Obama, the Great Divider — Literally
The Republican message for 2012 is as irrefutable as 1 + 1 = 2. And Obama threw himself headfirst into the bear trap with his veto of the Keystone project.
One one hand, we have nearly a fourth of working-age Americans without jobs, the worst proportion since the early 1980s. On the other, we have $2 trillion of cash sitting idle on corporate balance sheets, as President Obama complained in a February 2011 speech to the U.S. Chamber of Commerce. We have investors languishing for lack of returns, and unemployed people languishing for lack of work.
Standing in between prospective workers and prospective investors, preventing capital from employing labor, is Barack Obama. Someone really ought to to draw the cartoon: a $2 trillion cash pile gathering cobwebs on one side, an endless line of unemployment on the other, and Barack Obama in the middle, keeping them apart.
Under Obama, the United States has suffered the steepest drop in private investment since data were kept, as well as the slowest recovery.
The flip side of the investment bust is the worst employment-to-population ratio since before the great Reagan recovery:
To put this in perspective, $2 trillion of idle cash represents two years’ worth of American investment in equipment and software. Why would corporations rather earn rounding-error levels of interest at the bank than put their money to work in profitable ventures?
Why should firms invest in machines or employ man if there is no demand for the goods they produce? Even if the tax rate is minus ten percent they won’t. The problem in the US economy is the lack of household spending, not that of bussines. The lack of invest demand is derived from the lack of consumer spending. The main reason why Americans are not spending is because, their wealth has been reduced by the financial collapse. Years of wars and tax breaks to rich Americans financed by Chineese and cheap money by FED have corrupted wall street. So, what you observe is the result of irresponsible and literally bankrupt Republican administration of George W Bush and Dick Cheney.
Every syllable of your comment is utter nonsense. For there to be demand, businesses must take risks and invest in new product and services, which they must hire people and buy equipment (which will require even more hiring) to produce. When those people are hired, have jobs and are earning salaries, there will be demand.
$2 trillion is sitting in business coffers right now, plenty to hire everyone who wants a job. But they’re not spending it. Because of this administration’s anti-business policies.
Obama and the Dems had the White House, both Houses and a filibuster-proof Senate for two years – or have you forgotten. The policies you would advocate are, in fact, in place right now. What you see today is the result.
Has it ever occurred to you Socialists that rather than beg businesses to start investing, and hiring with, their $2 trillion, Obama could sit down with them, ask them what they want in exchange for investing and hiring again, and then give it to them? Repeal Obamacare, repeal Dodd-Frank (and for good measure, Sarbanes Oxley, passed under Bush, too), eliminate the corporate tax entirely, and you will see a massive economic boom virtually overnight.
Or keep all of the above and enjoy your third “recovery summer,” courtesy of Obama, the Democrats and Socialist such as yourself.
It is the divisive Republican policies that have bankrupted the US and resulted in the current malais. When George Bush and Dick Cheney stole the election, the US had more money in the state coffers than ever. Budget surplus, not the defi cits were the topic of discussions. George W Bush and Dick Cheney wasted all that money and more by giving it to the rich and then throwing bombs on the heads of Iraqis thinking they would see the light and be liberated. That is their version of liberation theology.
Bush and Cheney stole teh election?! Well, since Obama has been in office for three years now and has had full access to all information on Bush’s thef- and war crimes… why WHY hasn’t he prosecuted yet?!
Unless…HE’S IN IT TOO!
Bwuhahaha.
If McCain had won the election in 2008 instead of Obama,
would you be making excuses for HIS administration too?
The voters hired Obama to do a job, NOT to keep whining about how hard the job is or what a mess his predecessor stuck him with.
“The job is too hard” is a common excuse of incompetents. (Try that excuse out on your own boss at work, and see how far you get.)
If the job is too hard for Obama to deal with, then he was the wrong choice for President.
Obama is doing an excellent job and will be most probably reelected given the sorry excuses for republican candidates. What he is guilty of is that he stimulated too little. When he took over the government the american economy was in a deep coma and bleeding profusely. The harm in the financial market was already done so that all he could do was to clean up the mess as quickly as possible lest it would damage the real aconomy by suffocating it with credit squeeze. The business and household spending fell sharply. So, between a recession and a painful depression Obama stood. Like a true modern thinking rational political leader, he promptly stimulated the economy and saved millions of jobs. So, thanks to Obama thousands of households are looking forward to a brighter future. So it was up to Barack Obama to right all the wrongs of Bush and Cheney.
The problem, mstr, is that your opinions lack evidence. Therefore, they exist only as your subjective views – alienated from reality.
You’d have to provide evidence that ‘millions of jobs’ were created. Saved? Only in the public service/public unions – and these are not wealth-creating jobs but are drains on the taxpayer.
You’d have to provide evidence that Obama’s high taxes and increase in regulations did not smother but stimulated the economy.
Where’s the factual, real-life evidence for these personal opinions that you hold?
mstr is doing what many liberals do – mistaking correlation for causation. In his/her mind, something is occurring BECAUSE of Obama, not on its own irrespective of who is president. It’s like saying higher or lower temperatures are the result of some Obama policy just because they fluctuated.
