Government Hubris

Obamanomics is why there is no recovery.

How many more months must Americans endure near-double-digit unemployment, little or no new-job creation, economic stagnation, a topsy-turvy stock market, and sagging consumer confidence before Washington politicians concede the "summer of recovery" is mostly a mirage?

They've spent nearly $8 trillion since 2007, including nearly $2 trillion on economic stimulus programs and an equal amount for the Troubled Asset Relief Program and similar bailouts. They've effectively nationalized Fortune 500 corporations, taken over the health care sector, and set the regulatory stage for more bailouts and takeovers, but the needle is still stuck. Worse, recovery isn't likely for many months ahead because those same politicians are planning more of the same failing policies.

I think this is true. We were hit by a massive housing bubble burst brought on by misguided federal policies intended to make home ownership more affordable, but which caused rapid inflation of housing prices and rampant speculation. When people couldn't keep up their mortgage payments, they simply walked away from the homes in which they had no equity, and that exposed the rottenness in the housing markets, which in turn lead to a disruption of financial markets that had packaged mortgages into securities which in turn plummeted in value because their value couldn't be determined, due to the foreclosures and drop in housing prices. These securities suddenly became pigs in pokes, and the financial companies holding them no longer knew where they stood and stopped lending.

That's how I understand the problem, but the Democrats show no sign of having learned anything and are doubling down on the lending practices that fostered the collapse and charging the costs to the national credit card. Those who lived through the Carter administration recognize this pattern, but that was 30 years ago and we have a whole generation who either weren't there then or were and failed to learn the lessons that government interference with markets is far too tricky to be relied upon indefinitely. Planners repeatedly forget the basic rule that people will act in their own self-interest and not amount of government regulation can match the efficiency of free markets or anticipate the ways that human ingenuity can screw up the best laid plans of technocrats.