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Fearing Fearing Fear: The Case For Common Sense and Focused Stimulus

Wednesday, December 24, 2008  |  posted by Hugh Hewitt

Consumers cut back spending in November and increased their savings in anticipation of the recession’s bite. At a Christmas gathering last night a senior car exec from one of the “transplants” told me that people have gone from buying cars they want to buying only cars they need, and that there are a lot of miles left of the 16 million autos sold each year of the past few years. This is an evidence of the lingering impact of the panic of October and the fear about the economy spread daily by the MSM that, as ever, oversells every story including recession.

Congress can help change the car consumer crouch via the stimulus package, of course, by offering car buyers a price concession via the tax code, one that only lasts three months or six at most. If the president-elect announced it and guaranteed it, the cars would fly off the lots as they are extremely attractively priced. The same goes for home sales –if Congress makes purchase of a home a really good deal for the next six months, the recovery will be quick.

Lawrence Summers and the rest of the economic team know this. They know that “spreading the stimulus” around will defeat its purpose. Can the president-elect hold off his coalition of interest groups each demanding a slice of the stimulus pie and do the right thing by targeting a massive amount of stimulus on key sectors?

Brian Wesbury, chief economist of First Trust Portfolios, was on the program yesterday, and he thinks ’09′s recovery can begin almost immediately as the slowdown is largely based on fear that can dissipate quickly. My friend Richard McKenzie, an economist whose book, Why Popcorn Costs So Much At The Movies, is one of the best business books of 2008, also believes that the economy can turn on a dime and expand strongly in the new year.

Everyone of any sense agrees this is a recession, not a Great Depression. (Unemployment in the nation was above 25% in 1933, in Toldeo it was 80% –that’s a depression.) Most agree that there’s lots of cash on the sidelines, and extraordinary deals on the big ticket items –cars and mortgages– to be had right now. Stocks are a bargain as well.

Some in the media are hysterical, as per usual. Some on the left want to engage in a last frenzy of Bush bashing. Some in the Democratic Party see an opportunity to talk down the economy so as to talk up Obama’s success when the cycle turns.

But what we need is a lot of common sense from the incoming powers-that-be, and a repetition of the basic fact that the business cycle has been around for a long, long time, and the recessions it contains are unpleasant but not catastrophic for the country even as they fall heavily on individuals. Key points need to be made again and again, for instance: Madoff is a crook who has hurt a lot of people very badly, but his crime is not emblematic of investment professionals, and its impact is not significant on the overall market.

Which is why I hope the president-elect sticks with the Lincoln shtick and refuses the FDR imitation. We don’t need grave discussions of 1933 and fearing fear. We need common sense in the stimulus package, not theatrics to stimulate glowing packages on the MSM.

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Was the President-elect Under Oath?

Tuesday, December 23, 2008  |  posted by Hugh Hewitt

Incredibly, the press seems not to have asked the obvious question about the U.S. Attorney’s interview with President-elect Obama on December 18.

Further, the interview occurred on the 18th, and it wasn’t disclosed until today? What happened to transparency?

Question for prosecutors: Since the Fitzgerald team already knows what Emanuel said to Blago et al, why was he interviewed after the president-elect and Valerie Jarrett? Simple scheduling, or could there be a reason for the order of the interviews?

Demographics: Churches and Schools Division

Tuesday, December 23, 2008  |  posted by Hugh Hewitt

Mark Steyn calls himself a demographics bore, but anyone who has read American Alone knows that demographics are indeed destiny.

And not just for countries and subcontinents, but also for congregations and school districts.

Today the Wall Street Journal ran a long story on the number of churches running into terrible financial difficulties and even foreclosure on their church buildings because of shrinking congregations and budgets.

This week as well the California Teachers Association announced a push for a new initiative to raise the sales tax by 1% to make up for budget shortfalls –this despite a declining school age population. I might actually vote for increased school funding via a dedicated sales tax, but first I have to be persuaded of the need, and simply shouting fire isn’t enough anymore.

Today’s program features Mike Regele, CEO of and, two firms that deal with demographic forecasting for churches and school districts respectively. I have known Mike for 20 years, and believe with him in the power of demographics analysis completely. As a result, i am sympathetic to churches and school districts that have fallen on hard times, but I also have to wonder if the folks running them have taken the time to ask some basic questions, such as whether there are enough bodies in a community to fill the pews and whether there are too many schools for a particular community?

Only a couple of decades ago, a lot of informed guess work went into the decision of where to plant a church or build a school. These days with the programming and data at the fingertips of many extraordinary specialists, it is very hard to justify new taxes (or fund drives) without first seeing in black-and-white a demand analysis. One good effect of the recession may be to force public entities and not-for-profits into the 21rst century when it comes to planning.

If you have a question for Mike Regele, you can e-mail him at or

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