Daily Reading: January 7, 2008

ADP report says the job market got much worse in December. Reuters.

A female Austrian banker who sold Russian investors on Bernie Madoff might be in hiding. She is rumored to be afraid for her life. NY Times. John Grisham couldn't make this stuff up.

Environmentalists want to stop or reduce production of oil from the Canadian sands. NY Times. Great idea. The global economic downturn is already setting us up for severe oil supply problems. And now these idiots want to voluntarily make the supply picture even worse. Hey, I have an idea, let's stop driving cars altogether; we could just go back to riding horses!! U.S. alfalfa producers would certainly be on board.

Economists disagree on how to best use the fiscal stimulus plan to end the recession. NY Times. Although, as a card-carrying conservative I would never argue against a tax cut, I doubt very seriously that tax cuts will provide the desired economic benefit. Here's why:

We have experienced a dramatic erosion of consumer spending. And there is a strong arguement to be made that the shift from frivolous consumer to frugal consumer is not going to reverse anytime soon. Further, the purpose of using federal discretionary spending as an economic policy tool is to fill the 'spending void' left by consumers. So, if consumers aren't willing to spend, it does no good to give them money. It will merely go to pay off debt and increasing savings.
Now, to be sure, increasing savings and reducing debt is a good thing for the long-term economic health of our country. But paying off credit cards and saving for little Johnny's college tuition isn't the purpose of the stimulus plan. As previously stated, the purpose of fiscal stimulus is to increase SPENDING. The only way for the Feds to ensure that every penny appropriated to the plan is spent is to spend it themselves.