by Steven Waechter | Jun 13, 2011
Imagine a plot of land in the desert, consisting only of mesquite scrub and dust. If you assembled a system of sprinklers on this desert land, and ran them heavily enough, you could make the desert green with grass, corn, or even water loving willow trees. But then the water supply you are stealing from runs dry, and the sprinklers sit there, idle. The greenery of your efforts wilts, dies and turns to dust.
This is the story of government stimulus. First, the federal government stole – yes, I said stole – hundreds of billions of dollars to bail out first the banks, and then General Motors, and then spend hundreds of billions more on the President’s stimulus package, which promised to reignite the economy, fight of the recession, and reduce unemployment. The federal government crowded out private borrowers from the capital markets with their enormous deficits, damaging other sectors of the economy – but no matter. The stimulus program would create or “save†jobs elsewhere, making the whole thing worth while, somehow.
It didn’t work. It was never going to work. All we were left with was another economic bubble; this one not in stocks or in housing, but in government spending. Now, the cash supporting this situation – the air inflating the bubble – is being printed, at the cost of inflation and rising prices on everything; essentially theft through increased costs of living. Consumer spending is shifting to cover the increased costs of food and fuel, to the detriment of other goods and services.
As it became an obvious failure, the first impulse was to double down with another stimulus program – digging a deeper well. But not this time; the wealth of the country was depleted, the water was gone.
Now, we stand at the beginning of the double-dip recession – a recession within the depression that was born from the last recession. This time there is no way out and no way to delay. The economy as a whole can no longer afford to supply the cash to keep the government spending bubble inflated, a bubble that never should have existed in the first place.
It is time for the economy to be purged of all the mal-investments of both government and business and finally rebalance itself, something which it has not had a chance to do. Government stimulus was doomed from the beginning because it only stimulated a portion of the economy that depended entirely upon government money; the rest of the economy was damaged by this, not improved by it, and governments can, in fact, run out of money.
The next phase of the recession will be more painful than the first; with an economy that has been further weakened and a government lacking the resources to do much of anything, the next big dip is going to be one for the history books – which is terrifying.
by Art Smith | Feb 16, 2009
This week’s newsletter from Iowa House District 60 Representative Peter Cownie is addressed to Governor Culver and provides encouragement for the Iowa Governor to travel to Microsoft headquarters to press for the software giant to recommit to their plans for a data center in West Des Moines.
Dear Governor Culver,
One of the most important jobs a governor can perform is that of advocating for new businesses and jobs to come to his/her state. No one is as recognizable or deserves to be listened to more than a governor in this respect. Therefore, I respectfully encourage you to go directly to Microsoft headquarters in Redmond, Washington and advocate for Microsoft to remain committed to building the data center in West Des Moines. The data center was scheduled to break ground in 2009. However, Microsoft recently informed West Des Moines officials that plans would be postponed indefinitely due to the difficult economic times. The data center represents $550 million in new development for West Des Moines and Iowa as well as the creation of 75 new jobs with salaries near $70,000.Â
Governor Culver, now is not the time to sit and wait for Microsoft to decide what they want to do. Iowa needs to be proactive in bringing business to our great state. Nobody has more credibility in selling Iowa than you. Microsoft is an example of new business that would bring millions of dollars to Iowa. Real leadership means taking chances even when failure is a possibility. Real leadership also means going to bat for the people who elected you. As a State Representative for West Des Moines, I feel strongly that you can make a real difference for the people of Iowa in this case. This COULD be a signature moment for Iowa and your tenure as governor. I hope you will decide to rise to the challenge. I would be happy to accompany you.
Sincerely,
State Representative Peter Cownie
District 60
West Des Moines
This is the type of action that our state leaders need to take… acting intentionally to ensure that players like Microsoft don’t think we’re just fine like we are. This is the time to act as if the deal were new and we are in contention with other states or cities… if you think that Microsoft isn’t looking somewhere else right now, you don’t know much about the world.
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By the way, this reminds me of the fact that the General Assembly seems to be sitting on their collective hands waiting for the Stimulus package. Among other things, Iowa has around 50 projects that are specifically waiting for federal money to be commenced. I don’t know how many of those projects need state legislative action to proceed, but it’s a little concerning that we’re getting in line for money in some cases for projects that have questionable value or relevance in our current economic times. After all the criticism of US Banks for how they manage their [stockholders’] money, it’s rather ironic that we won’t treat the excesses of government spending being brought about by this huge pile of pork manure with the same level of contempt.
More on these projects later.