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Monday, August 16, 2010

A Short Lesson Why The U.S. Economy Is In The Toilet

To understand why the U.S. economy is in so much trouble, in a very short order, you could do no better than to read a column in Business Week (August 9-15) called Speed Dial. It is an interview with Christina Romer as she leaves the Administration.

1)She says, "I was a big proponent of a jobs tax credit, such as is the HIRE act-if you hire an employed worker, you don't have to pay any payroll taxes (on them)for the rest of the year. That increases demand and gives firms an extra incentive to hire workers."

This is so incredibly stupid as to defy comprehension! First of all, small businesses are the job creation engine of the U.S. economy, and NO small business has ever hired a new employee to get a tax break. Even worse, Christina's bill required that the employer fill out paper work to prove the new employee had been out of work for at least six months. Anybody who has ever been anywhere a small business knows that the single thing they hate most is more paper work, simply because there is nobody there to fill out the pointless firms.

Poor Christina doesn't know a damn thing about how the economy works.

2)"That's why we did Cash for Clunkers, which seemed to be very successful."

If possible, this is even more stupid! All she did was to move November sales into October by cutting the price. Every manager knows how to do this simple job. More than once, to make my numbers for the quarter, I held end of the month sales,i.e., One Free With One, $1.45 off a case on orders by, etc. All I did was move future sales forward, knowing full well that I was creating a short fall for the future that I would have to fill later on. Poor dumb Christina didn't know that simple fact. And,indeed, November auto sales were down something like 20%, a completely predictable occurrence.

But it is even worse. Because the Clunkers had to be destroyed, the supply of second hand cars that small lots rely on to stay in business was sharply reduced. As a result, a number of small businesses went out of business and poor people looking for an inexpensive used car were prevented from buying one. Way to go,Cristina.

And this dumb woman was Obama's number two economic adviser!!

If this wasn't enough for you, go back and read earlier posts about the other genius economic adviser to Obama, Larry Summers, who believes that any one who is unemployed is unemployed because they are lazy.

Do you still have any questions about why the economy is in the toilet??

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