Fact: average unemployment during the Bush years was under 6%
Fact: Obama has added more to the debt in 3 years than Bush did in 8
Fact: under Bush, jobs were added for 52 straight months
Fact: more people on food stamps than ever before
Cause or correlation: the downturn began not long after Dems won control of Congress in ’06. Hmmmm
Mstr proves the point that you cannot have a substantive debate with liberals; you can only laugh at them. They will not consider empirical data; they will glom onto 8.3% as a self-contained sign, blissfully ignoring the artificiality of that number since a lot of unemployed are not even counted since they have stopped looking. They will ignore that the workforce contains several million FEWER jobs than when Obama took office, despite a sizable increase in the population.
Bush and Cheney stole the election? Even the NY Times finally admitted that Bush/Cheney won the Florida election. By the way, if Gore had carried his “home’ state of Tennessee, he wouldn’t have needed Florida. Unfortunately for him, after his “service” to this state as Senator, we knew him for the self serving phoney he is.
Please know your facts. The national deficit when Bush took office was 5.7 trillion – Bush raised that to 10 trillion in 8 years. Obama raised the deficit to 15.4 trillion in 3 years – do the math – mstr – Obama is bankrupting the country. In fact if you forecast the budgets conservatively ( or lack of them as the Dems have not produced one in over 1000 days ) Obama is going to spend close to 10 trillion by the time he leaves office if he would get two terms. Contrast that with all the Presidents prior spending 10 trillion combined. That will destroy our country.
Companies are not investing because Obamacare has been hanging over there heads for the last 2 years and they are hoarding capital because they know there is no “economic recovery” going on.
Blaming Bush will not get Obama the destroyer re-elected this time.
The key word is “risk”. Companies don’t have to invest to meet current demand, they invest (and hire) to meet anticipated demand. If they foresee that the government will take too much of their money, or that regulations will cost them too much, they’ll simply clam up and wait it out. I’ve talked to several small businesses that are refusing to expand or hire due to Obama’s regulations.
During a business cycle, investment in new capacity recovers the last. When the demand recovers, firms meet the extra demand from inventories so that capacity utilization and employment are still low. Once, inventories are depleted then production picks up followed by employment. So household consumption is further increased thus it makes sense for the firms to invest in new machines etc. In the short run, an economy moves by the aggregate demand. Only in the long run investment matters. This is economics 201.
Ah, no. The bottom of a recovery is often marked by a surge in investment, because this is exactly when many see the greatest opportunity. This is how we get something called a “V Shaped Recovery”. We are not getting that now because investors see opportunities, and excellent valuations, but also… Obama. His policies create a powerful damping effect, holding down investment in new capability.
Think about it. Imagine for a moment, we’re friends, and somehow we live in an alternate universe, and a conservative was already president. And I said, “Hey, mster, I’ve got a great idea for new way to provide welding gasses to the contractors that will build the Keystone Pipeline, I think it will make a lot of money, would you like to get in with me?” Depending on your faith in me, you’d say “heck yeah!” or “let me think it through.” But in this world, with Obama, you’d say “You’ve got to be kidding me! Didn’t you hear that the nincompoop in the White House CANCELLED that pipeline?”
That’s how it works. Investment and expansion occurs when you don’t cancel the pipeline.
Are you by any chance a liberal? If so, I have nothing against liberals, but please remember, your opinions on things like feng shui or which Broadway show I should see might be very valuable, but please, expounding on matters economic, it’s just doesn’t work with a liberal mindset. It comes off as rather silly. I mean, really, if you wanted opinions on rifles, you wouldn’t ask a liberal, right? And if I needed an opinion on an interpretive dance group, I wouldn’t ask a conservative. That’s why we have both, so that we can each play to our strengths.
Clearly the bullet left the gun well before Obama took office and clearly the republican congress does everything in their power to undermine his agenda and even the economy. I don’t think it is fair then to say that Obama’s ideas are at fault. I consider myself conservative but register independent due to the terrible ideas and candidates I see put forth by the republicans. This is all very regrettable because we are divided and divided we fall. I think finding common ground is more important than being right at this point.
Risk certainly is a factor as is the needed bursting of the real estate bubble but the real issue is relative wages in terms of the % of the economy workers get . This has dropped roughly 30% for almost 9 out of 10 Americans over the last 30 years. That means in very rough terms, a decently well off person would made the equivalent of 50,000 will have $500 less in spendable money every year.
This was compensated by lower prices for some goods (electronics and cheap food) and having a second workers and held up with a series of bubbles. Of course that is a completely non sustainable economic system and as would be expected it went BOOM!
Right 40 million need assistance just to eat and that doesn’t count for a lot of marginal cases that get no assistance but make like $10-12 in an expensive state. They might have a TV and Internet but they are locked out of a lot of commerce and while not poor by Somali terms, certainly are not affluent enough to be a market for anyone but $1 stores.
Throw on top of that 40 million or so unneeded immigrants legal and illegal, the ease of outsourcing, massive automation job loss (the Netflix effect) and the drying up of international markets and you have a recipe for economic stagnation .
Remember the world can’t support another net exporter since all (yes all) of the affluent countries have high youth unemployment and a fast aging populace.
Now certainly Obama’s policies don’t help .
None of the policies pursued by Romney, Gingrich, Paul anybodies will help. They’ll end up giving the economy a bubble bump.
