Home > General Comment > Swords into plowshares: How the Messiah is creating jobs for you by preparing for World War III

Swords into plowshares: How the Messiah is creating jobs for you by preparing for World War III

For those who still don’t get it: The brick and mortar of economic recovery and job creation is being fashioned out of the material of your life.

defense spending

Isaiah 2:4: And he shall judge among the nations, and shall rebuke many people: and they shall beat their swords into plowshares, and their spears into pruninghooks: nation shall not lift up sword against nation, neither shall they learn war any more.

From Contrarian Musings:

Raising GDP is not a hard thing to accomplish because GDP is really just a measure of spending. What really matters is the quality of the spending. If we are spending on productive investments that produce a long term return that is one thing, but if we are spending on consumer goods that produce nothing and depreciate over time, we are not creating wealth. If we are “investing” in housing, we are not creating wealth. If we increase government spending on defense (which rose 13% in the quarter), we are not creating wealth. If we increase government spending on welfare payments that are used for current consumption, we are not creating wealth. Wealth is created by saving and investment. Much has been made of the rise in the personal savings rate, but at this point government dissaving is offsetting all the good being done at the individual level.

Karl Denninger has this to say:

Real federal government consumption expenditures and gross investment increased 10.9 percent in the second quarter, in contrast to a decrease of 4.3 percent in the first. National defense increased 13.3 percent, in contrast to a decrease of 5.1 percent. Nondefense increased 6.0 percent, in contrast to a decrease of 2.5 percent. Real state and local government consumption expenditures and gross investment increased 2.4 percent, in contrast to a decrease of 1.5 percent.

So much for Obama destroying military spending eh? Uh, not so fast eh? 13% increase? Not bad. The Federal Government is attempting to pick up the pieces from the private sector, but without success. State and local governments are trying to pick up the pieces but all they’re doing is going bankrupt; do not expect to see this contribution repeated in the 3rd and 4th quarters, as they’re out of money!

The Daily Capitalist writes:

It is true that government spending grew at a 5.6% annual rate for the quarter, moderating the contraction in gross domestic product. But most of that increase came from the defense sector, not the nondefense sectors targeted by the American Recovery and Reinvestment Act. Defense spending grew at a 13.3% annual rate, in part a rebound from a 4.3 first quarter contraction. Nondefense spending grew at a 6% annual rate, contributing 0.15 percentage points to overall growth. The economy can use all of the help it can get, but it’s too soon to declare that federal spending is effectively making its way into the system.

Yes, we wanted to tell our brother he is not a chicken, but we needed the eggs…

What you might not know, and most blogs and reports we found did not mention: This second quarter 2009 GDP spending party came on the heels of the Moron’s third quarter 2008 defense spending surge of 18 percent:

Economic Growth in the Defense Sector: While the U.S. economy slowed in the third calendar quarter, defense spending leaped, far outstripping other government agencies. It is tempting to draw the conclusion that defense spending is somehow not aligned with the rest of the economy. Here is why that conclusion is incorrect. According to the Commerce Department’s Bureau of Economic Analysis (BEA), which tracks U.S. economic activity, defense spending rose 18.0 percent from the second calendar quarter to the third, on a seasonally adjusted, annualized basis in constant dollars.1 The third quarter of 2007 saw a similar increase, when the annualized rise in defense spending exceeded that of federal spending, which in turn also outpaced overall U.S. economic growth.

We assume there will be another such green shoot uptick in defense spending for this quarter, which will technically send the economy into positive territory. As you can see from the chart, projections are that defense spending will continue to rise until the recession is over.

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