From Hope, Change & Future to Doom & Gloom

Pres. Obama's attitude sure has changed in the past few months. He campaigned on the three main themes of "Hope", "Change" and "Future" and now all he talks about is how we are doomed unless we ramp up government spending to record levels.

Apparently trickle down (aka Supply side) economics only work when you increase the money supply by increasing government spending (rather than by cutting taxes).

The same Liberals who decried President Reagan's trickle down economics via tax cuts are now promoting trickle down economics via government spending.

The problem is that the bailout bill is not a true stimulus of the economy and it will cause mass inflation in a few years. At least when you cut taxes and allow individuals and businesses to keep more of what they earn you are naturally stimulating the economy and letting the free market work.

If the politicians really want to help this economy and make sure this doesn't happen again they need to do two things IMO:

1) Regulate the mortgage industry correctly once and for all. Only allow fixed rate mortgages. Get rid of ARMS, Balloons and reverse mortgages. Have strict guidelines for the loans purchased by companies that sell them as securities (like Fannie Mae and Freddie Mac) on the market. Do not allow them to buy crap loans. If crap loans are not allowed to be sold on the market they will cease to exist since the loan originator definitely does not want to be stuck with them.

2) Cut taxes across the board.

If our politicians do these two things and stay the out the way this economy will recover and probably faster than if you were to artificially pump $800 billion or so into the economy.

But Obama knows that if things do not stabilize or improve within 3 years he is done so he is doing whatever he can to stay in power even if it means short term gain and long term loss.

The saddest thing about all this is our poor kids are the ones who are going to pay for Obama (and Bush's) mistakes in all this. They are the ones who will be stuck with all of this debt and a much bigger government. There will be "change" but probably not the type of "change" people had in mind when they elected this President. Or maybe it is.

Here's another good article from the WSJ on all this found here