The only thing that will works is large scale employment (it needs to be easy to get a job) and corresponding wages go up faster than goods inflation for Americans.
Anything else and the economy shrinks.
The problem is though getting there, it requires a hefty dose of populism, economic nationalism and pro worker incentives, not to mention a fairly massive immigrant repatriation effort. I can’t imagine any business today supporting that . A little skills education would help too but I can’t see the Left being much in favor of that (they don’t get to mangle young peoples brains) or the immigrant repatriation (oops there goes the voter base) so we get gridlock.
The administration’s decision to reject the Keystone XL pipeline is the latest acknowledgement by Barack Obama that jobs are unimportant, but it is only one of many. The administration has turned the Gulf of Mexico into a “no drill” zone, ignoring court orders and using the permit process to halt development.
Recent regulations from the EPA are a naked attempt to shut down coal-fired electrical generation, responsible for 50% of America’s electricity.
Shell Oil, having spent $4 billion trying to develop tracts, already leased and paid for, north of Alaska, gave up when the EPA denied permits to begin exploratory drilling.
At every available opportunity, Barack Obama has waged war on energy, shutting down future drilling off our coasts and in the interior. Production is up, but this is despite Barack Obama, not because of him.
The president has now announced an auction of 38 million acres of oil and gas leases in the Gulf of Mexico. Yet any company willing to pay for a lease under this president would have to be either stupid or confident that 01/20/13 will be the end of an error.
Read more of my article: http://www.americanthinker.com/2012/01/obamas_dismal_job_performance.html#ixzz1lJlaGyKz
The problem with your ‘demand-side’ or Consumption outline of the economic process is that you totally ignore the other two components, (necessary components) of the economic process.
An economy functions as a triad – not your simplistic singular process. The triad is Investment, Production..and then..Consumption.
In order to have the money to consume or demand goods/services, there must be jobs. Govts can’t give you this money for they take it from someone else. So, the source of your income is from a job…in the private sector of the economy. [The public sector exists only by taking money from people].
In order to have a job, the private sector must INVEST its private money into building a factor, starting up and maintaining a business, funding research for new technologies. INVESTMENT money comes from profits.
Then, once the money is invested in this basic infrastructure…comes PRODUCTION. That’s hiring workers, providing the services. Paying the bills. This is maintenance work…
The paid workers…can spend their money. But it must generate a profit or INVESTMENT can’t take place. Without Investment, PRODUCTION can’t take place.
So, a govt has to keep business taxes low so that these two vital first steps can build jobs and keep workers with jobs so that they can then, and then only, CONSUME goods and services.
Your outline utterly ignores these basic processes of an economy.
You sound like you are an expert in soviet economics. In a market economy, such as US, it is the consumers who are the kings. If they demand it is produced, if they don’t it is not produced. This is economics 101.
Your simplistic view illustrates a very limited understanding of economics & how it works. I don’t know all that much either but I do understand that more than just demand drives a market. There is need AWA demand that generates work that must be done. It is also a fact that introducing a product into the market can generate demand. Think of all the things out there that we buy simply for the sake of convenience: Video games, movies, books, fancy cars, vacations, trips down zip lines, etc. Get the picture?
The consumers must have: A) the money with which to purchase items, and B) the confidence that they don’t need to save that money for the future.
What the heck is ‘soviet economics’? That’s socialism; don’t you know that?
All economies, whether socialist or capitalist, function within those three phases: Investment, Production, Consumption. Socialism insists that the govt control the first two phases – that’s similar to Obama’s view and actions in the economy – ie, his actions are socialist.
Capitalism puts these phases into the hands of the private entrepreneur, who must take wealth and INVEST it in a private business, to PRODUCE goods/services. These two actions provide JOBS. Got that? And that enables the final phase of: CONSUMPTION.
And no, in a market economy, the investor/producer is King. The consumer doesn’t demand something until it is innovated, designed, manufactured and put on the market. Then, the market EVALUATES the produce for quality and cost.
Basic economics – and you don’t seem to know much about this field.
So.. what do you think was the demand for “Cap’n Crunch” in 1962?*
People create new demand all the time. But that’s in Economics 202.
*I’m using this as an example because it’s as clear a text book case of market creation as you will ever find- the marketing campaign was designed before the product was!
They have college classes on walking and chewing gum and breathing at the same time. I highly recommend.
A consumer can desire all he wants- do you think the soviet citizens didn’t want cars or makeup or milk or eggs or clean water? do you think chinese citizens really want collapsible elementary schools? or mao suits?
A businessperson has to have the capital to make the product. Then, if it’s successful, they have to be able to produce multiples, they have to be able to hire honest, hard-working employees, and they still have to make a profit above what they pay in pay and regulations. My husband is in the banking industry. He has customers who own factories making successfully sold products. The minute they hire their 51st worker, they render themselves an unprofitable company, b/c further regulations kick in, courtesy of senator- never- worked- in- manufacturing- in- her- life Madame Clinton. Without those particular new regulations, they could hire more workers, fill the economies demands, and grow even more. As it is- there are supply lags, and thus a drag on the economy.
