Stimulus Or No Stimulus, Why The Economy Isn't Coming Back Like Expected

I think you can tell from some of my past blog posts that I don't believe the stimulus package has helped in any way to stimulate the economy and may, in fact, have made things worse. Much like vampires helping out at the blood bank, I also fear that the creation of a stimulus package by folks who think that wealth is created by owning the printing press that prints the currency has actually helped to undermine the economy as a whole.

This morning, Why My Business Has Ceased Investing from Coyote Blog helps to explain why we are not seeing the economy come back. From that blog post:

This is exactly where I am right now. The business I own has been growing at about 10% a year for the last five years. In each of the last 3 years, we have invested an average of a half million dollars in new facilities. In the past five years I have added over a hundred new positions in the company.

This year we will add ZERO.

It is not for lack of opportunity. Because we are on the low-cost end of recreation, we have had a record year. And because I am in the business of privatizing public recreation, my phone has been ringing off the hook. All over the country, desperate public recreation authorities are calling me to say that they are out of money, their parks are about to shut down, and can I do something to keep them open.

To the extent we find opportunities to grow with limited investment, we are pursuing those. But I just cannot put up any more capital in this environment. If I make an investment, how much will the government let me keep? How much are taxes going up (because they certainly are going up)? Inflation simply must be around the corner given the monetary policy this country is pursuing — so will my business be able to raise prices fast enough to keep up with inflation in my inputs?

From Don Surbers Blog, Commenter "Sean" writes the following:

Businesses aren’t hiring because no one knows what in the hell our economic system is going to look like 5 years, or even 5 months, from now.

Will “Cap and Trade” get implemented as the Democrats hope?

How much of an upheaval will “Healthcare Reform” end up being?

Is the administration and Congress done overhauling regulation of the Financial Industry?

No prudent investor is going to bet their money (i.e., invest in growth) when it is conceivable that the government is going to radically alter how 50% of this nation’s economy functions.

Investors want to know what the playing field is going to look like before expanding their businesses, or starting new ones.

Right now, there is no certainty. No one knows if the business you start up is going to be adversely impacted by government dictum in a few months or years.

To say nothing of all the questions surrounding taxation to deal with these massive deficits we have going on right now.

Too much risk, and the prospects for reward are also uncertain. No better way to prevent growth.

The logic behind this thinking is pretty much common to all the successful business men and women that I have ever had the opportunity to cross paths with. Even in the best of economic climates, there is an element of risk. But add everything going on right now and we see no movement to jump out and risk the folly of investing when uncertainty is the only known.

So we see the following:

• The stimulus was a big failure. Not only economically, but politically. Basically nothing for small business. Consider if the stimulus package contained loan backing to small businesses. Not grants or handouts, but loans to be paid back. 787 billion dollars worth means that its possible for over 7 million businesses to get a minimum of 100 thousand in backed loans. Now some businesses may need more, but could you imagine the confidence that we would see as a result of a move like that. That confidence would have helped boost employment. Further politically, the Republicans would have been co-opted and would probably not opposed anything after that.
• Cap and Trade is a loser. I believe if I had a problem that dealt with science (climate change), I would find a scientific solution. Not an economic solution. What if we are wrong. My Weekly Reader in the 60's said that we need to prepare for an Ice Age.
• Health Care. Words fail here, but why wouldn't we just identify the problems and fix those.

The stimulus truly was short-sighted. I have always believed in using experts and have left many choices to my betters, but it's turning out that my betters are a bunch of dumbasses. And unfortunately, our political class may be the most inept that we have ever had. As the Official Scribe to the Great Unwashed, you are not in the best of hands.