There’s always something to howl about.

Obama ups the stakes in his contest with McCain over who can do more enduring damage to the crippled economy

Witness:

Democrat Barack Obama is calling for a 90-day moratorium on foreclosures and a two-year tax break for businesses that create jobs as part of a plan to heal the nation’s ailing economy.

The presidential candidate says banks that participate in the federal bailout should temporarily postpone foreclosures for families making good-faith efforts to pay their mortgage.

He also called for a $3,000 tax credit for each additional full-time job a business creates. The tax break would end after 2010.

Obama also is proposing letting people withdraw up to $10,000 from their retirement accounts without any penalty this year and next.

The Obama campaign emphasizes that these ideas can be done quickly, either through executive order or legislation.

Here’s a question that no presidential candidate, apparently, can answer: Where does investment capital come from?

A ninety-day moratorium to “temporarily postpone foreclosures for families making good-faith efforts to pay their mortgage” is stupid. A loan is either performing or it isn’t. The lender is never going to foreclose on a performing loan, although the threat or foreclosure may not be withdrawn for quite a while.

The corollary? If you want out of your mortgage, you have to stop making payments.

The tax credit is also pretty dumb. If $3,000 is the margin of profitability for a new hire, a few people might get hired.

But “letting people withdraw up to $10,000 from their retirement accounts without any penalty this year and next” will bleed the economy of lendable capital just when the economy is already bled white of lendable capital.

I can’t even think of all the ways this is perilously damaging. It encourages a run on retirement accounts, which will probably drive securities values lower over time. Individuals probably shouldn’t reduce their retirement investment stake just when it has suffered a terrible hit. Freeing up that money encourages still more spending on consumer goods — depreciating assets — where it is now invested in future growth.

But here is the worst feature of this insane proposal: Not only won’t that money be committed to future economic growth, but the people whose job it is to invest that money productively will have to think twice, going forward, about how much money they have available to invest, for how long and on what terms. If “these ideas can be done quickly, either through executive order or legislation,” then markets have no ability to plan for the future. The rules of the game could change at any moment.

Capitalism, ideally, is not regulated by the state but only by the courts. Only torts — actual crimes and injuries — are the government’s concern, and the hurly-burly of the marketplace is a matter to be worked out among buyers and sellers by mutual consent. But even in our insane Rotarian Socialist economy — well over half government by now, dollar-for-dollar — what is left of the free market performs poorly when investors cannot plan. What should be a three year recession is going to be a twelve year recession because economic witch doctors will refuse, again and again, to let the patient heal.

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