The markets have resoundingly given a no confidence vote to government spending as a means to economic prosperity.  The Dow is down a staggering 4.25% today, closing at its lowest level since 1997, even as the unrepentent statists in the Obama administration pledged another $30 billion in aid for AIG.  The actions of the federal government have degenerated into absolute insanity.  It must be trumpted from every rooftop:  An economy cannot be rejuvenated by the government confiscating, borrowing, and then spending other people’s money; in fact such actions will only lengthen and deepen the economic slowdown.  Keynes was simply dead wrong.  Decades of exhaustive economic analysis have proven this beyond a shadow of a doubt, yet Obama and his minions continue to believe the fantasy.

If Obama and Congress were truly serious about economic recovery, they would do the following, at a minimum:

Immediately cut all capital gains tax rates by 50%.  This would spark renewed investment of all types.

Pledge to make the Bush-era tax cuts permanent.  This is not a radical step.  Simply maintaining the status quo and elminating uncertainty and speculation about how drastic Obama’s tax plan will be will go miles toward market stabilization.

Rescind in the whole the obscene $787 billion earmark-laden pork bill.

Stop desperately propping up banks.  As painful as it may be, declare the banks insolvent, take them over, and liquidate them.  This is one function of the FDIC; use it.

Stop desperately propping up companies.  Bankruptcy is not the end of the world.   It is infinitely better to let the company declare bankruptcy and get on with the restructuring than it is to draw out the agony with incremental nationalization, which is really what we are seeing.  Does anyone on this planet think that Citigroup will be healthier in the long run with Henry Waxman on the board?

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