Posts Tagged ‘Recession’

Insight: US Economic Recovery at risk as Americans raid savings

(Reuters) – More than four years after the United States fell into recession, many Americans have resorted to raiding their savings to get them through the stop-start economic recovery.

Click here for the complete story

Read Full Post »

Five Myths About President Obama’s Economic Recovery

There are a ton of myths about our economic recovery. One of the most obvious is that the economy is recovering from the recession that hit back in December 2007. It supposedly ended eighteen months later. But this is not a recovery because we are in a Great Depression. More on that later. However, below is an interesting point of view that does deal with myths of the recovery that hasn’t actually occurred. That’s one of the myths the author of the story fails to point out.

Click here for Five Myths of the Obama Recovery

Read Full Post »

Is China heading for recession?

China’s move this week to keep its economy afloat isn’t generating the big headlines that Europe’s actions got, but is no less important in keeping the world’s economic engine churning.

While coordinated action by the world’s other central banks to enhance liquidity for Europe’s banks stole the focus Wednesday, China’s decision to cut reserve requirements for banks was even more important, some believe.

That’s because the developed world has come to depend on China for a variety of reasons – from buying up American debt to providing loans to growing businesses to keeping its mighty manufacturing base growing.

Easing the amount of money banks have to keep on hand, as the People’s Bank of China did with a lowering of the rate by half a percentage point, helps accomplish those goals by keeping the lending spigots flowing.

Click here for the rest of the story

Read Full Post »

Obama Inherited Our Economic Problems

Published: September 18, 2011

Just a few winters ago my wife and I took our daughters to witness the inauguration of a man who had campaigned on hope and embodied possibility. We are pretty immune to political euphoria, but, circulating among the footsore pilgrims, we could imagine our country had embraced the idea that we were all in this together. When the newly sworn-in president congratulated us all on choosing unity of purpose over recriminations and worn-out dogmas, we wanted to believe that we had done exactly that.

Inaugurations, of course, are ceremonial ephemera. After the 60-plus approval rating comes the 9-plus unemployment rate. But it is worth pondering how we got from that day to this partisan clamor, how we lost that sense of common cause, and how it became a consensus of the commentariat that Barack Obama is in serious danger of being a one-term president.

The decline in Obama’s political fortunes, the Great Disappointment, can be attributed to four main factors: the intractable legacy bequeathed by George W. Bush; Republican resistance amounting to sabotage; the unrealistic expectations and inevitable disenchantment of some of the president’s supporters; and, to be sure, the man himself.

Obama inherited a country in such distress that his Inaugural Address alluded to George Washington at Valley Forge, marking “this winter of our hardship.” Unfunded wars, supply-side deficits, twin housing and banking crises enabled by an orgy of regulatory permissiveness — that was the legacy Obama assumed. In our political culture if you inherit a problem and don’t fix it, you own it. So at some point it became the popular wisdom that Iraq and Afghanistan were “Obama’s wars,” and that the recession had become “Obama’s economy.” Given the systemic burden Bush left for his successor, that judgment seems to me to be less about fair play than about short memories. But this is what passes for accountability in our system. And the Republicans have been relentlessly effective at rebranding every failing of the Bush administration as Obama’s fault. The historical truth, therefore, is no longer a viable political shelter for the Obama presidency. At best we can hope it serves as a caution against those who preach a return to the indiscriminate tax cuts and regulatory free-for-all that helped produce our lingering mess in the first place.

Another toxic legacy of the Bush years is an angry conservative populism, in which government is viewed as tyranny and compromise as apostasy. The Tea Party faction has captured not only the Republican primary process, but to a large extent the national conversation and the legislative machinery. In Congress the anger is pandered to by Republicans who should know better, since their nihilism discredits not only the president they have cynically set out to make a failure, but their own institution. Voters are frustrated by this — Congress has the approval rating of bedbugs — but it remains to be seen whether the electorate will punish the real culprits or simply reward the candidates who run against that bogeyman, “Washington.”

