Thursday, November 13, 2008

Why the "Stimulus" Packages Are Suffocating the Economy

Terence Corcoran at Canada's Financial Post nails it:

Henry Paulson’s about-face yesterday on Washington’s US$700-billion financial market bailout should be the last straw. It is now past time for governments, from the G20 through to Washington and Ottawa, to call a moratorium on bailout plans and stimulus efforts, liquidity injections and capital supports, rescue packages and mortgage guarantees, deposit insurance expansions and credit subsidies.

To put the matter bluntly: These measures — from Mr. Paulson’s surprise policy turnaround to China’s fake stimulus program to the looming spectre of the G20 meeting this weekend — are all undermining global financial market recovery.

Complicating matters, the world today faces the prospect of an Obama administration hell-bent on more initiatives, including auto-industry bailouts and even bigger blasts of “stimulus” to rescue an economy that’s drowning in too much stimulus.There’s a simple reason this endless succession of interventions, the most radical and massive in global financial history, is not working and is instead making a bad situation worse. They are designed to subvert market realities and by doing so, they make it impossible for the rest of us to make rational market decisions — about our money, our jobs, our investments, our spending...

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