Who Killed the American Job Machine

Maureen Dowd’s having trouble slathering make-up on her favorite pigs these days. Her President—the man for whom she surrendered all pretense of intelligence, wisdom, and self-control—is flailing. maureen_dowd_x200And Maureen Dowd is going all wobbly.  Wobbly on Obama. Wobbly on America.  Wobbly on life.  Here’s an exceprt:

On the razor’s edge of another recession; blocked at every turn by Republicans determined to slice him up at any cost; starting an unexpectedly daunting re-election bid; and puzzling over how to make a prime-time speech about infrastructure and payroll taxes soar, maybe President Obama is wishing that he had thrown the game.

Maureen Dowd makes a big mistake in blaming Obama alone for America’s jobless carnival of mayhem.  It’s not all his fault.

Let’s not make the same mistake made by Dowd and her friends.  Barack Obama did not wreck the American Job Machine.

His Democrat Party did.

Face it.  When the Democrats took overwhelming control of Congress in 2007, unemployment was 5.5 percent.  When John Boehner pried the Speaker’s gavel from Nancy Pelosi’s dry, cold claw, unemployment stood at 9.9 percent.  (Source)

That’s a 44.4% increase in the unemployment number.

For two years, Democrats controlled the House, the Senate, and the White House.  What did they do with that power?

They created a new entitlement.  Even after admitting that the existing spending programs were unsustainable, Democrats invented yet another new entitlement.

Sure, George W. Bush and the Tom Delay Republicans had their problems.  But they’re not around THIS TIME.

We are living under a 100 percent Democrat economy now. The GOP’s grasp on 1/2 of  1/3 of the government can’t undo 4 years of Democrat damage.

We have a Democrat in the White House and Democrats running the Senate.  It’s not the Republicans in the House preventing Obama from moving the economy forward; it’s the Democrats in the Senate and White House frightening natural risk-takers into keeping their job-creating money in their pockets.

I can see only one solution to the continuing unemployment nightmare facing people in America. That’s to finish the work started in 2010 by turning over the Senate and the White House.

Obama Makes It Worse

"It" could refer to anything. Anything at all. 
In this case, though, I'm referring to unemployment.  Well, maybe I'm referring to the economy overall.
Unemployment rate rises to 9.1%, 54K jobs added « Hot Air
Obama has increased regulation, seized entire industries (auto, student loans, commercial banking, medicine), and borrowed more money faster than all previous presidents combined. 
Obama is a one-dictator disaster.  And an incompetent one at that.
If you don't have a job, Obama made it worse.
If you have a job, Obama made it worse.
If you live in America, Obama made it worse.
Unless you're a communist college professor or union boss, Obama made it worse.

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Who’s Fit?

Take a look at Drudge. I’ll wait. The day doesn’t really matter.  It’s always full of stuff that makes you think rivets are flying out of the planet like a jalopy in a cartoon.

  • Two girls beat another girl into convulsions over the course of eight minutes while cowardly young men quiver in fear.  (But an old lady steps in and protects the victim.)
  • Syrian security opens fire on demonstrators killing 90.  (But it’s Good Friday.)
  • U.S. Dollar collapses as fear of government debt makes everything American worth less. (But Greece and other European countries even worse.)
  • Japan warns that earthquake aftermath could cause them a double dip.
  • U.S. spending could hit debt ceiling in a week.

These are everyday headlines from an abnormal time. Times as odd as a football bat.

Abnormal Times Breed Abnormal Leaders

The next president or two cannot be ordinary.  As much as we like the underdog and plain, common sense, everyman, there are times when Providence and history conspire to demand a GIANT of a person.

The Depression and World War II would have crush Truman.  Not that Roosevelt’s policies were right, but his stature was.  he was a giant.

Winston Churchill was a giant.

We’re in another era that calls for giants. At least one—one in every country that hopes to survive.

France had no giants in the 1930s.  Nor did Poland or Austria, Czechoslovakia, Hungary, on and on.  The countries without giants fell to monsters.

The World Thirsts for Leaders

You know the difference between the Depression-WWII era and now?

All the giants of that era are dead.  So are most of the people were young then, the ones who fed their families during the Depression, then conquered the monsters in the war.  They’re mostly gone. And those that remain are too old to fight.