The disenchantment of the liberals may seem less consequential; it’s not as if they are going to vote for Rick Perry. But Obama needs their energy if he is to keep his office and have any allies left in Congress. What he gets instead is a lot of carping. Obama’s deal to continue the Bush tax cuts, his surrender of a public option on health care, his refusal to call the Republicans’ bluff on the debt ceiling rather than swallow budget cuts — these and other compromises amount, in the eyes of the Democratic left, to crimes of appeasement.

There is an element of partisan cynicism in the Democrats’ disappointment. For example, last week Obama was excoriated for putting Medicare cuts on the table. His offense was apparently not so much that he was wrong on the merits, but that his move “cancels out any bludgeoning that Democrats might give the Republicans” on the potent issue of geriatric entitlements, in the remarkably candid words of one House Democrat.

Jonathan Chait pointed out in The Times Magazine recently that the liberal repudiation of Obama “wishes away any constraints upon his power.” (See Republican intransigence, above.) It also undervalues some real accomplishments, achieved despite a brutally divided government. Lost in the shouting is the fact that Obama pulled the country back from the brink of depression; signed a health care reform law that expands coverage, preserves choice and creates a mechanism for controlling costs; engineered a fairly stringent financial regulatory reform; and authorized the risky mission that got Osama bin Laden.

To be disillusioned you must first have illusions. Some of those who projected their own agendas onto the slogans and symbols of the Obama campaign were victims of wishful thinking — fed by Obama’s oratory of change. Anyone who paid attention while candidate Obama was helping President Bush pass the 2008 bank bailout should have understood that beneath the rhetorical flourishes Obama has always been at heart a cautious, cool, art-of-the-possible pragmatist. When he sees that he lacks the power to get what he wants, he settles for what he can get.

Obama can be faulted for periods of passivity (his silence as Republicans have sought to defund financial reforms), for a naïve deference to Congress (his belated engagement in the details of the health care bill), for a deficit of boldness and passion, for not doing more to stiffen the spines of his caucus on Capitol Hill, for not understanding — at least until his latest barnstorming on the jobs bill — that governing these days is a permanent campaign.

It is partly a failure of presidential communications that Republicans have succeeded in parodying each of his accomplishments, turning “stimulus” into an expletive, portraying “Obamacare” as socialized medicine and attacking the Dodd-Frank financial reform as an assault on capitalism.

It’s not just that he has failed to own his successes. He has in a sense failed to define himself. He is one of our more elusive presidents, not deeply rooted in any place or movement. David Remnick’s biography called Obama a shape-shifter. At the fringes, that makes him vulnerable to conspiratorial slanders: he is a socialist, a foreign imposter, a jihadist, an adherent of black liberation theology. To a less paranoid audience, his affect comes across as aloofness or ambivalence.

PERSONALLY, I can stand a little ambivalence in our leaders, particularly compared with the blinkered certitude of the previous administration. But in politics there are few greater liabilities than a perceived lack of definition.

Against Obama we have a cast of Republicans who talk about the federal government with a contempt that must have Madison and Hamilton spinning in their coffins. The G.O.P. campaign sounds like a contest for the Barry Goldwater Chair in States’ Rights: neuter the Fed; abolish the Environmental Protection Agency, the Department of Education and a few other departments; turn Medicare and Social Security into individual 401(k) programs; dismantle national health care and revoke consumer protections. Rick Perry, who likes to rouse Texans by claiming the right to secede from the union, sometimes sounds as if he has expanded his view to encompass the secession of all 50 states. Even Mitt Romney — at heart a Republican technocrat (and the only candidate I’ve ever seen give a campaign speech with PowerPoint) — talks as if the main role of the president is to grant waivers from any kind of mandate upon the states. Such is the power of our new, centrifugal populism.

Do they really believe this, or are they just playing to the Ron Paul libertarian niche? Do you really want to find out?

So let’s get real. Yes, Obama could do better. But we could do a lot worse.

