SEARCH BLOG: ECONOMY
Earlier in the month, I asked "Are We There Yet?"
Let's just say we are getting closer:
NEW YORK (CNNMoney.com) -- The U.S. dollar fell to a 13-year low against the yen and weakened against the euro Wednesday, a day after the Federal Reserve cut its key short-term interest rates to historic lows.
The Japanese currency reached a 13-year high against the dollar Wednesday, falling to ¥87.78 from ¥88.95 late Tuesday. The last time the yen was this strong was July 1995. Since mid-September, the yen has gained nearly 15% against the dollar.
For those with short memories, Japan experienced an economic "revolution" like this a decade ago. Their central bank went to 0% funds rates for years... and the economy did nothing in response. Here's the point: you don't manipulate your way out of a situation caused by long-term financial manipulations and disintegration of manufacturing. You get to bite the bullet.
Until federal, state, and local governments become unabashedly pro-business and anti-taxes the downward spiral from prosperity is just going to happen. Until our great politicians and economists realize that more programs and service jobs at McDonalds are not the recipe for prosperity, we are going down the road to being Great Britain, Jr.
This is not to argue for unethical business practices. Fraud is fraud. The Madoff's of the world need to be castrated and sent to prison (oh, I know that is too harsh).
But government can't hamstring business with onerous taxes, mandates, and incomprehensible regulations and red-tape... and then ask why a tax break here or there didn't work. Government can't try to micro-manage the economy the way the Federal Reserve does and wonder why the distortions appear in the economy...
Thursday, June 08, 2006
Okay, others are thinking it. I'm saying it. Michigan is in a recession. Housing markets elsewhere are tanking. Just talked with my wife's brother-in-law in Virginia. The spigot just got turned off there.
Ben Bernanke et al at the Federal Reserve has just cost the U.S. taxpayers billions of dollars and he feels good about it. [The Federal Reserve had just increased the funds rate to 5.25%]
That's what happens when the government tries to run the economy.