ANOTHER SHELL GAME

As a young man, I’m ashamed to admit, I fell prey to a street con based on a playing card variant of the old shell game. Until a short time ago, I was nearly hoodwinked again, in the form of a game nicknamed “sequestration.”

Unless you’ve been hiding in a tunnel, you can’t have missed the escalating rhetoric about the looming financial catastrophe come March 1st, when, assuming our legislators can’t reach a consensus (almost as certain as death and taxes), the automatic spending cuts go into effect. Our president, who se idea it was and who signed it into law a couple of years ago, perhaps naively believing it would galvanize our lawmakers to pass a rational budget, now uses its impending activation as a club to beat them up, citing the pending dire consequences of their inaction. It reminds me of the talking heads before the impending Y2K disaster-that-never-was.

Get ready to quake in your economic boots: It turns out that the coming cuts amount to a measly 2.5% cut in spending. And that’s actually a reduction in the rate of growth in spending. But even the hint of a change in behavior to try and get a handle on our runaway spending causes the media alarms to go off. It’s true that the way in which these cuts will be implemented is like a club, rather than a scalpel, but our ruling class doesn’t know how to wield sharp instruments; they’re afraid they might cut themselves. Besides, I don’t know that I’d trust them with one. So, in my opinion, sequestration is a good first baby step that we should celebrate rather than fear.

Don’t expect to look to the stock market for clues as to the future effects of sequestration. Like a person with generalized anxiety or bipolar disorder, it capriciously goes up and down in response to the events of the day. As an example, when Ben Bernanke prints money, the stock market sees dollar signs and rises, even in the setting of weak economic growth and lagging employment.

The window for the short-term fix is rapidly closing. You can only pump saline into a dying man for so long without giving blood and actually trying to cure what ails him.

And you can’t make money in a shell game.

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