I'm having a hard time swallowing much more of the ridiculous television programming regarding our current economic crisis and the government's fiasco of a stimulus.

If I have to hear one more economist or executive editor of some financial rag or former Wall Street insider address the merits of the government's stimulus using double talk, armchair economics, half truths and massaged statistics I'm going shoot my cat.

They all babble about how it will create jobs, unlock the credit markets and stimulate investment. Horse-hockey.

I don't understand how these self-proclaimed financial insiders can go on television with a straight face and lay out this crap.

No financial measures or calculated metrics are needed to analyze the situation. Any such numbers would favor the party presenting them anyway and thereby be biased by association.

Here's the problem so even those mental midgets on CNN can understand it: there is nothing the government can do with our money to legally stimulate the economy except let us keep it! Here's why:

Firstly, there's a seemingly irrelevant, historical document sitting in the National Archives in Washington called the constitution. It's the document that Ron Paul referred to many times during the Republican primary debates that usually evoked a condescending chuckle from the likes of McCain, Romney, Giuliani, Huckabee and the other Manchurian candidates.

Nowhere in that document does there exist clear constitutional authority for the federal government to tax the people and redistribute those monies to the markets of their choice.

Secondly, the whole charade is a wash: if Uncle Sam takes money from me in the form of taxes, or debt or inflation that I was going to spend on having my lawn cut, and gives it to you so you can have your car washed then there are no new jobs created. The young man I would have hired to cut my lawn loses the job, and the one that washes your car gains one. Zero-sum game.

Thirdly, there is nothing that the government can do on my behalf with my money that I can't do better. Anyone who has ever worked for a large corporation or a state or the federal government will attest to the blatant inefficiencies associated with it. It's just not logistically possible for the government to act as a central planner for our economy. To think they know what, who, where, when, how much to invest so as to better our lives. Besides, hasn't that been tried before and failed miserably? Wasn't that Communism?

Fourthly, the insertion of the government in-between businesses and consumers creates the opportunity for businesses to lobby (bribe) the middleman and get special interest treatment. Lobbying directly to the consumer without the government is called marketing. The benefit to the consumer is a quality product. Lobbying with the government in the middle is called special interest pandering and the benefit to the government is cold hard cash in hand and there is no benefit to the consumer. Only corruption and higher prices.

A firsthand example: a former colleague of mine who was recently laid off told me today that he has been fortunate enough to find a new job in this troubled economy but for significantly less money and he still has to incur significant relocation costs, and his family will not be joining him immediately so he'll have to support two households for the time being.

He called his bank, Bank of America, to try and negotiate a lower interest rate on his credit cards in hopes of some short-term relief. He explained that given the current economic climate that given the decision to pay the rent or his BOA credit cards that naturally he would pay the rent and therefore would appreciate BOA working with him to find a solution that benefited both him and BOA.

Unfortunately, according to Reuters, BOA received $25 billion from the Treasury Department’s Troubled Asset Relief Program (TARP) in October 2008 and again on January 16th, 2009 the U.S. government gave BOA a $20 billion bailout and a guarantee for almost $100 billion of potential losses on toxic assets. These bailouts made Bank of America the biggest recipient of taxpayer money next to Citigroup.

Later in the day my colleague tried to use one of his BOA credit cards and it was declined. He called the bank only to find out that his credit card accounts, which had been in good standing for 2.5 years, had been closed!

After calling the bank and speaking to a "credit specialist" he was told that his credit worthiness had been re-evaluated and found to be a higher risk then previously thought.

More horse-hockey.

What incentive does a bank like BOA, which has received almost $150 billion from the U.S. government, have to negotiate with Joe Blow over $10,000 in debt? None!

The government intervention, as usual, gives institutions such as BOA incentives to make bad business decisions. Would you or I do differently with that kind of safety net from the U.S. government?

February 26, 2009

The Best of Don Cooper