Dick Morris’s analysis of the future of Obama’s is somewhat sobering. Although I would like to think that Presidents Obama’s economic plan for this country would pull out of the upcoming recession I would have to agree with Mr. Morris’s assessment that the current planned investment not only are illogical but also repeating the mistakes of the past.
One of the first points that Mr. Morris brings up is increased government regulation. Many economic analysts have argued that it was because of relaxed oversight of lending and financial institutions that many defunct loans were approved bring about all of these toxics assists that the government backed banks, such as Citi Group and BofA, are what’s weighting down our economy currently. This maybe the case, however in economics price floors and ceilings are not the most efficient way to allocate resources. Morris states that if Obama tightens the reigns on lenders making us similar to Japan’s Fed, which has the propensity to make investment decisions on a bizarre hybrid between capitalism, bureaucracy, and socialism that to me sounds horrible.
Getting away from vague opinionated terminology, from the most basic model of GDP (Y=C(k,l)+I(r)+G) we know ceteris paribus that GDP here is in equilibrium, however Obama wants to increase G which in turn will increase C(especially in the present case with work programs and new energy technologies) however to maintain equilibrium investment will go down, and increase interest rates making it increasingly more difficult of private firms to generate new business ventures without the assistance of the Federal government, which brings us back to the idea of a socialist reign for the Obama administration.
Many liberal economists and pundits disdain Dick Morris and dismiss him as a ignorant neo-con. Although I’m not a huge fan of some of his wording, you cant argue with results: Obama announced today that company receiving TARP funds top executives would have a salary cap of five hundred thousand dollars, which he predicted when he wrote this a month ago. Now I think that idea is prudent right now since execs compensation has been controversial topic since the begging of the banks collapse, however this can be the first misstep on a slippery slop toward socialism.
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