Since The One assumed the throne, the DJIA peaked at about 8,400. Since then, the "stimulus" package has been the primary news topic, both during its "debate" and eventual passage and signing. The Dow closed yesterday at about 7,550, a drop of 850 points, or about 10 percent of the index, over the last 3 weeks. Yesterday alone, the market greeted the Denver Surrender with a 300-point freefall. The One's response? We need another stimulus!
"Oh sure," you say, "Use the greedy stock market as a benchmark. They got us into this mess!" Alright, let's talk energy markets. We all want a cheap, clean source of energy that will wean us off of foreign oil. How about solar energy? Here's the problem -- no one wants to buy solar panels, or at least not the solar panels manufactured by companies supported by the stimulus. The New York Times reports today:
Before the signing ceremony, Mr. Obama and Vice President Joseph R. Biden Jr. toured a solar-panel installation and visited with officials of Namaste Solar, a Boulder-based company that the White House has singled out in an effort to spotlight the legislation’s clean energy provisions. The company, owned by its staff, has grown quickly, expanding to 60 from three employees over the past three years. The White House says that without the stimulus bill, Namaste expected to lay off as many as half its workers in 2009. The bill will enable the company to hire 20 additional workers, the administration said.
So, without government help, Namaste Solar expanded quickly (too quickly?) -- 2000 percent over the last 3 years -- but was not making it in the marketplace, with perhaps 30 people expected to be laid off in 2009. Now, according to the White House, the stimulus bill will permit Namaste to hire 20 MORE workers. Where is this demand coming from? Not from the private sector, which has already spoken on Namaste. The demand will come from government, but what happens next year? Unless Namaste is permitted to downsize, the government will have to prop it up again next year, and the year after that, and the year after that, and so on. This is how temporary spending stimuli become permanent and protect businesses that would ordinarily fail.
This complete distortion of the market shows what happens when one decisionmaker -- even the most brilliant person in recorded history -- replaces the collective judgment of millions.
By the way, if you think that our current situation really parallels the New Deal and that FDObama will get us out of our predicament, you need to read Amity Schlaes.