Market Curiosity: Exploring Markets And Systems

January 11, 2009

“The American recovery and reinvestment plan” isn’t

Filed under: Editorials — Jeff Fitzmyers @ 11:44 pm

I mostly read Mr. Obama’s American Recovery and Reinvestment Plan. It’s self billed as a “report” and a “study”. Really? There is no overview of the process, few specifics, few examples, just “rules of thumb”. And they say these are “unusual” events. Do rules of thumb work in unusual events? They mainly write about results but 90% of a decent proposal would likely be spent on deciding which variables of the system are important, implementation, monitoring feedback, etc. How about the effects of inflating the money supply even more while increasing debt. Is there demand for all that new debt?? What happens if things don’t work as planned?

“… the current recession is unusual both in its fundamental causes and its severity.” So what exactly are the fundamental causes?? Is it really unusual to have a system implode when it becomes over extended (over leveraged, too much debt)? No. Good luck fixing something when you can’t articulate what the something is! Or, good luck engendering confidence when you won’t articulate the something.

Do I read it right, they propose raising GDP by 570 billion by spending 800 billion??? So far governments efforts have seemingly been around 10% efficient. That is a rather inefficient system. Why would this plan be any different?

The movie The Day After Tomorrow (2004) had an interesting tidbit. One scientist character said they did not yet have the ocean currents included as part of the weather models. I am pretty sure that was a true statement as of 2004. Imagine that, not including a MASSIVE heat sink in models that deal mainly with temperatures. Ocean currents have cycles that range up to 10,000 years. And people wonder why weather forecasts are so inaccurate on most scales. Please refrain in portraying uncertain results as facts.

“… The ability to “manage” a complex system is low. One might as well try to “manage” the weather. So a degree of humility might be appropriate.” Unintended consequences are high. “Biologists have consistently failed to manage systems like national parks and wetlands where the network structure is, if anything, simpler than that of markets.”

People like to act like this is all “unusual” and quite a mystery. But it is just a repeat of history:
Mr. Hitler said: “The Government calmly goes on printing these scraps of paper because, if it stopped, that would be the end of the Government. Because once the printing presses stopped (and that is the prerequisite for the stabilization of the currency) the swindle would at once be brought to light … because the state itself has become the biggest swindler and crook. A robber state! … If the horrified people notice that they can starve on billions, they must arrive at this conclusion: we will no longer submit to a State, which was built on the swindling idea of a majority, we want a dictatorship! …”

Mr Stephanopoulos interviewing Mr Obama: “I asked [Mr. Obama] … where everybody in the country is going to have to sacrifice something, accept change for the greater good?”
“Yes,” Obama said…
“And eventually sacrifice from everyone?” [Mr. Stephanopoulos] asked.
“Everybodys going to have to give. Everybodys going to have to have some skin in the game,” Obama said.

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