There can never be a recovery based on fiscal and monetary stimulus. It hasn’t happened in the past and it is not happening now, despite Mr. Obama’s claim yesterday that “his” policies are working. What we are seeing with an unclouded eye is that the “recovery” cycle is a mirage. Left to its own devices, the “economy,” that is the actions of millions of business folks, do what they need to in order to survive. First to happen in a down cycle is that retailers and wholesalers get rid of inventory. That has been done. Then, because the other 80% or so of us have jobs, businesses then restock to service ongoing business, albeit reduced. That is almost complete. This part of the cycle induced manufacturers to step up production to meet the resumed demand. Without real consumer demand reviving, manufacturing will stall out and maintain a modest level of production to meet modest demand. That is happening now. There is another factor to consider and that is the impact of fiscal stimulus. At some point the money the government spent to “revive” the economy runs out. Since it was used for mostly useless projects, the effect is temporary and when the money is spent, the empty shells of these projects produce nothing and all that is left are the debts incurred to pay for them.

There’s a saying I’ve heard from accountants: recessions uncover what auditors can’t. When a company has reasonable cash flow and access to credit, dodgy practices can be hidden for quite some time. But when sales dry up and banks tighten the purse strings, eventually companies are forced to admit that there is no money in the till. That’s why recessions always seem to be accompanied by revelations of terrible accounting practices, which makes a lot of people think that an epidemic of dishonest accounting must have brought the economy to its knees. But there’s not much evidence that accounting practices actually get worse at the end of booms; it’s just that companies who might have gotten away with it and eventually made enough money to repair the hole in their balance sheets, instead are forced to disclose what they’ve done.

“Shall we all commit suicide?” is the title of a prescient Winston Churchill essay on modernity. Listening to President Obama last night on Larry King (video below, via) his voice dripping with hostility to Israel, one wonders what the Israelis are to do. Shall the Israelis commit suicide?

Kahan’s history is that as long as aristocrats at birth were important, intellectuals as a class had something to gain by bringing down these aristocrats, and promoting capitalism did that. Once the birth aristocracy weakened and a strong business class emerged, anti-capitalism became the more natural ideology of the intellectual class. Remember the Masonomic view that politics is about relative group status. Intellectuals aspire to the status of the clergy and aristocracy in Kahan’s view.

Let’s try for a little perspective. The BP oil spill threatens to cause something like $10 billion worth of damage. That’s pretty bad. By contrast, an extra trillion dollars worth of federal spending threatens to cause something like $300 billion worth of deadweight loss (that is, underproduction due to tax avoidance and disincentives to work). That’s 30 times worse. How is it that so much angst about the former seems to be coming from people with a history of shrugging their shoulders at the latter?

A crucial fact of modern life is the ever-changing gazillion facts-on-the-ground that producers and consumers must continually adjust to if the economy is to satisfy as many human wants as possible. These facts, however, cannot possibly be collected in articulable form, transmitted to government officials, and then ‘adjusted to’ by these officials quickly enough to keep the economy humming along reasonably well. Instead, individuals on the spot must have the freedom and responsibility to adjust to these changes as each of them senses and interprets these changes.

Henry Cisneros says government’s push to increase home ownership had nothing to do with the crash. The only thing government did wrong is that it didn’t regulate enough Cisneros told a crowd of 50 at the Hilton Hotel in Austin. It was not reported how many were able to keep a straight face.