Conan's back!

Thank God. I've missed him so much. Enjoy. "Conan's back...on TBS" (soulful crooning)

You're Getting Another $600B [Keynesian] Stimulus...

Whether you want one or not!  And that's a good thing, because if you haven't noticed the economy stinks right now. Now you might say to yourself, "Hey Ernie, when President Obama was inaugurated the Dow Jones Industrial Average was hovering around 8,000 points and now it's hovering around 11,000 points, that looks like a recovery to me!"   But I say that too many people are not working and Adam Smith's "Invisible Hand" is giving lots of ordinary working people a slap in the face.  "But Ernie, how is President Obama going to get through another stimulus package with a Congress controlled by Republicans, who are all in favor of massive deficit reduction?"

He's not going to get a new stimulus through Congress. But thanks to the saner and thanks-be-to-God "unelected bunch" over at The Federal Reserve, the board decided last Tuesday to purchase $600 Billion dollars worth of U.S. Treasury Bonds over the course of eight months. Because U.S. treasury bonds are essentially a fancy savings account for major banks, by purchasing these treasuries there will be less supply and banks will actually have to INVEST IN SOMETHING, thereby giving businesses some capital to create some jobbies.

And guess what, the markets LOVED IT. Tea Partiers hate it, Republicans pretend to hate it, and Democrats pretend that they don't like it either.  But Keynesian stimulus policy works and if the nincompoops in Congress are too afraid of the voters to do what's best for this country then we need to hope that the unelected institutions have the 'cojones' to do the right thing and get people working again.

Trust me, you don't balance the budget by having a 20% unemployment rate.  Remember, the basic definition of Keynesian economics is counter-cyclical government involvement in the economy.  So that means leaning in favor of job creation over deficit reduction.

I give you the new Speaker of the House - Republican John Boehner. As you can see, he's focused on reducing the debt and NOT extending the Bush tax cuts.

It's the Economy, Stupid

Here's a little Ernie punditry a la James Carville, political consultant extraordinaire. 

Democrats tonight will most certainly lose control of the House of Representatives. You will hear a lot of talk in the next few days about how Democrats were "too liberal", or Democrats were "too centrist".  Obama, "should have spent more time on jobs and less time on healthcare".  Or, "Obama had all of the policy right, but didn't communicate effectively as he could have." And on some days, I'm partial to that last media narrative.

BUT, here's the god dang truth.  Most presidents in history have lost the House after a big wave election that brought them to power.  New Presidents have only kept the House for their party 3 times in our history. THREE!  Combine that with the weakness of the economy, which is the mortgage and subsequent financial crisis's fault and NOT Obama's and the opposition party is going to have a pretty good cycle.

If unemployment hovers around 10% in 2012, Obama will not be re-elected.  If it gets back down to 6-8% he most likely WILL get re-elected.  It's that simple. You don't need to make up any other stories to explain what happens in elections.

It's the economy, stupid.

P.S. But let's please remember that anyone who talks about stimulating job growth is a Keynesian (commonly associated with general liberalism).  A classical economist lets the economy collapse for a "natural correction" which is more brutal, but theoretically leads to a faster recovery.