Luck

Luck is what you call it when your ideological blinders won't let you see the obvious, because to do so would be too damaging for your ego:

"[Here is a] living example of Heinlein in the WAPO story about the economy and Obama you linked to. The Post admits the economy is terrible and that is bad for Obama. But says that it is just bad luck.

“Behind the economic distress is a series of unexpected events, including the earthquake and tsunami in Japan, the European debt crisis and rising gasoline prices. As a result of the unemployment rate turning back up and the housing market reaching new lows since the slump began in 2006, numerous economists have reduced their expectations for economic growth this year.”

I can’t help but think of the famous Heinlein quote.

“Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded- here and there, now and then- are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.This is known as ‘bad luck.’.”

This entire economic mess was precipitated by having the government "exempt" itself from the inalterable rules of the market. America's success in the world - relative to other nations - is that we've lived our lives and conducted our affairs in closer concert with market realities than other nations.

It didn't take "luck" to predict the housing crash. It was the inevitable result of our arrogant belief that we could purposely disobey the market and get away with it. In this case, we allowed the government to force banks to loan money to people whom the market said were not good risks. And when that didn't work initially, we used the monopoly power of the government (through Fannie and Freddie) to inject trillions of dollars to float a market that was telling us it didn't want to exist in the first place. And that worked for a while to fuel the economy from 1996 to 2007-8, when the market corrected itself. Put it this way: If something is too good to be true, it isn't.

You simply cannot give untold trillions of dollars to people who can't repay it and expect to avoid disastrous consequences. You will eventually run out of other people's money. Either that, or responsible people will start to figure out there's something very wrong with paying $500K for a house that only 2 years ago was $200k, and they will pull back from that risk. LIkewise, you simply cannot print trillions of dollars out of thin air and expect that no one will notice your dollars are worth less today than they were before you printed trillions of new ones.

And avoiding the pain of the market correction with "stimulus" or "QE2" or "QE3" or whatever it's called this month is just more arrogance that we are (or can make ourselves) exempt from the market. We're not. The market is like gravity. You can avoid it for a while, you can even build tall buildings. But gravity, like the market, always wins.