I kick unions alone on the “honest” and “hard-working.” My grandfather was a floor-shop manager. He’d worked his way up from nothing and an 11th grade education, share-cropping a dirt farm. With his own hard work he made shop-floor steward. And he expected his men to do the work he’d done- and they did. All but the union thugs who threatened him in public, who went after his kid, who threatened his wife. He wasn’t a big capitalist. His wife was the daughter of a sharecropper who didn’t get indoor plumbing his whole life. They lived in an apartment. She went to church in flour-sack dresses. They were threatened by union thugs in shark-skin suits. His son found out that bullies do indeed hit boys wearing glasses. Thugs, beasts, scum of the earth.
WE have elections, which means businesses can park savings, rather than invest. They can wait four years, or three, or however much until they guess that the dem-storm has passed. They don’t even need to be financial nostradamuses. Financial guys send out CD’s, or make radio shows, where they talk about how sophisticated financial analysis works- sit, with interest, risk, park outside the country– even the silly guys in the CD radio business know more about finance than what O remembers from college. They were sober- he was stoned. Anyone listening can get a fierce, immediately applicable education. You are used to the snake oil hustlers on cable tv, or infomercial liars. There are ones just doing shows for other financial professionals. They aren’t fools, there.
And- we have elections. Businesses can leave countries without elections, that have squirrely financial habits. Have you ever seen a company willingly move its heardquarters to Burkina Faso, for instance? or willingly moving to Georgia? Or Kazakhstan? Or Burma? They don’t have good governance, financially, and they don’t have viable elections. We have the luxury of decisive elections every few years. And, well, usually, the crazies don’t get power. I’m still not sure how O won the primaries. I saw Hillary tee-shirts all over the place, not O.
“Why should firms invest in machines or employ man if there is no demand for the goods they produce?”
Good question. But although you probably thought it was a rhetorical question, it has an answer. You generate the demand.
This was precisely Henry Ford’s strategy, and it was very successful. If you merely plan to existing demand, there is no risk, no innovation, no market creation, and no gain.
Let’s deconstruct the thinking that went into your question. You are considering marketing a product or service. Either some level of demand already exists, or it does not. If it does not, it is up to you to create it. If demand does exist, then you will have to either create more of it, or you will have to compete with those already meeting the demand. And to do that, you have to be, in some way, better.
Look at any successful innovative company, and you will see, this is exactly what happened. One of the above. The case you are thinking of, where there is existing unmet demand and none of your competitors are able to meet it, is a rare stroke of wonderful luck for a business, not the norm.
In Soviet Union you had mountains of unsold Lada cars. At the same time, you had to be a politburo member to get a pound of butter. Your theory that supply creates demand is false. Unless there is demand for a good what your supply would get you is a pile of crap.
Some supply creates demand. Entrepreneurs bet that they can create demand. Samsung sells smart phones, Nokia doesn’t. Granted, in the nonexistent planet inhabited by the imagination of economics professors, where we abstract away from messy issues like innovation, demand can be made to drive the economic model. In classical theory, supply and demand become equivalents (J.B. Say’s famous Law).
An entrepreneur is betting on a future (forecasted) demand for a product. Not all bets are rewarded. Those which succesfully meet the demand are produced and in most cases the scale of production multiplies many fold. Some entrepreneurs, who bet wrong, get preperation H.
Ah, no. There was a long waiting list for Ladas. Up to a decade. They were not disfavored until the Soviet Union fell, and superior foreign cars were available.
It is not “theory” I am talking about, but actual performance. Henry Ford did exactly what I said he did, it is historical fact.
You remind me of punchline of the old Soviet joke. “That may be all well and good in actual practice, Comrade, but it will never work in Theory!”
Reality: Ladas had a long, long waiting list.
So did Trabis. The canonical joke involves a rich American who hears that the longest waiting list for any car is the East German Trabant, and figures it must be great, so he orders one. The East Germans are so surprised to get a foreign currency payment that they bump him to the top of the line and ship his car immediately. The American says, “Imagine! While I’m waiting for delivery, they sent me a plastic model!”
Trabis and Ladas had the same jokes, I think!
“Can I get windshield wipers for my Lada?” “Sounds like a fair trade to me!”
Why is the owner’s manual so thick? It includes bus schedules.
How can I double the value of my car? Fill the tank.
And my favorite: A Lada buyer complains to the dealer: “I have to drive uphill going home, and the car won’t get past 70!”
Dealer: “But 70 is great for a Lada, especially uphill!”
Buyer: “Number 70. I live at Number 95!”
“Ladas had a long, long waiting list.”
How do you double the value of a Lada?
Fill up the gas tank.
A soviet worker saved enough rubles and received permission to purchase a car. He goes to the Lada dealer and orders one and the dealer informs him it will be delivered in 10 years. “Will you deliver it in the morning or the afternoon?”, asked the man.
Dealer: It’s in 10 years, so why does it matter?
Worker: Well the plumber is coming in the morning.
source: President Reagan
Here is a joke the Soviet economy played on my father-in-law:
He worked in the mines in Siberia all his working life and saved up enough to buy 9 Ladas to retire on(a considerable sum for a Soviet subject.) The Soviet leaders overspent the national government’s income for years and the result was hyperinflation. When it was time to retire, Nick’s 9 Ladas worth of savings became 9 loafs of day old bread.
Ha, ha, funny joke Nick.
Looks to me like Obama and Congress is getting ready to play the same joke on us.
