The fiscal stimulus program is designed to stimulate where economic activity has deteriorated and there are job losses. Many of these areas are those that had over-expanded. As we have been saying for some time on the blog, the effect of this kind of stimulation is to slow down the re-allocation of resources. It will not succeed, however, in preventing it. What it will do is prolong the recession.Recall, dear reader, that this stimulus was entirely the work of Washington Democrats: a newly inaugurated president, a filibuster-proof majority in the Senate, and Speaker Pelosi's caucus in charge of the House. And here we are, with the first primaries out of the way, and the Democrats who hope to succeed Barack Obama sounding like Herbert Hoover has been in the White House since 2001.
Jeff Jarvis of Seeking Alpha (recommended by Econ Log) described the macroeconomy as in a Great Restructuring, one for which a good deal of creative destruction would be present.
The change in our society and how it is structured are both causing and necessitating change in the economy and its industries. The crisis is bigger than it appears in the rear-view mirror. It’s more than jobs lost and companies folding. It’s a new economy built on a new society that we are only just beginning to recognize if not understand.Some of what he anticipates has come to pass, some has not, and the form of some of the changes might have come as a surprise.