June 24, 2009

Geithner - show us your proof

Today the OECD, the Paris based Organization for Economic Co-operation and Development revised it's economic outlook for the 30 OECD countries for the rest of 2009 and 2010.
The OECD has upgraded this year's forecast for the U.S. to a 2.8% contraction in GDP from a 4% drop previously. However, it has cut its projections for the euro zone and now expects a 4.8% contraction in GDP compared with a 4.1% fall previously.
This is in direct contrast to it's previous forecast and also the recent World Bank pronouncement.
The World Bank cut its 2009 forecast, predicting that global growth will shrink by 2.9% versus its earlier forecast for a 1.7% contraction.
This is in contrast to the previous World Bank pronouncement and somewhat at odds with the International Monetary Fund (IMF)

The International Monetary Fund is going to raise its growth projections "modestly upward, mainly with regard to 2010," John Lipsky, first deputy managing director, said Friday.

The rate of decline in world economies has slowed, confidence is returning and forecasts of future production and demand are up, he said in an address prepared for delivery to a business group in Turkey.

But the recovery from the "Great Recession" is still fragile, as unemployment is rising and lenders are cautious about making loans.

"Even the upbeat indicators widely cited as representing 'green shoots' still point to a global recovery that would be sluggish by historic standards," Lipsky said.

These are supposed to be experts. Certainly there's enough discrepancy to say that the experts are unsure of what the future holds. They don't agree, not only with each other but with their own previous assessments. The discrepancies are to be expected - if predicting the future was a simple matter then there would be certainty and things would progress without dispute. But if the prognosticating experts can't get 100% accuracy on an NFL football game, with thousands of variables that can affect the outcome, you can't expect other experts who have billions of variables to consider, some that have probably never been identified as having some impact, to get the economic future of the entire planet, or a region or even a country right.

They can present their best estimates based on what models indicate, but if the experts don't agree, then clearly nothing is certain. The White House, Congressional Democrats, Senate Democrats and Treasury Secretary Timothy Geithner would have you believe otherwise. They are dead certain their stimulus package will work. They are dead certain their health care reform will save the economy. Just as others are dead certain they are wrong. And there's the real problem with how the Democrats have handled this crisis.

No real debate of ideas, and plowing ahead at breakneck speed they've tried to lock the country into a path that doesn't necessarily provide a rosy outcome. Don't buy it. If the experts don't agree then you should be absolutely skeptical of what Democrats are saying about the recovery.

It reminds me of the double take Sweet Lou does in the movie Grind at about 28 seconds into this clip.

Sweet Lou: Sweet Lou's got everything he needs right here.
Eric: What? Okay. Dude, we're going cross-country. You know what that means.
Sweet Lou: Yeah!...No. What does that mean?

You can only pretend for so long to understand if you really don't. The US economy is not a teen movie - it's far too important to just take your best guess. That's especially true when you are dealing with the financial well being of the future of your country and the biggest economic engine on the planet. You don't plow ahead without a LOT of forethought and planning. Either reacting in a panic or using the crisis, is a dangerous and bad gamble.

Which leads to my last point about this whole experiment in socialism. When you are plotting your course forward, it's always best to rely on the learnings of the past. The Great Depression gave a great example of what not to do. But it's being done now in an exponential way, exactly as the Great Depression showed us not to try again. The larger point here is that learning from the past - standing on the shoulders of giants, building upon the foundation already built - is the smartest way to proceed. Trying to re-invent the wheel after thousands of years of successful use of the original design is sheer idiocy. Sure the wheel has been upgraded from stone to iron to having tires. But it's still round. This is why conservatism works - it's the slow and steady methodical improvement versus trying to make the square wheel work.

Conservatism, real conservatism not Republican conservatism of late, isn't flashy. It's not attention-grabbing. But it works. It's the tortoise versus the hare story. Improve by tweaking not ramming radical change down the throats of an unsuspecting public - a radical change that is more likely to be wrong than right, especially.

And realize it or not, a radical change is exactly what this is, and on the surface, it appears much more likely to fail than to succeed.


  1. I think you could make the same argument for global warming. Well said.

  2. Thanks for the comment Linda. I and others have in fact made similar arguments for global warming.

    Check out this documentary:



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