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They Want You Scared

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Tom Blumer does a better job making a couple of my recent points:

Before its release, experts predicted that the economy’s gross domestic product (GDP) had contracted by an annualized 5%-6% during that period. The actual annualized -3.8% from the Bureau of Economic Analysis (BEA) was not nearly that bad.

Why not? Though the result could change in BEA’s February and March revisions, it appears that businesses built up inventories during the quarter in anticipation of revived demand early this year. If it weren’t for that, the annualized contraction would have been 5.1%.

The media spin that the inventory build-up masks larger overall weakness misses this important point: Businesses don’t build up inventories for the heck of it. They do it because they either have customer orders in hand or because their forecasting models tell them they can reasonably expect future orders.

It wouldn’t be surprising if this were indeed the case, because there are underlying indications of a nascent recovery. Gas prices have stayed well over 50% lower than they were last summer, keeping an estimated $1 billion a day in consumers’ pockets. Record-low mortgage rates have fueled a wave of refinancing around the country, with lower monthly mortgage payments freeing up additional billions of spendable dollars a month.

The porkulus bill might be survivable, economically. Setting a trillion dollars on fire building useless bridges and funding “community organizers” leaves us more residual value compared to setting a trillion dollars on fire invading East Africa. If energy prices stay low, the US economy could support a war. If there was one we needed to fight.

But the Chorus of Doom has been making war speeches for months:

The leaders of what I have been referring to as “the POR economy” — Nancy Pelosi, Barack Obama, and Harry Reid — began doing this in earnest, both in actions and words, in June of last year. Since the November elections, their downbeat decibel level has done nothing but increase.

Commenting on the GDP report, Barack Obama could at least have cited the fact that it beat expectations as a hopeful sign. Instead, he took the opportunity to ramp up the hyperbole of horror and engaged in an all-too-easy deception (bolds are mine):

“Today we learned that our economy shrank in the last three months of 2008 by 3.8 percent. That’s the worst contraction in close to three decades,” said the president at a White House gathering.

“This isn’t just an economic concept. This is a continuing disaster for America’s working families,” he warned. “The recession is deepening, and the urgency of our economic crisis is growing.”

The statistics, if cogently analyzed, aren’t showing anything more than a routine recession:

This is really infuriating. Thanks to the president and many media reports, most Americans really believe that the fourth quarter’s economy was 3.8% smaller than the third’s. It wasn’t. It was 0.94% smaller — a pace, which if continued for a year, would lead to a 3.8% contraction. The result was bad enough. Why present it as if it were four times worse?

Because Tokyo Rose Obama, Axis Sally Pelosi, and the rest of the choir have bigger plans for us. We could probably support war-level spending. But they are rushing this phony emergency bill through Congress not so much for the pork spending, but to capture greater control over our lives. Is there a better explanation for this:

A January 28 Wall Street Journal editorial estimated that only about 12% of the plan’s $800-billion-plus price tag “can plausibly be considered a growth stimulus.” That editorial also cited a litany of items whose only purpose is to address “just about every pent-up Democratic proposal of the last 40 years.” Many of them would get in the way of an economic recovery, as they would enable or encourage people to stay out of the workforce longer than they otherwise would have. Finally, most of whatever stimulus there is won’t get into the economy until 2010 or later. Thomas Sowell compares it to “mailing a letter to the fire department to tell them that your house is on fire.” Across-the-board tax cuts, which would have an immediately stimulating effect, are nowhere to be found.

Fomenting fear as a means to increase social control is a proven and effective tactic. Heck, even the former “village idiot” President got PATRIOT passed. When this phony war against a phony depression ends, the government will still have further extended its tentacles.