And you realize, of course, what you’ve done there: Not only is the example wrong, but you are using the Soviet Union… the SOVIET UNION!! to give us an example of how a market works.
Yes, I’m sure Lada production was relatively free of bureaucratic repression!
You will either now wake up and see the complete absurdity of what you’ve just done, laugh and smack yourself, or stay asleep.
“……This was precisely Henry Ford’s strategy, and it was very successful. If you merely plan to existing demand, there is no risk, no innovation, no market creation, and no gain……”
And that is precisely what he did when he set the goal of producing a thoroughly reliable, functional and appealing motor vehicle for a base price of $365 US dollars – “A dollar a day, one year, a Ford”. That was the price point that allowed him to sell an iconic product into the millions to farmers, labourers and tradesmen. Before that, a motor vehicle was more of a toy for lawyers, doctors and professional people……
You ignore one important reason that companies make capital investments – to lower costs via higher productivity. Even with no demand growth, a company will consider an investment if it lowers costs even if it doesn’t increase the quanitity sold directly.
Lower costs can increase demand too – that’s what the Keystone pipeline would have accomplished indirectly.
But business will do very little investment as they know not the rules going forward. Would you sit down in a casino, push your chips out on the table and then WAIT for the new rules of the game?
DPG, another excellent synopsis of current business dynamics.
Add to this mix the facts that micro and small businesses are NOT sitting on piles of cash, are still watching every dollar, are continuing to find ways to cut costs and spend less, are not hiring, are not able to get loans to expand operations, and are braced but woefully underprepared for whatever whimsical regs and taxes Obama and his minions dream up next, and you have an entire economic sector operating on the edge.
Many micro/small business owners confess they’re unsure whether their businesses will survive 2012, let alone 4 more years of Obama.
As you note, if the Rs win the presidency and both Houses in November, 2013 will be a boom year. If Obama wins, the impact of micro/small businesses closing their doors for good will be felt everywhere, except perhaps in DC.
And the psuedo-Keynesian position is herd from. I label it pseudo-Keynesian because half of Keynes advice, to run a surplus in good times, is never even given lip service. Well, his advice to stimulate demand has been tried, and its not working this time either.
Oh, and the capital strike started when Obama was elected, as businessmen paid attention to his tax and regulate rhetoric during his campaign.
The current economic state is not just a regular business downturn. The problem is much bigger because the financial markets are not yet recovered from mortage related credit bust. Household networth is down and it is recovering very slowly. So what we have right now is recession cum credit crunch. When the housing market starts to recover then we can say that we are out of the woods, not yet. It would be irresponsible right now to talk about cutting the deficit. That would kill what little recovery we have.
There’s not going to be any “recovery”
The Congressional Budget Office estimates that unemployment is going to start ticking up again this year, back to 9%.
Your hero Obama has failed to get the economy back to recovery AS HE HAD PROMISED TO DO. Admit it.
Give somebody else a chance to fix the problem. Heck, why don’t you Democrats dump Obama and give Hillary a chance to fix the problem?
The current conservative thinking is anachronistic. It reduces domestic policy to reduced taxes and foreign policy to military confrontation. US domestic economy is many times more complex than what it was in 19th century. But conservaties have no good policy recommendations to sound regulation except to abolishing it. Again, cold war is over. There is a new world out there, but conservative foreign advocates military superiority, ignoring all other aspects of power. If the only tool in the carpenter’s hand is a hammer, then everything else would look like nails to him. It is unfortunate but, the Republican party has become ossified.
The current *simplistic liberal strawman depiction of* conservative thinking is anachronistic. It reduces domestic policy to reduced taxes and foreign policy to military confrontation…
Fixed
If Obama is re-elected,
do you expect we’ll have full employment and a strongly growing economy in his second term?
If not, why are you still supporting him?
Why aren’t you telling your fellow Democrats to dump him and go with Hillary instead?
Liberty and individual rights are only “anachronistic” to liberal fascists who are also economic illiterates.
Do you consider having to pass an enormous health care bill to know whats in it a sound regulatory practice? How about threatening to put the coal industry out of business?
do you even read your own posts?
there is a contradiction at every turn
now, “The problem is much bigger because the financial markets are not yet recovered from mortage related credit bust”
it is not that the markets have not yet recovered– they have never been allowed to reach equilibrium- all that “too big to fail crap” which, true, bush (never a conservative) advocated and now comrade obamanation has taken to 11
as other posters have tried to explain there is an intangible, yet absolutely necessary, force not being mentioned with regard to the market– confidence– there is very little of it among the investors/producers/consumers because of the suffocating counter force of regulations, which are just as confusing, contradictory, and abundant as your previous posts
You don’t know what you are talking about. Confidence is not an empty feeling. Households are not confident because the price of their primary asset, their house and their pension fund collapsed, that is why they are not confident. Even if they are presently employed, they may loose their jobs if firms start cuting production. Firms feel less confident because their market value is wiped off making investment less desirable. Moreover, there is less demand for their product, so no need to produce if only you yourself are going to buy it. With money comes confidence, not the other way around. This is economics 202.
Again, you betray a profound ignorance of economics. You focus only on the consumer and utterly ignore the Investment and Production phases of the economic triad. Why?