The Baby Boomers are the age that Roosevelt was during the last crisis era Gen X is Truman’s age, Eisenhower’s, Patton’s, and Bradley’s.  Gen Y will become the heroes of this era when the history’s written 40 years from now.

But if we don’t get some national GIANTS, who knows what language that history will be written in.

Is Trump the Giant?

trumpI’m not saying Trump’s my first choice. Nor will I pretend I believe he’s an ideological Tea Partier.  I bet he can’t tell you how many Constitutional Amendments there are.  I bet he’s not conversant about Article I Section 8, nor about the 9th and 10th Amendments.  I’d be surprised to learn that he knows the issue in Wickard v. Filburn.  Has he read The Federalist?

As dear and important as those things are to us in the Tea Party movement, I’m not sure how important they’ll be in the next four years.  I’m not sure how important anything we’re talking about today will be four years from now.

The United States on the verge of defaulting on its loans.  U.S. Treasuries are on the verge of being dumped.  The U.S. Dollar’s value is plummeting.  The Fed holds $trillions and doesn’t know what to do with it. George Soros is pushing to issue his own international currency.

The U.S. economic system is about to collapse under 70 years of illegal government activity funded with irresponsible, Ponzi scheme borrowing.

The next president better be Churchill and Reagan, Lincoln and Washington rolled into one.

Stardom and Chutzpah

In modern America, two qualities are indispensible for national leaders: stardom and chutzpah. That’s just be accepted. Those qualities alone are no guarantee of success.

Success requires strength, decisiveness, and a bit of national pride.  These are the qualities Obama lacks.

I see only two potential candidates with all of these qualities:  Sarah Palin and Donald Trump.

That disturbs a lot of people. Left, right, and center.

Can you name another giant personality with the will and resources to challenge for the world’s highest office?

P.S.  If you haven't read this post, please do.

Ideas Have Consequences—Even Stupid Ones

When Barack Obama became president in January 2009, he began a campaign to weaken America. I’m not talking about military cuts; I’m speaking of America’s stature.  Barack Obama famously refused to acknowledge American Exceptionalism in 2009. He bowed to kings and princes, then denied doing so, then bowed again and again. His White House has driven down the dollar. Timothy Geithner, Obama’s Secretary of the Treasury, warns that the world economy must “rebalance” with less reliance on America.

Barack Obama is short-selling America.

The results of a US President talking down his own country are stark.  America is losing prestige, and the office of our president loses prestige right along with the rest of us. 

Asian Embarrassment

In the last week, Barack Obama got a taste of the new, devalued USA.  In South Korea and Japan, Obama was no longer treated as first among equals, but us the kid at the far end of the table.  Having trashed America’s swagger and replaced it with a lilting prance, Obama learned that it’s not so fun to be a relatively young leader of relatively young nation whose prestige has taken a major blow.

From a Wall Street Journal editorial, we see just how far the USA has fallen under Obama’s presidency:

Has there ever been a major economic summit where a U.S. President and his Treasury Secretary were as thoroughly rebuffed as they were at this week's G-20 meeting in Seoul? We can't think of one. President Obama failed to achieve any of his main goals while getting pounded by other world leaders for failing U.S. policies and lagging growth.

For Obama, now, there is nowhere to turn.  American voters have rejected his domestic policy. His base has turned against his handling of Afghanistan. The world leaders, seeing him as weak, are planning world economic policy more or less over Obama’s head.

Stagflation

But there’s more. Obama’s economic policies promise to do two things: 1) perpetuate high unemployment and 2) increase inflation.  In fact, the Fed’s stated policy, which Obama defended twice in Asia last week, is to use Demand-Pull inflation to grow the US economy. 

We’ve seen this before.  In 1978 to 1982, America suffered a malaise brought about by bone-headed economic policies from a president who believed America had gotten too big for its breeches.  Jimmy Carter’s policies produced high unemployment, flat growth, and runaway inflation.  The term for this economic condition is “stagflation.”

True, Bernanke is a Bush appointee and the Fed is independent from the White House.  But Treasury Secretary Geithner and President Obama are full participants in an economic policy that threatens to revisit the disastrous years of 1978 through 1982.  Being unemployed, underemployed, or underpaid is bad enough. When the cost of necessary goods and services rise quickly, things get worse fast for the economically challenged.  And signs of stagflation are everywhere.

