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ThoughtsOnline

Friday, July 30, 2010


I certainly don't view it as 'unexpected' that the economic "Recovery loses speed as consumers turn cautious"...

No kidding, "Consumers spent less, companies slowed their restocking of shelves..." and "the reports raise doubts about whether employers will hire enough and consumers will spend enough to invigorate the economy".

And with Obama and Congress not having a clue as to why consumers are spending less and companies are reluctant to hire, they're looking to push more stimulus spending in an attempt to get things moving in the right direction. Like any ideologue, they believe in what they're pushing and if it hasn't worked yet, the answer is invariably more of the same. They never, and I mean never, will question whether they were pushing the right medicine in the first place.

But if a HUGE part of the reason the economy is stuck is the previous stimulus and regulatory changes, then doing more of the same will only ensure a continuation of the status quo.

And while the Republicans are to be commended for trying to block additional stimulus spending, they are sort off with their reasons. They shouldn't be blocking this because of concerns about federal deficit and debt, at least not per se, but rather because the Democratic proposals won't do anything to boost people's confidence, they do nothing to give the public assurances there is a light at the end of the tunnel.

In a way, the Democratic proposals are similar to Bernanke's promise to pump even more money into the economy to get it going, both scream out that things are bad and not getting better... and that is a lousy way to lift people's confidence about the future.

Sure, it is important to take actions to keep things from getting worse, no patient wants to hear their health is continuing to deteriorate. But the patient (milking the health care analogy for all it's worth) isn't getting sicker, the patient is stable, albeit in lousy shape, so it's time for taking steps to make us better.

Unfortunately, for all their supposed brains, Obama and the Democrats (and to an extent, the Republicans) just can't see that their proposals aren't going over very well. Ask anyone, other than a die-hard Obama supporter, there's pretty much next to no one who reads or hears about the various proposals and comes away more confident than when they woke up that day.

And people who aren't more confident than the day before don't show up to work ready to hire new staff, they don't go out at lunch and spend money on things they didn't need to buy.