Read Full Post »

FACT CHECK: Recession Is Culprit in High US Debt
Published: August 20, 2011 at 3:33 AM ET

* Sign In to E-Mail
* Print

WASHINGTON (AP) — It’s the loud and clear consensus of Republicans in Congress and on the presidential campaign trail: Runaway government spending is the problem, not taxes.

But the math isn’t so simple.

The number at the heart of the battle cry of the Republicans and their tea party allies — that federal spending has risen to an alarming 25 percent of the economy — is skewed by recession dynamics.

In recessions, federal spending always goes up and tax revenues go down. And the economy contracts in recessions, shrinking the gross domestic product, which is the total output of goods and services and the broadest measure of the economy’s health.

Republicans are calling for sweeping spending cuts and want to hold the line on taxes, even as the U.S. struggles through one of its slowest recoveries since the Great Depression. The jobless rate has been stuck for months at more than 9 percent. With the economy slowing again, the odds of a new recession seem to be increasing.

While spending’s share of the GDP might be at a post-World War II high, tax revenues have fallen to 14.4 percent of the index, the lowest since 1950.

This disparity between what comes in and what goes out plays into the Republican argument about runaway spending.

But it also reflects the mathematical reality that during recessions, tax revenues go down sharply because people and companies make less money and so pay less in taxes. Federal spending goes up, even before stimulus programs, with an increasing demand for government help from food stamps and unemployment compensation and other safety-net programs.

At the same time, the negative economic growth associated with recessions lowers the GDP number on the bottom of the equation, further boosting the ratio of spending to GDP.

Since 1970, federal spending has averaged just over 21 percent of GDP while tax revenues have averaged over 19 percent.

The last time since World War II that federal spending exceeded 23 percent of GDP was in 1982 and 1983, when it rose to 23.1 percent and 23.5 percent, respectively, during what was then called the worst recession since the Great Depression. A Republican, Ronald Reagan, was president, and he was hardly anyone’s idea of a tax-and-spend liberal.

Federal spending is even higher now as a percentage of GDP, but not by much — just between 1 and 2 percentage points. That reflects the fact that the most recent recession was far deeper than the 1981-82 downturn, which lasted 16 months.

Much of the present large gap between tax revenues and federal spending comes not from political decisions but from what happens to a nation’s finances during any deep recession, economists suggest.

But you wouldn’t know it from some of the recent campaign rhetoric. The Republican candidates all want to shrink government’s role by slashing spending and taxes, and repealing or suspending regulations.

—Former Massachusetts Gov. Mitt Romney asserted that, because of the rise of the ratio of government spending to GDP on President Barack Obama’s watch, “We’re inches away from no longer having a free economy.”

—Former Pennsylvania Sen. Rick Santorum: “We’re now at almost 25 percent (of GDP) … the problem is spending, not taxes.”

—Reps. Ron Paul of Texas and Michele Bachmann of Minnesota insisted they would never vote to raise the U.S. debt limit and they decried the rise in federal spending. The recent bipartisan debt deal, which includes a big spending-cut component, won the support of many tea party-aligned lawmakers, however.

—Texas Gov. Rick Perry said that Federal Reserve Chairman Ben Bernanke would commit a “treasonous” act if he “prints more money” before next November’s elections. “We would treat him pretty ugly down in Texas,” Perry told an Iowa audience. Economists generally credit Bernanke with helping save the nation’s financial system by stimulating it with a flood of new money.

Economist Bruce Bartlett, who worked in the administrations of both Reagan and President George H.W. Bush, said some of the statements by Republicans make him cringe. “And what sometimes makes me cringe more is the silence from their competitors.”

Bartlett includes the solid opposition to any tax increases from the entire GOP field, citing the recent debate when not a single Republican participant would agree to accept even a mix of $1 in new taxes for every $10 in spending cuts.

“It’s the cowardice of people who know they’re wrong when they say these things that disturbs me more than the fact that some people say crazy things,” Bartlett said. He said the Republicans were clearly playing to the party’s conservative base for the primary elections “but when you repeat these things, they tend to get solidified.”

He added, “The same is true in both parties. It’s just that there’s no primary race on the Democratic side.”