Alan Reynolds of the Cato Institute wrote in a WSJ op-ed that several inflationary signals surfaced in October:

Producer prices rose at an annual rate of 5.5% in September and 4.8% in August. The broad price index for GDP rose at an annual rate of 2.3% in the third quarter, up from 1.9% in the second quarter and 1% in the first.

For ordinary folks trying to make ends meet, the prospect of inflation is frightening.  Already the weak dollar has driven up the price of gasoline and food—the two things we all need to survive.  The two things the government omits from its consumer price index.  In the past week, gasoline prices in the St. Louis area jumped $0.25 overnight. 

The Next Congress

There is little the 112th Congress can do to repair the economic damage, but it can lay the foundation for the next president and the 113th Congress. I encourage all members of the next Congress to follow Arthur Laffer’s prescription of extending the Bush tax cuts, repealing Obamacare, eliminating incentives for idleness, and push free trade. 

3 Signs of Economic Disaster

Each day, more economists jump onto the Double-Dip bandwagon. Signs abound that the natural economic recovery that would normally follow a deep recession won’t happen. Instead, the economy is now saddled with so much debt, so many regulations, and such onerous new taxes that the Obama Administration tells us to be happy with 9.5 percent unemployment.

great-depression

Barack Obama is an economic disaster of the first order.

So why all the pessimism? 

Well, every week it seems we’re hit with wave after wave of bad news. At the same time, Biden and Obama tour the country telling the unemployed they never had it so good.  Here’s today’s top stories on Drudge:

 drudge25AUG10

Here’s a link to one of the stories—on CNBC—that says we have left recession and entered . . . economic DEPRESSION.

And that brings us to this week’s triple-play of disastrous economic news.

First, existing home sales fell by 27 percent in July to the lowest levels in 15 years. At the same time, inventories climbed and interest rates fell.  That means prices will have drop dramatically before the housing market can recover.

Second, durable goods orders, excluding transportation, fell by 3.8 percent in July. Economists and analysts expected a 12 percent rise.  That means businesses have abandoned hope of recovery.

Third, existing home sales plummeted 12 percent in July to the lowest level on record. 

Why can’t the economy find solid footing?  Because America can no longer afford the government in Washington.  With government workers earning twice as much as people who actually produce value in the economy, wage earners can afford only two things:  subsistence and taxes. Truly, the government has erected a multitude of New Offices and sent hither swarms of Officers to harass our people and eat out their substance.

Either we cut the cost of government or die.  That’s a stark choice.  But it’s the one we’ve been given.

2/3 Think Worst Is Yet to Come for USA

The Wall Street Journal headline is grim:

Grim Voter Mood Turns Grimmer

Underpinning the gloom: Nearly two-thirds of Americans believe the economy has yet to hit bottom, a sharply higher percentage than the 53% who felt that way in January.

Wow.  I think the barrage of terrible economic news this week has people realizing that you can’t borrow your way out of a debt problem.

So far this fiscal year, the US has paid more in interest on its rapidly rising debt than it’s taken in from all corporate taxes.  That’s just the service on the debt, people.  And interest rates are at all time lows.  From the WSJ.com:

Years of deficit spending by Washington have led to a mounting national debt. Interest payments so far in fiscal 2010 amount to $185.25 billion; by contrast, corporate taxes collected by the government during the same 10 months were $139.71 billion. Interest payments in July alone were $19.9 billion.

The Fed and Treasury officials admit they’re out of options for dealing with economic crisis.  As a nation, we are living paycheck to paycheck.  Yet we’re STILL maxing out every credit card we can get.

Soon, we won’t be able to get more credit cards. Then we’re totally screwed.

Barack Obama inherited a bad situation and made it orders of magnitude worse.  In July, he and the Democrat Congress spent twice as much as they took in.  You can’t make it up in volume, Nancy.

To be honest, I would hate to be a member of the next Congress.  They will face a crisis that few living Americans have ever seen. And it looks like Republicans have a better chance of controlling the House, at least, with each passing headline:

Republicans, meantime, are gaining ground on a number of issues that have traditionally been advantages for Democrats. More Americans now think the GOP would do a better job on the economy—an advantage the party last held briefly in 2004 but has not enjoyed consistently since the mid-1990s. On one of the Democrats' core issues, Social Security, just 30% now think the party would do a better job than the GOP, compared to 26% who favor the Republicans. That margin was 28 points in 2006.