The confidence referred to is not that of the consumer but of the Investor and Producer. They are not investing; they are not expanding or creating businesses. Why not? Because they are concerned that Obama’s high tax focus, his ignorance of how wealth is produced (he seems to subscribe to the Magic Cauldron Theory of wealth production)…and his pathological need to Control Everyone with his regulations – means that their Investment capacity will be removed by taxes and their Production capacity will be nullified by regulations.
So- no jobs.
That means, that the final phase of the economy, Consumption, which is the ONLY one you seem to be aware of – is starved of wealth. Your problem is that you don’t seem to be aware of or understand the basic first two phases of a complex economy. Why not?
[I mean - to declare that analyzing the first two phases - is Soviet style - whew - I've never heard of such a thing!!]
Obama hasn’t given us ANY assurance that we can get back to full employment in his second term if he’s re-elected. In fact, the latest CBO forecast is that unemployment will remain above 7% for at least the first two years of Obama’s second term (if he’s re-elected).
So why are you still supporting Obama?
What EXACTLY has Obama done that has impressed you so much?
Why are you going to vote for him?
I’m really curious.
What’s more, Keynes’s advice to engage in deficit spending during leant times was only meant to help shore up employment. Theories of “pump priming” or otherwise stimulative methods came later and became a boon to irresponsible politicians seeking to keep the Spend-O-Matic running at full tilt so they could buy votes. Keynes himself never proposed such ideas and I am pretty sure he would be mortified to see his name associated with them.
I’m afraid it will take more than tossing Obama to cure what ails this economy. It will not be happy days are here again in January 2013…more like a tsunami of inflation washing back ashore from EUrope after the Fed gave them trillions to cover their bad debts.
http://www.zerohedge.com/news/mike-krieger-explains-why-its-leadership-stupid
David is right to advocate for those who clearly have a ton of skin in the game i.e. small to mid-size businesses and start ups. The amount of (fiat) money required to bail out the banksters though who (at least at the top) get their bonuses no matter what keeps smothering all that latent recovery.
Just to clarify…I do agree with this post 90% and expect a nice bounce if Romney gets in and manages to pass a repatriation of capital bill through the Congress combined with some sort of corporate tax cut, not just a one time holiday gimmick. And I also agree about Keystone and would add that the Russians, Chinese and Brazilians must think American enviros are idiots are really just puppets of folks who have big bets placed outside of North America (Soros, cough cough, Maurice Strong, cough cough).
It’s good to see more articles from you. I read How Civilizations Die in 3 days and have since read everyone of your PJMedia articles.
You are always worth reading. Keep it up!
Obama knows this cash is out there but in his mind it is a public asset, not a private one. While even he knows it will be hard to confiscate it directly, he has arrived at a plan for confiscating it indirectly, by blocking its use on projects he does not it to be spend on (i.e. Keystone) and supporting/subsidizing spending on those uses he approves of, such as the moribund solar panel failures. The only alternative to spending it his way is the corporate equivalent of hiding it in a mattress: getting near-zero interest on short term money while inflation eats away at it like termites eating a vacant house. And companies that do so get the priviledge of having Obama proxies denigrate them in public for “trying to sabotage the recovery for raaaaacist motives” for being good stewards of their capital. Virtual confiscation – another hopeless change brought to us by the Chicago con man.
Obama won’t say it publicly,
but plenty of other leftists are saying it–in newspaper columns, in blogs, in posts:
“If private business keeps sitting on that $2 trillion and won’t hire more workers with it, then let’s take it away from them to fund a government WPA-type program to hire the unemployed.”
That’s Robert Reich’s proposal, in fact.
Mr. O ‘Fama (giggle): I do believe you have nailed it. That money belongs to All God’s Chilluns. Obama feels righteously certain that God would want the Government to have it and to have Obama spend it. He’s better than the rest of us, you know, because he has those inclinations. We are the selfish, greedy ones for thinking that the individual whose talent brought a return on investment should be accountable for the use of that wealth.
I believe there is a New Testament Parable to that effect.
Dan Henniger at WSJ (http://online.wsj.com/article/SB10001424052970204740904577197223804294582.html) argues that Obama is and will be very effective by ignoring facts and logic and running on the virtual image of the economy he is fighting to bring into the world … so join him in the fight against the fat-cat Romney-types and for “An Economy Built to Last.”
“If Republicans win the presidency and both houses of Congress in November, 2013 will be the hottest year the U.S. economy and stock market have had since 1994.”
Only if they are committed to disassembling the obstacles (eg. EPA, Obama-care, roll back regulations, cap lawsuits, etc..) as long term investors know the mad rush back to insanity is just an election away.
I have been posting this for the last two years. It pretty much explains that government spending does not provide any semblance of growth in the economy.
The US Federal government deficit spending for the last three years has been about 10% of GDP. The stated GDP growth rate has been around 2%. If you take into account that the government is propping up the GDP by their deficit spending yet the economy is still faltering, how can anyone suggest that the deficit spending is helping?
What happens in the micro when you borrow? That means in the future you have to pay off that debt. Meaning that in the future, you will have to pay the debt obligations instead of actual spending on yourself. This translates to the macro as well.
No matter how you work it, the entire problem with our economy is the debt and the manipulation of the money supply and value. Oh well, I have a wheelbarrow for going to buy bread in the near future.
