Skeptical Humorist

Here’s a fun FACEBOOK interchange that I had with a banker friend of mine. There’s some additional commentary at the end.

Him:

Not the most penetrating analysis, but the essence of the folly is captured.

Financial Overhaul Is Flopping – Barrons.com, “The banking-reform bill misses the mark”

Me:

So you agree with me that the national economic solution is more “innovative financial products”? Maybe something with an acronym like “COWBELL”.

Him:

Think we have PLENTY of innovative financial products. What we need is more focus on jobs creation and less on grandstanding.

Him:

That would be political grandstanding in D.C. All grandstanding here is strictly encouraged

Me:

Obviously, I’m trying to make an economic case for “more COWBELL!”

Of course we don’t want the government to create more jobs by just hiring people. That’s wasted resources and increases the deficit.

Private companies are supposed to do the hiring. But they won’t because they can’t sell what they can already produce. Because ultimately the consumer is overextended and in fear.

The common argument is to lower taxes. But that also increases the deficit. And besides, most small businesses, where early jobs would be created, don’t pay taxes anyway.

So both possible structural solutions increase the deficit on an if-can-maybe bet that it will re-prime the economic engine. And our current fixation is that the Greek deficit disease is going to visit our shores.

I’ve always been partial to the “trickle down” strategy – showering the wealthy with more money because they are the most experienced with spending lots and lots of it, albeit not often intelligently.

In the end, I don’t believe that there is any magic bullet that can be expected from Washington. And grandstanding may be the least harmful solution they can engage in. Maybe we should just let the market play this out, and companies will hire when they’re good and ready to hire.

Hot dogs and pork’n beans will become chic again.

I might add: the issue of cutting the deficit places more stress on job creation,
since the money being spent is supporting jobs throughout the economy. When
Federally supported jobs are de-funded, those effected will be out looking for work,
not paying their bills, and not purchasing products along with the rest of the
unemployed nation.

I like to consider whether we can economically afford to declare victory in the
Middle East, bring the troops home, and cut back on military spending. That part of
the economy has become so large that cutting back the role of planet policeman may
be untenable.

We may be reading about Fraser’s 15th tour of Iraq.