No matter how you spin it, business is being stifled by two things: debt and taxes. Obama campaigned on raising both. At least he kept that promise.

Now, will the American voter keep alive the promise of America?  We have 83 days to make it happen.

Fed: Other Shoe About to Drop

The only two people in the world who believe the economy is healthy and vibrant are Barack Obama and Joe Biden. 

Train%20fire[1]

Now, the Federal Reserve Board’s Open Market Committee (FOMC) is getting ready to announce that the economy is sicker than we thought.

Although Fed policymakers still believe the basic trajectory of the economy remains one of moderate expansion, there may be more attention given to heightened dangers of a sharp slowdown. “The FOMC will have to tone down its assessment of the economy in view of recent weak indicators on real growth, real consumption spending and employment,” said Brian Bethune and Nigel Gault, economists at Global Insight.

Last Friday, we got more bad news about the economy, particularly job growth.  The economy still is not adding enough new jobs to keep up with population growth. The 9.5 percent unemployment rate remains that low only because so many people have simply given up finding a job. 

Yet Barack Obama keeps telling audiences that we’re better off than we think we are.

The fact remains that the economy is getting weaker, not stronger.  Consumer confidence is falling, heading toward 12-month lows.  A swarm of bureaucrats and an avalanche of tax hikes are about to hit the country on January 1.  The Obama agenda includes measures intended to hurt businesses and the American consumer.

Obama is right to say that the economy is on track. What he’s not tell you is that the track he’s put it on is one that ends in tears for most Americans.

On November 2, most Americans will elect to switch trains.  A ticket to anywhere is better than Obama’s express to economic hell.

Don’t Blink (you’ll miss the recovery)

eyes430x300 The stock market reacted mildly to some devastating economic news today.  In fact, the stock market appears to be in denial about the state of America’s economy. 

Existing home sales fell in May.  As of this morning, economists expected a six percent increase

Economists expect new home sales to be worse than existing home sales.

And economists expected home sales to fall off the table in July and for the remainder of 2010.

But the actual housing market is already worse than economists were thinking. And now over 56 percent of economists expect home prices to fall throughout 2010.

And the bad news keeps pouring in.

Europe is going on a spending and borrowing diet – the sort that tea partyers have advocated for the USA.  But Obama wants to keep on borrowing and spending, borrowing and spending, extorting and bribing.  The contrasting strategies threaten to create a rift in the G20 at a time when unity is pretty important for economic stability.

Obama wrote a letter to his European counterparts on Friday urging them borrow and spend more.  Apparently, he wants the whole world to crash together. Are his projections so ugly that he’s afraid Germany will be bailing out America? 

Cuts in government spending now may cause some short-term pain in the US economy, but continue irrational borrowing will send the US off a cliff into debt slavery. That Obama and his minions no longer bother to argue that point tells me they don’t care about the consequences of their policies. 

See the W? 

8,000 Dow? *UPDATE*

So says Yale economist Nouriel Roubini in an interview today on CNBC.

"There are some parts of the global economy that are now at the risk of a double-dip recession," said Roubini, head of Roubini Global Economics. "From here on I see things getting worse."

unemployment-line-nyc-depression

Roubini’s comments came in response to a 376 point drop in the Dow Industrials. Nasdaq and S&P 500 were off significantly as well.  All three indices are at or near correction territory, having fallen about 10 percent from their peaks.

The reasons for the nosedive are pretty obvious:

In short, if the news isn’t uncertain, it’s bad news for economic growth.  Other economists see weakness in the US economy, as in this Yahoo News story:

"The economic recovery story has started to look like a mirage and the new reality is a return to credit crunch conditions" like those seen during the financial crisis, said Tom Samuels, manager of the Palantir Fund in Houston. "If that's correct, stock prices are well ahead of economic reality."

Buckle your seatbelts.  It looks like Obama’s second recession is on its way.