The intense focus by Republicans and some conservative Democrats on cutting spending to reduce the national debt, now at nearly $14.5 trillion, helped put deficit reduction high on the priority list for both parties.

But polls continue to show that people are more concerned about the lack of jobs than they are the deficit. Nearly 15 million are jobless in the U.S.

Obama, now on vacation, plans a major speech on the economy after Congress returns in September, trying to emphasize jobs and help the poor and middle class, aides said. The plan is expected to contain a mix of tax cuts, construction projects and steps to help the long-term unemployed.

Even though the pace of recovery is painfully slow, any improvements in the jobs situation will help spur stronger economic growth, leading to more tax revenues and lower federal spending.

“If the economy starts to get better, then everything gets better,” said Democratic strategist Mark Mellman.

But it will be a slog.

As the recession that began in December 2007 intensified, federal spending increased from 20.7 percent of GDP in 2008 to 25.0 percent in 2009, according to figures compiled by the White House budget office. And while the recession was officially declared over in early summer 2009, overall federal spending was 23.8 percent of GDP last year and is projected to come in at 25.3 percent for 2011 amid fears of a new, or “double dip,” recession.

Read Full Post »

At some point during any business expansion, dividends increase at a faster rate than corporate earnings. When that occurs, our know-nothing corporate heroes begin to cut jobs, reduce or hold steady employee compensation, or outsource jobs. They also curtail business-to-business transactions to save money and push earnings higher.

That’s why the demand for durable goods decreases prior to the beginning of every economic downturn. By the way, a durable good is any product that is expected to last a minimum three years, like cars, stereos, computers and copiers. As businesses that produce durable goods begin to fulfill their contracts, as consumer demand drops due to increasing lay-offs and stagnant compensation, as businesses cut back on business expenditures, the employees in the durable goods industries are the first to feel the effect. Their hours are reduced.

According the United States Bureau of Labor Statistics, the number of hours worked by employees in the durable goods industries have fallen from 40.9 in May 2011 to 40.7 in June and 40.6 in July. I should point out that the June and July figures are preliminary and could be revised upward. However, that is unlikely. Regardless, these figures are not a good sign, especially since they are following a contraction of corporate profits. This is a sign that we’re heading for an even greater recession than what we have experienced so far.

Now for the bad news. The largest redistribution of income from working people to the rich have occurred during the last thirty years. This has taken money out of the hands of working people and decreased the demand for goods and services. And that is why the current economic expansion is the weakest since the last one under President George W. Bush.

President Obama and good liberal politicians such as Senator Ron “Corporate Bitchboy” Wyden and Corporate Congressbitchboy Earl Blumenauer plan to vote for redistributing more income and wealth from working people to the rich via free trade pacts with South Korea, Columbia and Panama. I’ll begin a series on those redistributions tomorrow.

Read Full Post »

The numbers are lining up; a recession appears to be on its way. The numbers have not completely lined up, but they appear to marching forward toward recession. This means President Obama’s policies are a terrible failure, his leadership totally lacking. The Republicans have played him for a fool. He should have taken the economic advice of Paul Krugman and George Stiglitz, but instead he took the advice of Wall Street drones like Lawrence Summers. Let’s face it. President Obama is a corporate bend-over bitchboy.

Experts have assumed that we may be heading for a repeat of 1937, when the economy dropped into recession in the midst of the Great Depression because FDR decided to reduce federal spending. However, there’s something more to fear than a repeat of 1937. What if the recession that began in December 2007 is more like the recession of 1927? That was a mild recession. If there is a potential comparison between the likely recession of 2011 or 2012 and the one that hit in 1927, then it is likely the next recession will be far worse than the recession of 2007-2009. That means both G.W. Bush and Obama will share the historical stage as being as bad on economic matters as Herbert Hoover.

There’s one thing that can be said about the coming presidential election. Obama is not the person this country needs, but all of the Republican candidates for president are even worse choices. The United States needs a new FDR, or a Harry Truman. We need a hero, a real leader, someone perhaps like Warren Buffett.

