Last Thursday, a higher than expected jobless claims number helped cause the markets to open sharply lower. In response, a friend sent me an e-mail with a subject line that read: Job claims unexpectedly high? What? How did that happen?

My response was as follows:

This is as big of a surprise as Bernanke raising the discount rate. Does anyone on Wall Street have a brain?

We are coming off one of the worst financial shocks in history. Real estate remains in the tank. Big businesses are making their numbers by cutting costs, and small businesses aren’t hiring because a) they either can’t get working capital or b) they don’t want to take any undue risks while the other cohort of people without brains – Washington – is screwing around with things that don’t matter.

One such meaningless thing is enacting tax credits for companies willing to hire new employees. Yeah, saving the employer portion of the taxes – plus a thousand dollar tax bonus – really makes me want to take on a major salary expense.

Last year I predicted the economy would grow 2.1 percent in 2010 and I’m sticking by that number. The Street expects 3-4 percent, but I don’t think that’s going to happen. It’s possible the growth rate for this year will exceed my estimate but I believe the situation is too fragile to achieve a three-handle.

I wish more friends would send me e-mails. I’d be able to hammer out a column in about a half an hour.

Look, despite the numerous economic land mines that exist, things are improving. An appropriate comparison is to someone who’s suffered a severe auto accident. After that type of shock, you don’t just jump out of bed and resume your life. First you go through rigorous therapy to re-learn how to accomplish ordinary things like walking. It might take a while.

That’s analogous to where our economy is today. As I’ve said before, employment holds the key. However, notwithstanding the positive blip that will occur this spring when an army of census workers is hired, we’re not likely to see appreciable improvement on the jobs front until the later part of the year. No matter what else the government does.

Tax credits and artificial incentives can do no more than assist on the margin. Sure, the stimulus package helped prevent matters from becoming worse, but the benefits were temporary. Permanent employment can only occur when there is sufficient product demand. And that requires people to have something more than a temporary paycheck to spend.

The cornerstone of the proposed jobs bill is the aforementioned new employee tax credit. Though it will undoubtedly become law, the bill is an excellent example of how little politicians know running a businesses. The tax credit will likely push those teetering on the fence of hiring someone over the edge. It will also subsidize those who were already going to hire someone. The “teeterers” represent the marginal improvement.

The tax credit is equal to the employer payroll contribution for Social Security and Medicare. Together, these amount to 7.65 percent of a person’s salary. If the new employee is retained for one year, the employer receives an additional $1,000 tax credit.

Let’s examine the best case scenario from an added expense standpoint: an employee making $8 an hour. Annually such an employee would earn $16,640, which yields a maximum tax credit of $2,273. That’s nothing to sneeze at but it still puts the employer on the hook for covering $14,367 in salary.

No small business owner is going to take on a $14,000 liability to save $2,300 unless they are certain there will be sufficient demand for their product or service to require the additional help. Conversely, if the demand existed, they would hire the new employee regardless.

In essence, the government is providing a small subsidy and relying on the small business community to provide a big one. Not likely to happen in any meaningful way.

The bottom line is that the government needs to get out of the business of short-term economic manipulation and focus on creating a robust and predictable economic environment where businesses large and small can thrive. If the government did this we wouldn’t have bubbles bursting left and right.

I’m going to close this week with another brief comment about the Federal Reserve. Last week I described the Federal Reserve’s increase of the discount rate as a “technical” move that isn’t likely to impact the average Joe. Fed Chairman Bernanke echoed that description in his semi-annual Congressional dog and pony.

The collective “brainless trust” on Wall Street, which had previously driven the markets down on the “surprise” discount rate hike, applauded Bernanke’s follow-up comment and drove the markets sharply higher. It’s a bit scary to think that these are our best and brightest financial minds.

And you’ll never guess what else the Federal Reserve has embarked upon. They’re investigating Goldman Sachs and the transactions they helped Greece facilitate. Referring to the credit default swaps in his congressional testimony, Mr. Bernanke described them as a useful means of hedging investments but added, “obviously, using these instruments in a way that intentionally destabilizes a company or country is counterproductive.”

No kidding?

Author, professor, entrepreneur, radio and TV commentator Tony Paradiso can be reached at tparadiso@tds.net.