*UPDATE*

The stock sell-off continues in Asia on Friday.  Major indices are down about 2.5 percent from yesterday's close.  The Senate tonight voted to place massive controls on banks and finance, a move sure to spoil investors' appetites.  This Congress and this administration are bent on controlling every aspect of our lives.  Alexis de Tocqueville predicted this outcome 180 years ago:

Above this race of men stands an immense and tutelary power, which takes upon itself alone to secure their gratifications and to watch over their fate. That power is absolute, minute, regular, provident, and mild. It would be like the authority of a parent if, like that authority, its object was to prepare men for manhood; but it seeks, on the contrary, to keep them in perpetual childhood: it is well content that the people should rejoice, provided they think of nothing but rejoicing. For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness; it provides for their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, directs their industry, regulates the descent of property, and subdivides their inheritances: what remains, but to spare them all the care of thinking and all the trouble of living?

Please read the rest of Democracy in America, Volume II, Section 4, Chapter VI.

Debt Crisis: Greece, Portugal, Spain . . . ?

WSJ.com Alert:

S&P downgrades Spain to 'AA' with a negative outlook, saying the country is likely to have an extended period of subdued economic growth.

Markets react:  DJIA plummets from +23 to –22 in seconds after S&P drops Spain’s debt rating. And the sovereign debt nightmare is only beginning.  The UK is next.  But the USA borrows more money faster than anyone, and Socio-History blog ain’t happy:

As I pointed out yesterday, US debt threatens to end the economic stabilization.  You cannot borrow your way to prosperity.

Greece: America’s Future

As I waited to appear on Larry Kudlow’s show last Friday, I heard Larry announce over and over again that he’s sick of hearing about Greece’s problems.  Greece isn’t America.  The U.S. economy is booming, and Greece can’t hurt it.

I didn’t tell Larry, but I think he was wrong.

Greece’s problems will hurt the American economy because Greece’s problems foreshadow a far more dangerous crash headed to America.

Markets are people.  People react emotionally to rational thought.  People in America see our government adopting the same reckless socialism that destroyed Greece.  They see America’s debt rising like a hydraulic lift, just as Greece’s did.  They hear warnings that Moody’s or Standard & Poor’s may cut the U.S. treasury rating, as they cut Greece’s debt rating today. People realize that Greece is not just a small European country, but also the canary in the debt coal mine. Portugal is next.

Ben Bernanke warned today that our debt and deficits must be dealt with sooner rather than later.

But Obama just borrows and borrows. 

Why Focus on Government Spending?

The mounting government debt--$2.98 trillion in recent bailouts and stimuli alone--is an oppressive anchor around the neck of every American.  Currently, every family of 3 is obliged to pay over $118,000 in the next 30 years.  That's a house payment with a variable-rate.  In other words, the government has done exactly what helped cause the mess for individuals by borrowing beyond its means at a teaser rate of 0.8 percent.   That Teaser Rate Will Skyrocket

In order to keep rates low, the Federal Reserve began buying up Treasuries bonds last week.  Sort of like your spouse co-signing a loan for you.  The idea was that the Fed's purchases would take some of the notes off the street, driving up the price (scarcity) which would reduce the interest rates. 

But it didn't work.  According to the Wall Street Journal on March 31:

The 30-year Treasury yield immediately moved higher Monday after the Fed bought $2.49 billion in long-dated government bonds, jumping as high as 3.656% from an overnight low 3.519%. The yield was pushed below 3.6% in the afternoon session as worries about U.S. auto makers and banks spurred a haven demand in Treasurys.

This will be an oft-repeated story until the Fed's spent its Treasuries allowance of $300 billion.  As the economy perks up (which it will for the next 2 weeks to 2 months), bond prices will fall, pushing up the yield.  Those yields will drive up the deficit and the national debt.  That's the adjustable-rate mortgage effect.  

US Debt Will Skyrocket

One reason that the deficits were so high under Carter and Reagan but low (actually some surplus) after the GOP took the House and Senate in 1995 was interest rates for government borrowing.  Even though Reagan's rates were cool compare the fever (18+) rates under Carter, they were still much higher at 8 percent under Reagan than they were in the 1990s. 

Today, rates are much, much lower than they were in 1998.  They are lower than they were late in George W. Bush's second term when, the Democrats tell us, deficit spending was "out of control."  Even with these all-time low interest rates, Barack Obama and the Democrat Congress have managed to explode the deficit and the national debt.

