The Cato Institute finally did something worthwhile. It took out a full-page ad in the NYT and the Washington Post to refute the administration claim that “Every economist, as I’ve said, from conservative to liberal, acknowledges that direct government spending on a direct program now is the best way to infuse economic growth and create jobs.” The ad is signed by some 200 economists and states:

Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we the undersigned do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan’s “lost decade” in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policymakers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.

Amen. I guess there are some economists who, unlike Mr Bernanke, have actually studied history rather than accept dogma. My respect for economists crept up from 0.0 to 0.1 on a scale of 1-10.

You can’t turn on the television or pick up a newspaper without seeing the word “stimulus.” It makes me crazy. I guess if you give government spending a new name that makes it O.K. and people nod their heads and agree, not wishing to contradict the academics and politicians who claim to know what they’re doing. Nobody says, if these guys know what they’re doing, why was this allowed to happen? Why didn’t they at least warn us? Even if you leave aside the issue of economic theories, doesn’t this suggest that there’s a wee competence problem? Apparently not. The addition of 2+2 is well beyond the mathematical compentence of either lawyers or journalists, it appears, and the academics are so wrapped up in their pyramids of nonsense that they cannot see the absurdity of it all. It is so sad. There is going to be so much prolonged misery as a result of this unwillingness to deal with reality.

However, there is at least one head of state which his head properly screwed on, and it is Vladimir Putin. He is not a nice man (GWB’s buddy? might as well befriend a cobra), but he is not a stupid man by any means. Far from it. His speech at Davos illustrates this.

The entire economic growth system, where one regional centre prints money without respite and consumes material wealth, while another regional centre manufactures inexpensive goods and saves money printed by other governments, has suffered a major setback….

…. Excessive intervention in economic activity and blind faith in the state’s omnipotence is another possible mistake.

True, the state’s increased role in times of crisis is a natural reaction to market setbacks. Instead of streamlining market mechanisms, some are tempted to expand state economic intervention to the greatest possible extent.

The concentration of surplus assets in the hands of the state is a negative aspect of anti-crisis measures in virtually every nation.

In the 20th century, the Soviet Union made the state’s role absolute. In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.

Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors and shareholders for their decisions, is being eroded in the last few months. There is no reason to believe that we can achieve better results by shifting responsibility onto the state.

And one more point: anti-crisis measures should not escalate into financial populism and a refusal to implement responsible macroeconomic policies. The unjustified swelling of the budgetary deficit and the accumulation of public debts are just as destructive as adventurous stock-jobbing.

And this from the former head of the KGB, for pity’s sake. If he can see it, why can’t anyone? Hello, hello, is anyone listening? OK, enough ranting. For today anyway. No promises about tomorrow.

Maybe this Caroline should have been appointed to the Senate. Unlike the other Caroline, she could add some value (and move the sum of economic knowledge in the Senate a tick above zero).

These are short-sighted, short-term solutions being orchestrated at the expense of the economy’s long-term health, and I suspect most economists know it. (Politicians are a different story. Their knowledge of economics is generally confined to the area of trade: providing favors in return for campaign contributions.)

President Barack Obama’s crack economics team, including Larry Summers and Christina Romer, and Fed officials from Ben Bernanke on down have to understand that the problem of too much leverage can’t be fixed with more borrowing; that a misallocation of capital to housing can’t be cured with incentives to buy more homes; that consumers (and the nation) can’t spend their way to prosperity.

At least I hope they do.

Well they don’t. They believe in a paradigm that is fundamentally broken; and besides, it allows them to spend with complete abandon. For a while, it will be raining money. Spread out your TARP and catch your share.

It seems that the contango is coming out of oil rather quickly. The front months are rising, and the back months are falling. Presumably the tanker fleets sitting at anchor storing crude to take advantage of the contango will quietly weigh anchor and proceed into port to unload. It is still nearly 20% (March 09 to March 10) but that is down from nearly 40%.

I watched John Thain try to talk his way around his peculation (on CNBC). He wasn’t very good. He struck me as a typical Wall Street sociopath. Completely motivated by greed and quite without any concern for his victims. Another example of this sociopathy is the willingness of many Madoff clients to ignore the illegal front-running that they suspected was needed to explain the returns he claimed. The only crime on Wall Street is getting caught. But not by the SEC, they were too busy to supervise Wall Street. Like any government agency, they are claiming that their failure to look into the allegations about Madoff was due to underfunding.

“I don’t know whether there will ever be enough resources until the SEC begins to act smarter,” said Peter Wallison, a former Treasury Department general counsel who is now a senior fellow at the Washington-based American Enterprise Institute. The group advocates limited financial regulation.

“There can’t be an excuse that they didn’t have enough people to look into something as precise as the allegations that were made against Madoff,” he said. “We hear this from the SEC every time they fail.”

Don’t worry. The government will declare the “War on Ponzi Schemes” any day now, sensing that public outrage will support years of richly funded failure. The SEC is largely staffed by Wall Street folks who share the same indifference to the fate of the marks. They just want their commodes, too.