I’ll go more in depth on what’s going on in the economy in a day, maybe two.

Read Full Post »

The time had come to fight power with truth. That’s why I raised my hand at a town hall meeting hosted by Oregon’s liberal Democratic Senator Ron Wyden. Last January, I’d driven thirty miles from Portland to St. Helens to ask one question. There were about 150 of us. I sat and listened as people asked a variety of questions. Nobody challenged any of the senator’s canned answers.

Wyden is a member of the senate finance committee. As chairman of the subcommittee on trade, the senator is in a position to determine the economic fate of millions of his fellow citizens.

I thought Wyden was a liberal, fighting for the good of the common man in the corridors of power in Washington D.C. I guess that was a long time ago, if ever. Nowadays, the senator is a plutocrat serving the corporate elite in their war against the middle class. The purpose of this war is to redistribute income from working people to the affluent. Like many Democrats and nearly all Republicans, Wyden has done his job well during the last thirty years.

Now, with the middle class staggered by job losses, along with thirty years of stagnant wages and declining benefits due in large part to trade policies that Wyden championed, the senator has decided to go for the kill. By all accounts, he intends to vote yes for the South Korea Free Trade Agreement this summer. Then he’ll vote for the Panama and Colombia free trade treaties when they come up for votes shortly afterward.

Free trade agreements are con games of the rich that enable them to swindle the vast majority of Americans out of their American dreams. The free trade income transfer scam is simple. These deals pave the way for corporations to ship jobs overseas. When they do, the difference between the old compensation in the United States and the new compensation overseas becomes profits. The newly available profits are then divvied up to the affluent as dividends and rising share prices. A job that costs an employer $50,000 a year in the United States costs $5000 or less in a lot of other nations. The difference is $45,000. That’s what the rich pocket. The American citizen who loses that job gets unemployment checks for a while, as well as an uncertain future. Wyden is not a dummy. He knows this.

The Economic Policy Institute (EPI) predicts the United States will lose over 800 thousand jobs within ten years if congress approves the free trade agreement (FTA) with South Korea. In other words, the affluent will get richer at the expense of the job losers. Imagine how many more jobs will be lost if congress also approves the FTAs with Panama and Colombia. Job losses from the three FTA’s could approach or exceed 1,500,000, especially if the results are similar to what happened after NAFTA became law on January 1, 1994.

Depending on who is doing the math and what figures they’re using, the experts have decided American job losses due to NAFTA are somewhere between 600,000 and 900,000. For example, Jobs with Justice has estimated the U.S. lost 766,000 jobs to Mexico from 1994 to 2001. More recently, an EPI study estimated the USA has suffered a net loss of 879,000 positions due to the treaty.

Lots of US corporations have taken advantage of NAFTA. Take General Electric (GE) for example. According to Business Week, the company has exported thousands of jobs to Mexico since 1994. This includes jobs making refrigerators and parking meters. However, not all of the positions shipped to Mexico are in manufacturing. By 2008, GE was hiring an engineer a day in Mexico. Those employees earned one-third as much as their U.S. counterparts.

Of course, there are plenty of other companies that manufacture their products in Mexico and then import them to the United States. For example, some Craftsman power tools are now made in Mexico and are then exported to the USA. This brings us to another point. Plenty of U.S. corporations manufacture goods overseas and then export them to the United States. Most Nike shoes are made in Vietnam and China and many of them are then exported to the United States. My Hewlett-Packard computer was manufactured in China. Thousands of other things are manufactured abroad by U.S. corporations and are then exported to the United States.

This brings us to an unfortunate truth about trade deficits. Much of the total US trade deficit is with US chartered corporations that have exported jobs, or created jobs overseas that would otherwise have been established here had it not been for investment clauses in trade treaties. This is especially true with respect to deficits the United States has with developing nations, such as China and Mexico. The same will be true with South Korea, Colombia and Panama.

Obviously, this is not necessarily valid about US trade deficits with more advanced countries, such as Germany, Japan and Canada. However, one has to remember that US companies ship many of their products to developed countries from their factories, contractors and sub-contractors in less developed nations. In other words, the shipping of jobs from the USA to lower wage countries also contributes to the US trade deficit with more developed nations.