When rates move up, deficits and debt will move even higher.

Consumers Will Pay

In a sense, the worst thing that can happen to consumers is an economic rebound.  With trillions of dollars of cash poised to hit the streets and trillions of dollars of debt to pay, every up-tick in the economy--GDP, stocks, jobs, anything--will increase prices and rates disproportionately.  

Think of it this way (but ignore my numbers which are for demonstration only).  Suppose you own a stock whose volitility rating is 1.0.  That means if the S&P goes up 2 percent, the stock goes up 2 percent.  When the budget is close to balanced, that's how debt, rates, and prices respond to a growing economy.  If the GDP grows at the 3 percent, inflation will be around 2 percent.  

But our volitility rating is more like 1.5.  So a 2 percent increase in the broad market will yield a 3 percent increase in your stock.  In terms of inflation, a 3 percent increase in GDP will yield a 4.5 percent price increase.  (The GDP:inflation ratio might be much higher than 1.5 considering the amount of borrowing that's occured in a very short time.)  So your salary might go up 3 percent, but your cost-of-living will go up 4.5 percent, leaving you worse off than before.  

Unemployment sucks, and I want that rate to fall.  But be realistic.  Someone who lost a $60,000 job and finds a new $60,000 job will not be back where he started.  Even if he managed to survive on savings during the unemployed period, $60,000 will no longer buy what it did before.  That's the problem with inflation:  it erodes the purchasing power of the dollar.

Stop the Borrowing! Stop It Now!

The road to meaningful recovery requires the same steps as life-saving:

1.  Stop the Bleeding:  stop borrowing

2.  Start the Breathing:  cut taxes to drive investment and cash-based spending

3.  Treat for Shock:  let communities help those who need assistance until the economy lifts their boats

Currently, the administration is doing none of these.  It's force-feeding anti-coagulants which will increase the bleeding; it's raising taxes which will deprive the patient of oxygen; and it's forcing its heavy hand on those in need. Bassackwards.

2009 Economic Prediction *Bumped and Updated*

*Originally posted February 15, 2009* I know this is a little late, but I was waiting for Congress to spend another trillion dollars or so before committing my prediction to the public.  Here goes:

GDP and unemployment will  flatten and even improve a bit in first half of 2009 for a couple of reasons:

First, people will begin to look for excuses to spend money.  This includes businesses.

Second, the hideous transfer of power from individuals to government that passed Congress on Friday will have a psychological effect on people making some believe that things will get better soon. 

Together, let's call this mass hypnosis.

That hypnosis, though, will wear off when we begin dissecting first quarter 2009 numbers in April.  The reality will then hit home:  downward economic trends slowed or reversed because things couldn't get much worse.  (Again, this is the psychological feeling, not economic reality.)  In other words, people will stop thinking "It's getting better," and start thinking, "We're stuck on bottom."  It'll be like old WWII submarine movies where the disabled sub settles on the ocean floor.  The crew's not out of the woods--oxygen will run out eventually--but they've stopped descending toward collapse depth. 

Then, of course, some idiot seaman rolls a bowling ball toward the bow, a rock they're sitting on gives, and the sub starts sliding into 38,000 foot trench. 

The other economic bowling ball that will hit the pins in early summer is Treasuries.  With the uptick in private sector activity and the flood of Treasuries hitting the streets, investors--especially China--will shift their purchases away from government debt.  This will drive up yields quickly until equilibrium re-establishes.  I don't know what the level will be, but it will be high.  

Having obligated over $65 trillion (with a "t") in promisory notes since September, the US government must issue massive amounts of bonds.  If you're a bond salesman with crateful of US Treasuries, a weak economy is a wonderful thing--there's nothing else for investors to buy.  But a growing economy makes Treasuries, which are now riskier than ever before, a less attractive alternative.  Stocks and corporate bonds offer the possiblity of recovering some of the losses of the 50 percent stock market dive.  Treasuries do not.  Not until their yields hit the 12 percent range.

High interest rates will cause already skiddish companies to pull back even more, touching off a new round of layoffs and another dive in both stocks and GDP.  

Of course, I'm just a computer guy; I could be wrong.