DOW Breaks 14000! No, wait! I mean 15000!

It has been a while since the last "DOW Breaks" write-up - over a year, so here are the rules. For the purposes of this blog, it simply means ratcheting past a milepost - since the last write-up occurred at 13000, the stock market would have to sink to 12000 or rise to 14000 before it merited another note. It has to end the day at the milestone or above. And it is a good chance to take a look at the economy in general..

The DOW actually crossed 14000 back in February, but I didn't mention it then because, you know, Hawaii. And despite the common thoughts about how the current administration hates Big Business, and liberals in Washington are so gung ho to dismantle Wall Street, the market continues to surge upwards. Indeed, it seems that this is the best part of the economy right now. If there are truly socialists in charge, they are doing a horrible, horrible job at it.

And the rest of the economy is decidedly "Meh". Not for the bigs - they seem to be doing pretty good. But for most of us shmoes, the job providers don't seem to be providing much, despite their supposed good fortune. Employment continues its slow, incremental recovery. Seattle, with its regressive taxes and progressive stance, seems to be doing pretty well, but for a large swath in the country, most notably in the redder sections, life is still kinda sketchy.

And I have to look at why, and I think I have a reason that hasn't shown up what passes for wisdom among the pundit class. It is because government and its attendant deficits are not growing. In fact, they are shrinking. Government is smaller now than when we started this current recession, and the deficits are currently reducing (the overall debt is another matter - there is a difference).

This is important because government spending has in the past led the way out of recessions. Yeah, yeah, you supposedly can't spend your way out of a recession, but that's exactly what we've done previously. Government steps in and starts placing some orders, be it roads, tanks, or new weapons systems, and the private sector takes the hint and things get moving again.

This time, not so much. While I don't think the current administration are austerity hawks (and while I am amused by the reports that the research that austerity being a good thing is wrong because of a cut-and-paste error, it sounds really too perfect to be true), they are serious about making government smaller and more efficient. Which means it costs less. Which means that there is less money thrown around to get things going again. And no one wants that when their particular fiscal ox is offered for the BBQ.

This is a common problem with the current system - everyone hates government spending, but the moment that the big factory that makes warning stickers for OSHA reports is closing, or the local military base is being shuttered because we haven't had a war with Canada for 200 years, then everyone is indignant that the government is not paying attention to the needs of its people. The idea that the government is completely independent from the economy is a polite fiction, at best.

And yet in the midst of this no one seems to own up that government is getting smaller, and that as a result we aren't spending money to get the economy rolling again. I can see why the Republicans are all-fired quiet about it - here's a president who is doing what they have been claiming needs to be done (yet never seem to get around to doing). If it doesn't work, then that sort of undercuts their entire rational. On the Dem side, you'd think they would be glad to shed a tax and spend image tossed them by their Distinguished Competition, yet they don't want to be shown holding the bag for the attendant economic misery.

The thing is, a smaller government is a good thing - long term. It shows we can get out of these messes without ratcheting up the system one more notch. It backs us away from the cliff. But it is a slower, more painful process, and will still have economic suffering going forward, as everyone tightens their belts.

Except for the guys at the DOW, of course. For them, things are just ducky.

More later,