Sanity Injection

Injecting a dose of sanity into your day’s news and current events.

Even the Associated Press is starting to understand that we’re screwed.

Posted by sanityinjection on June 8, 2009

This article explains that the $1.2 trillion the Obama Administration has spent to try to bring down mortgage rates and jumpstart the housing market has, in fact, had the exact opposite effect – mortgage rates are going up:

http://apnews.myway.com/article/20090606/D98L67500.html

The reason? Bond traders, whose activity affects interest rates, are afraid that all the borrowing the government is going to have to do to fund this and the other stimulus spending programs will drive up inflation. Inflation reduces a bond’s effective yield, so rates have to go up to compensate for the expected reduction.

“The bond market is calling the Federal Reserve out,” said Mike Larson, a real estate analyst at Weiss Research Inc. in Jupiter, Fla. “Investors are saying that the Fed can’t just print money out of thin air to finance a massive deficit.”

As a result, the spending programs may actually be hindering the recovery of the housing market. And that in turn has implications for the greater economy.

Now recall that the point of all this stimulus business was to shorten the duration of the recession and speed recovery. Ironically, it may in fact be delaying that recovery.

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7 Responses to “Even the Associated Press is starting to understand that we’re screwed.”

  1. sanityinjection said

    “The end of the recession is still months away, but it is increasingly clear the stimulus package was a serious mistake. To date, it has had no identifiable beneficial impact on the economy,” said Stanford University economist John Cogan. “More important, its impact later this year and next will be decidedly negative because the funds required to finance the package’s spending will be drawn from private-sector resources that are needed to fuel the recovery. At this juncture, Congress would be wise to repeal the remainder of the program,” Mr. Cogan said…

    …House Minority Leader John A. Boehner, Ohio Republican, pointing to the rise in the jobless numbers, said Friday that the stimulus program “has not only loaded unprecedented debt onto our children and grandchildren, it also has failed to meet its most basic economic goals.”

    http://washingtontimes.com/news/2009/jun/08/gop-seeks-to-truncate-stimulus-cut-deficit/?feat=home_headlines

    • Sister Benedict said

      I was driving along a country road yesterday and I saw a large billboard announcing that any roadwork you would see was because of the feds’ stimulus package, “putting America to work”. There was no roadwork anywhere for the next five miles, and the road seemed none the worse for wear despite this lack.

      This wasn’t the first time I have encountered the recent government’s make-work projects out here in my rural community. A few weeks ago a man with an official badge showed up at my house and said he was taking information a year before the official census would be taken in 2010. Huh? With just a bit of questioning from me the man explained that he had been unemployed for over a year and he was able to get this newly-created position as a result of his financial distress. Seemed to me (and to him) that the newly-created position was a redundant one, as the same questions would be asked in a year and would only be relevant then. Later that same week I ran into a woman in a similar situation; she and her husband had been out of work for over a year and she too had a sparkly-new job going door-to-door on behalf of our country. She had to pay for her own gasoline, but was reimbursed for a certain amount of her car’s mileage.

      Do these projects actually benefit the community? Do they genuinely benefit the “employees”? I was reminded of two things when I saw these projects:

      1) Elementary school. When some of the children finished their assignments before all of the others, they grew bored and fidgeted. Teachers then assigned these children additional projects to complete. Official explanation: “Enrichment”. Real reason? “Keep the kids from annoying the teacher.”

      2) It is my understanding that in some Nazi concentration camps the guards assigned “projects” to the prisoners that were designed to keep the prisoners exhausted and submissive. One example is for the prisoners to move a pile of rubble from one place to another. When that job was complete the prisoners were commanded to move the rubble back to the original place. This back & forth continued indefinitely, and not a small number of the prisoners suffered more from the pointlessness of the project and their lack of purpose than from the physical labor. They grew mentally unstable because of the make-work they were forced to do. The conclusion made by sociologists was that people need to know that what they are doing serves some greater usefulness, even when they cannot stand the organization that assigns the task.

      I wonder if these “putting America to work” stimulus projects will do more than just damage the economy. I wonder if they’ll also damage the psyches of the folks who are given some of these “jobs”.

      • sanityinjection said

        The irony is that there are plenty of useful projects that the stimulus money could be spent on, and intead they’re spending it on pointless crap. That’s your federal government 2009, brought to you by the folks at the Democratic Party, and by the letter “F”.

  2. sanityinjection said

    Jason over at The Western Experience has got the roundup on the impact of the stimulus:

    http://westernexperience.wordpress.com/2009/06/09/obamanomics-democrats-and-stimulus-spending-are-sinking-along-with-the-economy/

  3. Ms. D said

    In all fairness, I don’t think this is a problem created by the federal government 2009 or the democratic party. When was the last time the government didn’t spend money on pointless crap and put it all toward efficiency and programs that work? The republican party sent this country into an economic tailspin, let’s not forget. Best decisions being made right now? No. Best decisions made for the last 10 years? Definitely not.

  4. sanityinjection said

    Ms. D – You’re right that the Republicans have plenty to answer for from the years in which they ran the show. (Some of them have already been sent packing by the voters.) The difference, though, is that Democrats are much better at overspending than Republicans are. When Republicans do it, they are violating their core philosophy, and deep down they know it. When Democrats do it, they’re *fulfilling* their core philosophy!

  5. Ms. D said

    I just ordered a Domino’s Pizza deal called “Big Taste Bailout Package.” Now, I don’t know what y’all republicans are griping about, but when you can get pizzas for $5 each, ain’t nothin’ wrong with the ‘conomy. 🙂

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