Christina Romer's department is at it again …

You have to give these interventionists one thing: they have no problem pulling fantastic-sounding numbers out of their hats no matter how dire the situation.

According to a report on Bloomberg:


“The economic stimulus legislation pushed by U.S. President Barack Obama last year will help encourage $280 billion of investment by private industry and local governments, according to an administration report being released today.”


Wow! What would the economy do without a legislation-pushing president who can evidently legislate prosperity into being! A performer of luxury miracles in our midst! All that remains for us to ask in view of these stunning results is: is the prosperity here already, or is it just around the corner? Oh wait, it says 'will help encourage…' – just around the corner then! Oh well, that is almost as good as if it had arrived already. Something to look forward to.

Now, we're not quite sure how these numbers came into being, but we are sure a dedicated staff of state-employed Keynesian economists has diligently worked on producing them. Maybe they used the 'accelerator model'? Yes, the one that was for a long time presented in that mind-poisoning tome by Samuelson, preposterously called 'Economics' (we hear it was taken out in post 1992 or so editions, a fate it shares with quite a few concepts and assertions that have quietly left the book over time. Such as the declarations about how well socialism seemed to work…alas, we digress).

The report continues:


“The analysis, by the White House Council of Economic Advisers, estimates that about $100 billion in government grants, loan guarantees, interest subsidies and tax breaks will be matched almost three-to-one by other spending on clean energy projects, economic development and building construction.”


OK, we admit we are cynical when it comes to the 'projects' touted by the big fiscal spenders, but their assumption that private industry will respond as intended at the ratios envisaged strikes us as a case of wishful thinking. 'Clean energy projects'? Unless they are profitable, in which case they will be done anyway, why do they need a subsidy? Anything that needs a subsidy to exist is  a waste of scarce resources by definition. What on earth is 'economic development'? As to 'building construction' – that is urgently needed right now why, exactly? Is it the many million empty residential houses that are in need of company? The empty commercial buildings? Has anyone discovered the urgent need for a bridge to nowhere? What?

Evidently such detail exceeded the scope of the Bloomberg report, and it exceeds ours as well. However, we have a strong suspicion that the government is admitting to furthering the malinvestment of scarce resources on a fairly large scale. We wonder who can actually afford that.

The report goes on:


“The Recovery Act appears to be stimulating private investment and job creation at a time when the economy needs it most,” Christina Romer, chairwoman of the Council of Economic Advisers, said in testimony prepared for a hearing of Congress’s Joint Economic Committee.”


Wait a minute … appears to be?


“Romer cited the Build America Bond program, which has subsidized interest costs for about $118 billion of local government securities sold to finance public-works projects, and tax credits for companies that invest in plants to build solar panels and wind turbines.”


There you have it. In short, they spent a huge wad of money on stuff no-one in his right mind with a view toward making a profitable investment would have voluntarily spent it on. QED – malinvestment of scarce resources on a staggering scale. Now comes a true knee-slapper – of course they have thrown that one out before, so it's not exactly news, but if they can repeat it, so can we:


“The report says the stimulus has “saved or created” about 3 million jobs, and is moving toward a goal of 3.5 million jobs by the end of the year, according to an administration official speaking on condition of anonymity before the report’s release today.”


It's no big surprise the official  wanted to stay nameless. We know of several million people  officially admitted to and several million more that have fallen under the 'statistical table' (those no longer looking for work are no longer counted as unemployed, which sort of begs the question, 'what are they then?') who might feel impelled to ask: what the **** are they talking about?

Be honest…can you actually name even one of those three million saved souls? No? Neither can we. The article then lets us in on why exactly such grandiose numbers have been produced by a department whose employees can not really be expected to produce anything but glowing reports about the administration that employs them:


“The Obama administration has been stepping up its efforts to defend the $862 billion stimulus measure passed by Congress soon after Obama took office, as the U.S. economy struggles to recover from the worst recession since the 1930s.”


So that is why this fantastic-sounding report has been concocted. After spending a huge gob of OPM (other people's money), you better have something to show for it, lest someone might find fault. The article then closes with a  rather dry remark on the situation colloquially known as  'reality' – you know, the environment we all share, like it or not…


“The economy lost 125,000 workers in June while adding 83,000 private-sector jobs, which was fewer than forecast. The unemployment rate fell to 9.5 percent, and has exceeded 9 percent since May 2009.”


Considering that the only reason that the 'unemployment rate fell' is that over 650,000 people were classified out of existence in terms of their 'labor pool participation' on account of (allegedly) simply having given up looking for work,  this doesn't exactly strike us as a big success. Admittedly, given that prosperity is just around the corner, that might be thought of as unnecessarily nit-picky of us.

This seems a good moment to share a bon-mot courtesy of the ever-witty Bob Hoye:


“At the recent G20 confab Obama pleaded for yet more "stimulus", but as the world is discovering interventionists will continue to spend other peoples' money until it is all gone.”


Amen. All indications are, we're well on the way!



Christina Romer: 'I promise you, we shall be drowning in solar panels….'

(Photo credit : Alex Wong / Getty Images)



Christina during the treasury briefing with the rest of her esteemed interventionist colleagues. And yes, the guy at the back, that's Larry Summers  sporting that 'I'll nod off just now' look!

(Photo credit : Life)




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