Talking Economics - Recession / Stimulus

by K. Russell Carlsson, Rogue Economist

What... you thought I could stay silent about this? Well, so did I, until the seventy-third person stood between me and my beer at the pub this past Thursday demanding answers. Fuckers. You know, even a tall Goose Island Honker Ale draught tastes like the congealing backwash of a congested troll if it gets warm and flat.

Anyway, let's get you your answers before another one of my beers spoils. I'd hate to have to punch someone in the dick who is earnestly seeking my professional insight.

The word "recession" is being tossed around like singles at titty bars these days. The vapid talking haircuts who read the big scary word off their TelePrompTers, however, never arse you with the petty details like what the hell a recession is and what it means. That, my friends, is why you have me.

Technically, (brace yourself for definitions!) a recession is defined as two consecutive quarters of negative macroeconomic growth - often as measured by the Gross Domestic Product (GDP). The GDP is a large, ferocious-looking formula packed with more figures and statistics than an autistic baseball fan at spring training which does a fairly decent job of defining overall economic growth from one time period to another. The GDP is usually calculated and reported quarterly and the percentage figure quoted by Newslie van der Mousse, such as "0.6% for the fourth quarter of 2007", indicates total economic growth with respect to the quarter immediately preceding.

Since the most recently reported quarter showed a gain (see above) , we are not currently in a textbook recession. However, since a textbook recession lags reality by six or seven months, by the time you're in one, it's pretty much too late to do anything about it. That is why Capitol Hill and the White House are screaming into every microphone they can find regarding an "economic stimulus package", which on the surface intends to head off, shorten, or reduce the severity an oncoming recession.

Should Washington be talking about a potential recession when the numbers just aren't there yet? With such a paltry gain in 4Q07 and reported overall job losses in January of 2008, one would think it wise. However, the facts are that the bulk of this slowdown can trace itself to the subprime mortgage meltdown, where smooth-talking rainbow-and-unicorn-poop selling mortgage brokers talked irresponsible and/or naive working people into buying houses they couldn't damned well afford. Home construction and related markets, real estate and lending institutions are the sectors of the economy really letting Big Bubba take the lead at the Prison Dance sock hop - all other sectors are still pretty solid.

Washington's answer to a pending recession is to give every working person in America a small sum of money and cut taxes on businesses yet again. Washington, however, is full of economically retarded vote whores. Giving away $150 billion we don't flipping have will only delay a true and solid recovery by burdening the future with higher interest payments on our ludicrously huge deficit. The best thing to do to help the economy right now: squat.

Yes, I went there. The government should do Johnny F. Bollocks to fix the mess toward which we're careening. Just like healthy forests need the occasional fire to burn off the scrub brush and dead wood, just like healthy populations need the occasional plague to rid itself of the weakest genetic bloodlines, healthy free-enterprise economies need the occasional recession to remind them of the price of excessive greed and/or stupidity. Adam Smith - the father of modern capitalism - referred to this reaping mechanism as "the invisible hand" of free-market economics in his magum opus The Wealth of Nations. Only by weasels and dipshits taking it in the shortpants will they learn not to repeat their weaseliness and dipshittery. If Government bails out the parties responsible for this economic downturn, the lesson learned is "If I crap all over myself finacially, Big Daddy Gubmint will swoop in and wipe my ass." Further, since the innocent will get paid as evenly as the guilty in this proposed "stimulus package", Jimmy Bag-O-Chips has no incentive to bitchslap the creeps and idiots into sensibility - if I get paid when weasels fuck over morons, why should I make the weasels play nice or keep the morons from taking it the wrong way up Hershey Highway?

However, doing nothing and saying why (namely telling the voters that they're scum and/or dumbfucks) won't win too many elections, where giving away free money and encouraging people to spend it will. 2008 is a major election year, so we have a "stimulus package". Reasons why the $150 billion vote-buyoff won't work on the macroeconomic level is another column for another time - right now, I've got a second chance with a cutie named Honker Ale Draught and I don't want to leave her idling any longer.