The policy reaction by our government to the economic downturn is like a wealthy man going broke to impress his fleeting girlfriend. The man (i.e. our government) sees the woman (i.e. economy) is no longer interested and decides to lavish her with gifts. This excites the girl for a few months but she knows he can not keep spending at this rate and the gifts will soon disappear. The wealthy man does end up going broke but not until he puts himself into a massive amount of debt exhausting all his options to keep the woman by his side. Now the man, once wealthy and powerful is weak and the woman has moved on. Her lifestyle is not as lavish as before but she realizes that she is happy just living within her means. In the end, the two would have been better had they faced the music and let the relationship end abruptly when signs pointed to an end.
From all the rumors flying out of Washington, it sounds like our government has decided that it needs to shower the economy with more gifts to keep it steady. This will just cause a repeat of what already happened but with more unintended consequences as many including the author below explained.
Good time to be a stock picker. Bad time to be just about anyone else.
Thursday, August 19, 2010
The policy reaction by our government to the economic downturn is like a wealthy man going broke to impress his fleeting girlfriend.
From my friend Alan Imberman: