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Deluded Pig Think

Robbing the unborn to pay stimulus checks to the dead...

"And the unclean spirits went out, and entered into the swine: and the herd ran violently down a steep place into the sea, (they were about two thousand;) and were choked in the sea."
 - Mark 5:13

The GADERENE SWINE RULE, as theologian Douglas Wilson explains it, states that just because a group is in formation, doesn't mean they know where they are going, writes Joel Bowman in Eric Fry's Rude Awakening.

Humanity, as we know, is hardly immune to swine-borne afflictions. This very day, possessed by the demonic spirit of fiscal and monetary insanity, man races towards his own cliff. Predictably, and perhaps fatally, he neither looks to see where he is going nor questions whether he is in intelligent company.

The economy is still sinking, he realizes, but stocks are still rising. Eventually the twain shall meet, though perhaps only in passing. Even so, everybody believes the worst is over and that stocks ought to continue on their lunar trajectory. The stimulus is working, they say. The problem is not that anyone believes this...just that everyone believes it. It is deluded groupthink on a mass scale.

When Britain nicked $30 billion from their future generations to pay for their present day financial malaise, for example, Prime Minister Gordon Brown was on hand to offer his defense of the theft.

"We now have a unique opportunity to do, in a 21st-century way, what was done in the 20th century by the New Deal," Brown said. "As they built roads and bridges to create the infrastructure for the years ahead, we can use this period of adjustment to build both the technological base and human capital to equip us for the opportunities ahead."

Politicians like Brown, in other words, are stealing from the future in order to pay for the road to get there. The problem is, it's not Brown's money to spend. It must be borrowed, and then taxed to redeem the creditors. Rarely during these "periods of adjustment" does the concept of paying for one's own road even enter the public discourse. And why would it? The victims of this crime are not even alive yet to defend their property. It's like taking candy from an unborn baby.

Sadly, Britain is but one pig in the mad rush off the cliff and into the sea. In Australia, the list of qualifications for receiving a government handout doesn't even include the rather lenient clause, "must have heartbeat". In a vintage display of bureaucratic bumbling, the Australian government recently mailed checks totaling $14 million to no fewer than 16,000 deceased estates. Recipients need only to have remained alive long enough to fill out a tax return for the 2008 financial year.

Not wishing to leave anyone out, dead or alive, Kevin Rudd's government also sent checks to serving members of the nation's prison population and some 25,000 expatriates – all part of Prime Minister Rudd's own $10 billion brand of economic Viagra.

Perhaps you are inclined to ask how one might go about defending a system that allows for thieving from the unborn to gift the already dead. Surely no moral argument could be erected to support this crime, you say, and surely no moral man would attempt to excuse it. Correct on both counts. Politicians however, morally absent as ever, are of course exempt from such inconvenient constraints.

Rather than offer an apology for the government's incompetent blundering, Labor Member of Parliament Janelle Saffin instead observed that mortality was unavoidable...and so are payments to the dead.

"Yes, it's unfortunate and sad that sometimes people die," Saffin remarked. "So that money goes to their estates."

Whined Rudd's Small Business Minister, Craig Emerson, "Do you sit and wait and try and get that up to 100% and have no stimulus?"

Rude readers know the correct answer rather betrays the author of the question.

"But how could civil society function without our intervention?" the government neckties persist, looking blankly at one and other. "Surely we are here to do something, right? What would happen if we just sat back and watched, if we did – gulp – nothing?"

US vice-president Joe Biden infamously warned that doing nothing would lead to surefire catastrophe. Unemployment would rise above 8%, said he, unless the government promptly dispensed hundreds of billions of as-yet-unearned Dollars to corporate America's Walking Dead. And so, in an environment fraught with fear, the stimulus bill was passed. A few months later, unemployment went over 9% anyway. It will probably pass 10% by year's end.

Where then does the government's intervention fit in all of this? Did stealing a few hundred billion dollars from America's future generations help to avert catastrophe today, or merely help ensure it tomorrow?

To the question, where should government intervention fit into the economy, we offer the same answer Pierre-Simon Laplace gave to Napoleon when asked why he hadn't included God in his monumental work of astronomy:

"Je n'avais pas besoin de cette hypothèse-là."

I had no need of that hypothesis. In other words, it works just fine without it.

Eric J.Fry has been a specialist in international equities since the early 1980s. A professional portfolio manager for more than 10 years, he wrote the first comprehensive guide to American Depositary Receipts, International Investing with ADRs. Today he reports on Wall Street from California for the renowned Daily Reckoning email service.

See full archive of Eric Fry articles

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