All of this means trade deficits are a rough tool to gauge the redistribution of income in the United States. The larger the trade deficit, the more income is being redistributed in the USA from working citizens to the affluent. That’s why the trade deficit and the mal-distribution of income exploded upward in tandem after President Ronald Reagan began his war against the middle class thirty years ago. The United States total trade deficit of nearly $17 billion in 1981 has exploded to nearly $500 billion in 2010. During this same period the richest 1 percent of Americans saw their chunk of national income rise from less than 9 percent to almost 24 percent. This was not a coincidence. It was cause and effect.

The EPI projects growing trade deficits with South Korea, Colombia and Panama if the trade deals are approved by congress. This leads us to an unspoken truth. The real purpose behind these FTAs is to redistribute more income from working Americans to the affluent. In other words, on behalf of the rich, Senator Wyden is preparing another frontal assault against the middle class during the summer of 2011. That’s why I was in St. Helens.

These weren’t the only thoughts racing through my head. I didn’t want the senator to redistribute my son’s future to the affluent, just like he’d done to other Americans when he voted for NAFTA, as well as the Central American Free Trade Agreement (CAFTA). I hoped he might respond to reason.

An hour or so into the meeting, the senator announced he only had enough time to take three more questions. Tons of hands shot up. One of those was mine. I figured there was no way I’d get called on. Then the aide to the senator made a critical mistake; he pointed his finger at me.

I stood and fidgeted for a moment. Earlier, the senator had answered my question when he told a woman he hadn’t made up his mind on which way he was going to vote on the South Korea FTA. That was nonsense. He’d had years to decide. That brought up another question and it wasn’t all that simple. After the aide called on me, I had a few seconds to organize my thoughts. Then I steeled myself and said what I felt needed to be said:

“I don’t understand your position on the free trade agreement with South Korea. Numerous studies show these trade agreements redistribute income and wealth from working people to the rich. That’s one of the biggest problems today. The rich have more of the national income than possibly at any time in our history. Former Labor Secretary Robert Reich called this the biggest issue of our time in his most recent book. The demand for goods and services is weak in the United States because of it. This trade agreement is going to ship more jobs from the United States to South Korea according to the Economic Policy Institute. Everybody knows the difference between the old wages here and the new wages in South Korea are going to be redistributed to the rich via greater dividends and enhanced share prices.”

I started gesturing with my hands as I continued, “Look what’s going on around you. Look at your country. There’s massive unemployment. The demand for goods and services is weak. How can we have a robust economy if people can’t buy stuff because their jobs have been shipped overseas? People have gone without jobs for years. Much of the tax base has been shipped overseas. That’s one of the reasons why they’re tens of thousands of people protesting in the streets of Madison, Wisconsin. These treaties only make the wealthy richer at the expense of the rest of us. They weaken the demand for goods and services in this country.”

At this point, I wanted to say, “Your position on this treaty is complete bullshit.” However, I held my tongue and opted to say something a tad nicer, “Your position on this treaty is completely silly.”
As I began to sit down, the senator stood ramrod straight. Then he pointed his finger at me and said, “Sir, I said I haven’t made up my mind on the treaty.”

My posterior hadn’t even hit the chair when I began to rise with my hand in the air. I was indignant. I was going to say, “That’s my point. How could you not have made up your mind?”

At that exact instant, just as the senator was beginning to defend his position with his earlier answers, two of his assistants appeared like magic at my sides. They asked for my name, if I wanted to provide any additional information and several other things. After about thirty seconds, I sat down and told them, “No, you can’t have my name.” I figured the assistants were there to distract anybody who asked a question that might make the senator uncomfortable. So I shooed the assistants away. Then I realized something.
It didn’t matter what anybody in the audience said. We were working people. The senator didn’t care that the South Korea FTA was going to redistribute income from working people to the affluent and weaken the demand sector of our economy even more.

