Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Obama's Policies Will Cause Economic Stagnation

Economics / Double Dip Recession Jul 19, 2010 - 02:44 AM GMT

By: Gerard_Jackson

Economics

Best Financial Markets Analysis ArticleGrim is one word that surely sums up the state of the US economy. Without a doubt the Obama administration is the most incompetent since the lamentable Carter sat in the Oval office. Now there are some who sincerely believe that Obama has deliberately set out to destroy the economy. What else could explain his 'economic policies'? Ideologically-driven ignorance, for one.


When Obama first emerged into the political sunlight I warned that this character is a committed leftwing ideologue and a profoundly ignorant man. Americans are now -- apart from the true believers who evidently live in an alternative universe -- beginning to face up to the reality of the man and the magnitude of their electoral folly.

Obama did not cause this recession: the lousy monetary economics of the Fed did that. What he did is retard the potential for recovery while feverishly working to impose a regulatory structure and debt burden on the economy that could cripple it for a generation or more. (One need look no further than once-prosperous Argentina to realise what an ignorant political bigot can do to an economy in a very short time.)

Some conservatives think that once the economy picks up Obama might be able to garner enough credit to win a second term, particularly if Republican-controlled houses have kept him in check. Obama, however, is not Clinton and this is not the 1990s. Republicans were able to rein Clinton in before he could do too much damage. (It's a pity there was no one around to rein in the Republicans during the Bush administration.)

Should the Democrats get a well deserved shellacking in November the Republicans will have to confront the consequences of Obama's criminal spending and borrowing policies while rabid Democrats and their lying mates in the media tear at their heels. (Democrats can be accused of many things but never of putting the interests of the country above their lust for power.)

Furthermore, there is the Fed to consider. Back in February I warned that "the economy is shaping up to be a disaster for the Democrats". Democrats soon hit the keyboard, accusing me of being bigoted (pretty rich from those in a political party based on bigotry) and "twisting the economic facts and history". (A clear case of projection.) It's now July, the economy has turned into a disaster for the Democrats and the emails have ceased.

While the commentariat were running around in a state of confusion about the economy some conservatives were solid in their opinion that manufacturing was heralding a V-shaped recovery, albeit one that Obama's tax policies would probably snuff out. Nevertheless, a recovery had emerged. Well, one swallow and all that stuff, except that I couldn't even see a swallow. For a start, the monetary aggregates were indicating a slowdown and not a recovery. The chart shows the money supply rapidly climbing from September 2008 until peaking in June 2009, and then falling until the following February, after which it started to climb again and then apparently start falling again.

It was my opinion that this 8 per cent contraction would cause manufacturing to slowdown, and a slowdown is exactly what is happening, with last month experiencing sudden falls in the manufacturing indexes. Once we omit increased output from utilities, which was mainly due to weather conditions, the production index hasn't moved. In fact, it's performance has been pretty bad overall. Desperately in search of an explanation some commentators are blaming inventory restocking coming to an end. It's true that during a recession manufacturing sometimes finds it has rundown its inventories excessively.

At this point firms obviously try to replenish their stocks. But manufacturing doesn't stop restocking in lockstep. And there is no way that the inventory explanation can account for the New York Federal Reserve Bank's "Empire State" general business conditions index falling by 15 points to 5.1, a drop of nearly 75 per cent. This situation could very well be signalling stagnation. Nevertheless, the Democrats' anti-growth juggernaut continues to thunder along, promising more of the same, including a wave of tax increases.

Seeking out more excuses for the absence of recovery Obama's media lackeys argue that the weak labour market is holding back recovery. Fewer jobs means less spending which means less growth, and so on. These hacks wouldn't recognise a circular argument even if you used it to string 'em up, which is what they thoroughly deserve.

The fact remains that given present conditions there is no way that Obama's policies could restore full employment without cutting real wages. And surging inflation is the only means by which he can do that, assuming Americans would stand for it. Even if full employment was restored Obama's policies would suck the life out of the economy leaving the vast majority of Americans without any hope of bettering their lives.

For those Obamatrons who believe that government spending is the road to prosperity they need look no further than Nazi Germany for a refutation. When Hitler became Chancellor in 1933 the official unemployment rate exceeded 25 per cent. Six years later there were acute labour shortages. As the demand for German labour rose real wages fell and personal consumption was severely cut. This fact at least refutes the popular idea that cutting consumption reduces the demand for labour. The point remains that public spending only appears to work when the government or the central bank can successfully engineer a sufficiently large inflation rate.

By Gerard Jackson
BrookesNews.Com

Gerard Jackson is Brookes' economics editor.

Copyright © 2010 Gerard Jackson

Gerard Jackson Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules