Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19
Crude Oil Price Fails At Critical Fibonacci Level - 15th May 19
Strong Stock Market Rally Expected - 15th May 19
US China Trade Impasse Threatens US Lithium, Rare Earth Imports - 15th May 19
Gold Mind Reader's Guide to the Global Markets Galaxy: 'Surreal' - 15th May 19
Trade Wars and Other Black Swan Threats to Your Investments - 15th May 19
Our Long-Anticipated Gold Momentum Rally Begins - 15th May 19
Defense Spending Is Recession Proof - Defense Dividend Stocks - 15th May 19
US China Trade Issues Will Drive Market Trends – PART II - 14th May 19
The Exter Inverted Pyramid of Global Liquidity Credit risk, Liquidity and Gold - 14th May 19
Can You Afford To Ignore These Two Flawless Gold Slide Indicators? - 14th May 19
As cryptocurrency wallets become more popular, will cryptocurrencies replace traditional payments? - 14th May 19
How US Debt Will Reach $40 Trillion by 2025 - 14th May 19
Dangers Beyond a Trade War with China - 14th May 19
eBook - Greatest Tool for Trading? - 14th May 19
Classic Pitfalls for Inexperienced Traders - 14th May 19
Stock Market S&P 500 Negative Expectations Again - 13th May 19
Why Rising Living Standard in China Offers Global Hope - 13th May 19
Stock Market Anticipated Correction Starts On Cue! - 13th May 19
How Chinese Trade Issues Will Drive Stock Market Trends - 13th May 19
Amazon SCAM Deliveries for Fake Verified Purchaser Reviews "Brushing" - 13th May 19
Stock Market US China Trade War Panic - Video - 13th May 19
US Stock Market Leading Macro Economic Indicators Update - 12th May 19
SAMSUNG - BC94.L - Investing in AI Machine Intelligence Stocks - 11th May 19
US Increases Trade Tariffs Against China – Stock Markets, Gold, and Silver - 11th May 19
Who Has More To Lose In A No Deal Brexit? - 11th May 19
Gold at $1,344 Will Start Real Fireworks on the Upside - 11th May 19
Make America’s Economy Great Again - 10th May 19
Big US Stocks’ 2019 Fundamentals - 10th May 19
Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - 10th May 19
Stock Market Shake-Out Continues – Where Is The Bottom? - 10th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Don't Blame Bush: This is Obama's Economic Depression

Politics / US Politics Sep 05, 2011 - 06:50 AM GMT

By: Mike_Whitney

Politics

Best Financial Markets Analysis ArticleThis is Barack Obama's economy now. George Bush can no longer be blamed. And if the economy dips back into recession--as it most certainly will--then that will be Obama's fault, too. Because it's Obama's fiscal policies that are driving the economy back into the ditch. This is no small matter, because Obama's failure will likely result in political change that will deliver the White House to the GOP in 2012. Then the deficit hawks will control both houses of congress and the White House, and they will slash spending and push the economy into another Great Depression. This is not speculation. This WILL happen. Obama has made sure it will happen by shrugging off the warnings of every competent economist in the country, all of whom have said repeatedly that we needed more stimulus to lower employment, to reduce the output gap, to increase GDP, and to put the economy back on track.


Now--according to the Bureau of Labor Statistics (BLS)--the economy is producing no new jobs. Obama's policies are producing ZERO JOBS. Let that sink in for a while.

At the same time, GDP is sputtering below one-half percent for the first 6 months of 2011 and the output gap has reset at a level that will cost the country 5 trillion dollars in lost production in the next 4 years.

Is it any wonder why consumer confidence is in the dumps and everyone is so pessimistic about the future? It's because there is no future, Obama has made sure of that.

The economy is dead. That's what it means when there's no growth and no new jobs. How would you describe it?

Obama had the economy going in the right direction. When he took office he already had his economics team in place and they quickly implemented his $787 billion fiscal stimulus plan just a month after he was inaugurated. The country was losing 750,000 per month, the stock market was plunging, and GDP was deep in in the red. Exports, retail sales, manufacturing and consumer spending were all falling faster then they had during the Great Depression. But the stimulus turned things around, and in just 6 months, the hemorrhaging of jobs slowed to a trickle and the economy returned to positive growth. By the 4th Quarter of 2009, GDP had climbed to a healthy 5.0 percent while unemployment slowly began to retreat from it's peak of 10.1 percent earlier in the year.

What seemed like a miracle was nothing more than basic economics; Keynesian economics. Not Voodoo economics, not supply side economics, not make-it-up-as-you-go faith-based Republican economics, but Keynesian economics, which is to say, economics that is grounded in observable phenomena, facts, science; y'know, reality-based economics.

When consumers are unable to spend because of the losses they sustained when the housing bubble burst, ($8 trillion in losses) then the government must provide sufficient resources to keep the economy running, otherwise activity will slow, businesses will trim costs and lay off workers, government revenues will shrink, the deficits will rise, and the economy will go into a long-term funk.

Simple, right? If there's no demand, the economy nosedives.

And, that's what was happening when Bush left office. The economy was tanking. But, Obama applied the right ideas, and the economy responded. In other words, ideas count. If you apply stupid ideas--like the GOP deficit hawks--then you will get bad results. This seems so obvious that it hardly seems worth repeating repeating. But, we have to repeat it, because we're dealing with people who insist that stupid ideas are smart ideas, and, regrettably, there's a difference. And the difference is quite excruciating for the people who end up being victims of these flawed ideas.

So, even though Obama could see the results of the fiscal stimulus, and even though he could see that GDP had risen to the 3 percent range for the entire time the stimulus was feeding into the economy, he decided to do a 180 and start preaching the ideology of his rivals, the gospel of austerity.

Is this a fair account of what happened?

It's not that Obama merely brushed off the considered advice of liberal economists like Joseph Stiglitz, Robert Reich, Paul Krugman, Mark Thoma, Dean Baker etc etc etc. But he also ignored the main players in his former economics team; Lawrence Summers, Christina Romer, Peter Orzag, all of whom strongly recommended more stimulus (to avoid another downturn) in editorials in leading US newspapers.

But Obama knew better than all of them, after all he was a community organiser, right? Besides he had other things in mind, like hammering out a structural adjustment plan (the "debt ceiling" agreement) that would constrain public spending forever making it impossible for the government to increase deficits even in an economic emergency. In other words, Obama was fulfilling the right wing "wish list" to strangle big government and to ensure that entitlement spending faces savage cuts in the future.

That was the game-plan, right?

So, now the economy is headed back into the toilet; manufacturing is sputtering, consumer spending is off, business investment is falling, GDP is barely positive, housing remains in a historic swoon, unemployment is stuck at 9.1 percent, the 10-year Treasury is signalling "deflation", 47 million Americans are on food stamps, and there are NO NEW JOBS. And--Oh yeah--Obama is still jabbering about "cutting the deficits".

Does that sound about right?

Obama can't fix the problems the country faces because he's owned by Big Business and Wall Street. Everyone knows that. But to continue to pretend that the Democratic Party is a viable alternative to the GOP, is beyond misguided; it's delusional. The policies that are presently in place--and which are largely supported by the Dems in Congress--are destroying the economy, the country's reputation, and our children's future.

There's got to be another way.

By Mike Whitney

Email: fergiewhitney@msn.com

Mike is a well respected freelance writer living in Washington state, interested in politics and economics from a libertarian perspective.

© 2011 Copyright Mike Whitney - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis.
Individuals should consult with their personal financial advisors.

Mike Whitney Archive

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


Comments

Paul
05 Sep 11, 15:07
there is another way

There is one way left Mike, but it involves the torches and pitchforks approach. It also requires the phony distinction between opposing parties in the West generally be ignored as the farce it is, and pollies on both sides receiving equal helpings of public justice.


Rick
05 Sep 11, 17:18
Smoot-Hawley Tariff Act: A Sure Answer To Job Creation

Wrong, wrong and flat out wrong. First, let me correct you on one small matter. Barack Obama inherited this Depression from the Bush administration. So don't you think that President Bush should deserve some credit for this calamity too?

Now if the Republicans do manage to take over the reins in 2012, at least we might entertain a balanced budget for a change (and preferrably even enjoy a sizeable surplus). Spending on social entitlement programs (Social Security, Medicare, Medicaid, Welfare, Food Stamps, Unemployment Benefits, etc.) not only has to be slashed, but eventually curtailed. The federal government simply can not afford to assume the role of a caretaker for the aged, the infermed and the desitute any longer.

As for the stimulus programs, all that these voo doo Keynesian concoctions have accomplished thus far is to further drive this nation into the red. If these ballooning deficits aren't addressed now, I can pretty much guarantee you that S&P and other rating agencies will do it for us.

So now what's the answer to "meaningful" job creation? Well, across the board stiff tariffs on all imported goods and services sure seems to me to be a pretty good start.

One has to look no further than the Smoot-Hawley Tariff Act of 1930 to take some cues. Much to his credit, President Hoover signed on to that bill, and protection soon became the norm. Bravo!

To nudge itself once again on a solid footing, this nation urgently needs to employ a strictly regulated and protected economy along with heavily unionized industries.

The alternative to all of this would of course be: "MORE OF THE SAME". Don't you think that we had enough of that already?


Post Comment

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

6 Critical Money Making Rules