Forget corporate profits, economic growth, unemployment, etc. It’s a matter of fairness. It’s just not fair that some people are smarter, more ambitious, more hard working and more successful than others. That is, flat out, not fair. It is a blow to their self esteem. Members of the current generation, having been brought up with a resounding ‘good job’ every time they wipe their nose, are having difficulty dealing with the reality of how poorly their overpriced college educations have prepared them for life. And that’s not fair. Improving their prospects would entail much hard work. Undoubtedly that would cut into their internet gaming and social networking time. Not fair. Better to drag the achievers down to their level of mediocrity. That would be fair.
“Under Obama, the United States has suffered the steepest drop in private investment since data were kept, as well as the slowest recovery.”
This should be the battle cry for any Republican running for president this year. Facts are facts, and this has been a horrific “recovery” and if it is not stopped and if this jerk gets another four years in office, we will suffer a “lost decade” like the one Japan had, where high unemployment and economic stagnation was the name of the game for years. Make it stop. Please, make it stop. The jobs of millions of Americans depends on it. Vote this man out of office.
I am looking at my voter registration card right now as well as wearing an M&P40c on my hip as I write this response! I am ready for the next election and the results…are you?
And another thing; The One We’ve All Been Waiting For just announced ‘Afro-Americans for Obama. What is this? A bit racist n’est ce pas? Would Euro-Caucasions for whoever be acceptable? Why isn’t the liberal media screaming at this divisive racial ploy, a creation of the one who was supposed to bring us together? No answer necessary.
I stand in awe. Devastating summary, and brief too! It might even play on the telly.
All these stats don’t matter. The average 18-25 year old American slug can’t get his/her mind around this stuff, what, with “World of Warcraft” and the Kardashians to attend to. You know what’s more important to at least 45-50% of Americans today? Not working hard, not worshipping God, not treating others with respect….no, none of these things. The important things are “soaking the rich” or making sure they get their “free” stuff, like health care, unemployment, government sunsidized cars, etc…. You think some 21 year female college grad is more concerned about her empty job prospects and her ballooning student loan debt than she is about her “right” to kill the yet unconceived child in her womb? Or about raising taxes on hard working people? Please….Obama may suck as a president, but he and he ilk are wonderful organizers, and that it what this election will be all about. Romney is in real trouble, as are we all…………
Chill out.
“Soak the rich” has been a liberal Democratic theme for three generations, starting in the 1930s. It helped get several Dem presidents elected.
Truman tried to nationalize the steel industry outright, remember?
so everyone keeps saying the worst this chart, that sector, the O is the worst , etc – someone explain how 50% of the people in the US can still support the O at this point – sounds like the battle is already lost
Good propaganda and information control by the MSM.
you really think that’s all it is? Maybe years of indoctrination has finally caught up – lack of morality and independence, selfishness about my needs but utter contempt for the greater good, total ignorance on what this country was founded on and what this country represents…?
We have a lot of dumb people, mal–, mis- and under- educated for at least 4 decades now in America’s public schools, a dumbed down population that, literally, knows nothing of the United States Constitution.
Some argue that this has been intentional, the laying of the groundwork for overarching and all inclusive federal government.
Misapplying Obama’s preacher’s infamous observation, America’s chickens are coming home to roost.
What do you think 1.3 trillion dollars in excess spending gets you. It gets you alot of friends. The democratic party is roling in cash, it is great time for them. We don’t have unemploed burrocrats. As for Democratic voters they are cheap as hell you can buy them for penuts.
Food stamps, social security disability payments, and new to voting voters. 1/2 the households pay no taxes. How many get EITC?
The most memorable O voters last time was the woman who’d had her daughter declared disabled with Cerebral Palsy- she had a shady dark patch at the base of her spine- which is a possible symptom. She told me this as her daughter cart-wheeled past on the grass, waiting for her gymnastics class. Every member of her household was on some transfer payment system.
The second- the one who had never voted before who told me to my face that Republicans hate poor people. Um. I’d just told her I’d voted Republican. And she knows I’m far poorer than her.
The woman who had a state- paid nanny. The nanny was her lesbian lover. They are calculating the nanny’s pay to figure out how to pay for a brand-new, custom-built house. The son, who is disabled, is solicitously cared for. He’s got a disease that kills most kids by age ten. They need him alive until he’s eighteen, to make the payments. He’s 12 now. Still wearing government issued diapers.
The guy who supports the no-kill pet shelter, and the sign on the crisis pregnancy center meant to drive away pregnant women from help.
If you wanted to know who’s voting for him- there. those people.
Ari, that is a common condition known as the Mongolian Dark Sot, having nothing to do with Cerebral Palsy.
http://en.wikipedia.org/wiki/Mongolian_spot
“While one who sings with his tongue on fire
Gargles in the rat race choir
Bent out of shape from society’s pliers
Cares not to come up any higher
But rather get you down in the hole
That he’s in.”
Bob Dylan
Consumer confidence is a potent index of potential growth, velocity of circulation, and jobs. It is hardly accelerating. What would be interesting would be to have a producers’ confidence index beyond restocking manufactoring.
Stock and commodity futures do tend to express irrational exuberance.
