really can do becomes wider and wider.

If all of the efforts FDR’s administration made didn’t result in an end to that economic mess, how is it remotely possible to conclude that what they did was correct? You really can’t unless you explain it away with “logic” that is either total fiction or delusional.

The same kinds of misguided efforts of the depression apply to today’s foundering economy. Obama’s $800 billion stimulus package contributed absolutely nothing to the useful reallocation of misallocated resources.

In a similar way, GSE’s Fannie Mae and Freddie Mac, by foolishly redistribuiting vast sums of money, bear major responsibility for creating the current economic turmoil. But they have a failure-proof business plan. When there are profits they pay themselves big time but when they don’t, taxpayers have to cover their losses. Neat.

Government cannot allocate resources properly. That is as hard and fast a rule as the law of gravity.

Yet the Democrats tell us Obama needs more time. No he doesn’t. History is very clear and it tells us that the only thing that Obama and his policies will do is to make things worse, far worse.

Obama also said that we don’t need to “go back to same policies that got us into this mess in the first place.” Tom Sowell says, “That sounds very persuasive, if you don’t know the facts - and it sounds like pure hogwash if you do.” Oh how true.

Economist Larry Kudlow says that “Obama’s economic program of tax, spend and regulate has been a dismal failure.”

How are doing? Gas prices have almost doubled and in some parts of the country, they have more than doubled. Remember back a few years during the Bush presidency, a spike in gas prices was supposedly created to help Bush’s buddies. What’s going on here? Is Obama not so stealthily helping Haliburton and big oil too?

Green energy. Almost $100 billion disappeared into oblivion in bankrupt green energy schemes. Tell me again how government can properly allocate scarce resources i.e., our tax dollars.

$5 trillion added to the national debt, and around 40 percent of it comes from borrowing. It is completely immoral to steal the future from our children and grandchildren. Moreover, this is unsustainable. And insane.

In spite of a law requiring them to do so every year, Congress, thanks to Senator Harry Greed and Obama, haven’t passed a budget in more than 1200 days. What plan do Democrats have that will keep us from driving over the looming fiscal cliff? Their answer was, “We don’t have one but we know we don’t like yours (Ryan’s). By the way, why hasn’t the Senator released his tax records?”

Unemployment rate? Under Eight percent? Horse hockey. Larry Kudlow says that we need to create 250,000 jobs a month to have a robust economy. Yet we add around 100,000 per month and the “official” jobless rate drops? That can’t happen unless government statisticians are doing something else. And they are. They just reduce the estimation of the number of people in the work force and presto, make the unemployment figure anything they want. In August the feds removed 368,000 from the work force. By the way, about 50 percent of all recent college graduates are either unemployed or underemployed. Many of them have had to move back in with Mom and Dad.

Most important are the constitutional issues. As Tom Sowell says, “The Constitution of the United States cannot protect us unless we protect the Constitution...If laws passed by the elected representatives of the people can be simply over-ruled unilaterally by whoever is in the White House, then we are no longer a free people...No President of the United States is authorized to repeal parts of legislation passed by Congress...(E)very President takes an oath to faithfully execute the laws that have been passed and sustained -- not just the ones he happens to agree with.”

Give Obama another chance? Really? He is a complete failure. Instead of dragging out the 80-year old Democrat play book and running a “scare the seniors and everyone else about Republicans” campaign why don’t Democrats just run on their record and also remind us of what history tells us? But they can’t can they?

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