How much does it cost to create a job?
According to Martin Feldstein, a Harvard economist, each job that is created by the "American Jobs Act" would cost taxpayers about $200,000.
I think that most small businesses could produce three times as many jobs on the same amount of money. It seems the government is jumping into an area where it has proven in the past to have no expertise.
You would think the government would argue that it's going to cost a lot less than $200,000 to create each new job, but according to Timothy Geithner in a recent ABC interview, he didn't dispute that number at all!
We have been saying the markets were very oversold and ripe for a rally. I believe the rally we have seen in the last two days is basically a short covering rally. Last week, we saw a tremendous liquidation of all risk assets across the board in most markets. This week, we're seeing some of those short positions being covered with very little selling above the market. This is all predicated on a potential solution to the Greek/European problem.
Mr. Geithner also claimed in the same interview that if Europe went under, the US banks would stand to lose $41 billion. So here we are again, borrowing money to bail out the banks. We used to have legislation on the books that would have prevented the current problem with the banks. That law was put into place I believe, right after the great depression and was lifted because all the bankers felt that it would never happen again. Well, history repeats itself, just like the markets do. There is an old Hungarian proverb that says, "The past is the teacher of the future." This has never been more true than it is today.