I figured Wyden had already laid the groundwork to wage war again against the middle class on behalf of his biggest campaign contributors: Nike shareholders, hedge fund managers and investors, as well as other affluent institutions and people. Income redistribution: that’s how the wealthy have gotten richer while sucking the middle class dry. In addition, this scheme gives the affluent more money to purchase additional lobbyists and senators.

As the senator finished his rebuttal, I realized the future of our children was on the line. The time had come. I decided to get politically involved in the hope that enough committed voters might change Wyden’s mind.

In April, I attended a meeting with one of Wyden’s assistants. Everything he said indicated the senator intended to vote for the treaty no matter how devastating it was for the majority of Americans.
I now spend more time working as a volunteer with Oregon Fair Trade, an organization aligned against free trade income redistribution treaties. I got involved with Portland Central America Solidarity Committee (PCASC), which is against the treaty. They’re taking direct action against any members of congress not opposed to the South Korea FTA. Along with others, these groups are informing voters and taking part in protests. And they’ve had success.

Oregon Congressman David Wu was sitting on the fence on the South Korea FTA. These groups got him to change his mind. This proved one truism.

We can stop the rich and their plutocrats in congress. If we educate enough people, if we get voters to say enough is enough, we have a chance to stop this latest rich man’s scam. The time for action is now. Stand up for yourselves and for your children. Get involved. Go online. Numerous organizations are defending the vast majority of Americans against members of congress intending to vote yes on these trade treaties. The lists are long. We can stop this summer’s free trade income redistribution con game. Sign up, get active and stop the madness.

Read Full Post »

Every economic downturn has its brief moments of glory; those times on the downsize when new government economic data is released that shows something positive. And each kernal of good news in the midst of unmitigated disaster is treated by the government and the news media as a golden nugget of opportunity to support the conservative and liberal economic conviction that the calamity is caused by mass depression among the populace. And so members of the Obama administration and their sychophants in the news media have touted a few nuggets of gold amidst a mile high heap of economic cow dung and are now telling us good times are right around the corner. They’re figuring the absolute cure for the recession is a golden nugget of bullshit.

It may take a couple of years, but as the next election cycle approaches, Herr Obama, the master of the silver tongue of hope, will come to the conclusion that his cure for mass distemper will have relieved the unemployed of their desperation for life’s little pleasure (like jobs); but his cure will likely have resulted in rising unemployment and a tendency among the underlying population to blame the president for the economic madness that has scuttled their hopes and dreams. It’s possible the economy will come out of this funk, but if it does, the unemployment rate will remain stubbornly high. So whatever the outcome he faces two years from now , Obama will have no choice but to decide to change course in order to become reelectable.

He’ll need to figure out that being the next Herbert Hoover isn’t helping, that his remedy of hope for hopelessness is stupid, so he’ll mosey over to the political left, just a little, but not enough to help with his re-election campaign. At some point, he’ll need to become the next Roosevelt, but the odds are when he decides to become a great president, rather than hover just above George W. Bush on the all time lists, he’ll be too little and too late.

That’s when he’ll discover that conveying to the mass of citizens a nugget of hope is not a cure for a recession.

Read Full Post »

Could the Dow Sink Below 6,000?

In September 2007, I predicted the current recession, the Fed dropping the federal funds rate to zero, deflation, home mortgage interest rates “will drop below 5 percent and possibly 4 percent,” and numerous other things. Of those numerous other things I also said the Dow Jones Industrials will drop below 8,000 and “possibly” drop below 6,000.

My suggesting the Dow could plummet below 6,000 is not a 100% prediction, more of a strong feeling, a musing of a possibility that represents how weak the economy has become under the disastrous Republican economic policies of the last thirty years. And so we may yet reach that sad stage as billions of dollars of illusionary money disappears.

The below 6,000 possibility is now in sight. But we’re not likely to reach there overnight, it’s more a matter of months if we ever reach it, and there is yet a good possibility such a dubious outcome can be had.

Read Full Post »

« Newer Posts


Get every new post delivered to your Inbox.

Join 1,339 other followers