Monday, November 03, 2008

AGE OF PROSPERITY OVER

From the WSJ (Oct. 27, 2008): Arthur Laffer.

But here's the rub. Now enter the government and the prospects of a kinder and gentler economy. To alleviate the obvious hardships to both homeowners and banks, the government commits to buy mortgages and inject capital into banks, which on the face of it seems like a very nice thing to do. But unfortunately in this world there is no tooth fairy. And the government doesn't create anything; it just redistributes. Whenever the government bails someone out of trouble, they always put someone into trouble, plus of course a toll for the troll. Every $100 billion in bailout requires at least $130 billion in taxes, where the $30 billion extra is the cost of getting government involved.

If you don't believe me, just watch how Congress and Barney Frank run the banks. If you thought they did a bad job running the post office, Amtrak, Fannie Mae, Freddie Mac and the military, just wait till you see what they'll do with Wall Street.

Since I don't have a lot of confidence in Congress based on its passed economic decision-making, I just don't see how Frank, Dodds, Pelosi, and Reid will make good decisions in the future. And congress and Bernanke are talking about another $300 billion stimulus package.

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