An event of this administration is the government as player and not just the referee. The new regulations are stifling, and tax payer money into propping up failed business and new business models (i.e. energy) lends the issue to confidence in the goverment as investor, which dimisses the power of the people into their own free enterprise, choices, and responsibilities.
Obama and his minions are such a colossal joke, I feel like I’m inside some weird kind of Kabuki theater anymore.
The only thing I’ve heard in the past week that is unequivocally true is that since they can’t run on his record, they will run on destroying the republican candidate.
But the market will go up this year. Soros and co will see to that. There is no way little lenin will go into November with people angry about losses in their 401K’s again.
Couple that with the probable spurt, beginning election evening or before if the outcome is clear ahead of time, and the next couple of years look good for investors.
It started last September. The Oct 2007 highs will be beat in the first few months of a Republican administration, no matter who wins.
But if little lenin wins, there could be another crash in December. It will probably be a monster.
…if he can not run due to his ineligibility (…several states are looking for the elusive actual birth certificate) he may just cause a melt down of the market by showing the banks to be insolvent.
my guess is he will go all in. civil war to follow.
Spengler:
I know this is off-topic from the post, but as you have been a Cassandra about Egypt, with its collapsing economy, do you have anything to say about how the soccer violence that killed scores of people might have been a sympton of it?
If not in this thread, then perhaps in a separate one?
I’m struck by someone saying that more regulation means that the economy is more complex. Nuuuuuu…….
getting out of people’s way is how you grow a complex economy. Fostering exchange, by lowering the cost of entree to a market, grows complexity. There isn’t some perfect match between consumer desires and what is made on the market- that’s where risk comes in. There are smartphones and I-phones and android phones. And all the other phones…….it isn’t a perfect harmony of desire and supply. The last time that is evenly remotely possibly true is while breastfeeding from a healthy, attachment parenting style mother. Claiming it is claiming to be an infant.
One simple, small example: hair salons. Until Reagan, there were price controls on haircuts. Helpless, ignorant, hapless haircutters were told what to charge- they might starve, or prey on hapless consumers, otherwise. There were White House think tanks and conferences on the proper price of a hair-cut. Reagan de-regulated. Within months- maybe weeks- we had Supercuts. Then Price-cuts, Cost-cutters, Kids-cuts for kids. We had the guy who wrote Random Walk Down Wall Street declared a genius, b/c he invested in these new haircut places. He’s selling books and videos and speeches, b/c the White House task force got out of the way. Sally Herschberg sells $600 haircuts to Bill Clinton, and others. You think she’s starving? We have magazine articles about the Rachel. None of this wild complexity could have happened when all salons had to compete on was bigger mirrors, or cushier chairs…they had fixed prices. They couldn’t go up, they couldn’t go down, they couldn’t really even go sideways.
Getting out of people’s way is a great idea. It brings on complexity. Washington should not be in the middle of the complexity. It should hold level, and let other people do what they do best. Not everyone is built for policy and price meetings. Some people are built to wield blow-dryers and take cash for their business. Bless them.
as for the military: where do you get the idea that there’s only one Republican idea? Dems are the ones throwing military units at problems. Obama is at the point where he’s sending one unit of one branch all over the place. That’s pretty non- complex. That’s plastic soldiers in the bathtub level maturity. What’s complex is the leader’s college at Leavenworth. What’s complex is the US Military dispersing its soldiers to land-grant colleges, as well as military colleges. What’s complex is having military shows on cable, with internet supported discussions. What’s complex is robot-war games.
wheels were in use for centuries on children’s toys before someone figured out a full-scale chariot. shoot-em-up video games dropping the players into realistic models of far-away places, and then automatically killing them if they shoot a teammate is complex. That’s programming no friendly fire,ever, in kids too young to shave. You think they’ll be good soldiers? They’ve already got the visuals for afghanistan, soviet radar arrays, chaos in the us….and it’s all privatized entertainment.
anything but the pot-head in chief is complex.
A healthy society exhibits a good balance of competition with compassion. This is observed by a true republican no other than Richard Nixon.. he says:”a society which has no limits for its successes, will have no floors for its failures”.. there are things markets can’t deliver. you need honest governments to have them.. and fairness is one of them.
“you need honest governments to have them.. and fairness is one of them.
There is no such thing as a honest goverment, hence they should be kept weak at the federal level and “fairness” these days is a subjective term. Judicial law should be fair, but unfortunately life is not.
Live with it.
I will tell you what is depressing. The average Joe has no idea how he is being F…ed over. Not a clue. He’s to absorbed in trying to survive. So his decisions will be based on sound-bites. Maybe we deserve what we get.
True that, carla.
About 20 million people watch the nightly newscasts from ABCNBCCBS, less than 2 million watch Fox News, on average.
Thank god for Prozac.
Any movement in Dow today is a result of the devaluation of the dollar. The real price of the Dollar has lost under this administration between 30 to 40%. In real 2006 dollar value the Dow is around 7000 to 8000 and not the 12200 something it is listed today. Every time the Fed prints more money to increase the amount of money “Qualitative easing” the real value of each dollar is debased. That is the biggest reason that Gas if at $3.50 a gal, with the dollar down in value it takes more dollars to buy the same amount of gas. Instead of allowing inflation, the Fed is holding an artificial ceiling in the price of money. That means that banks can not make money, so they will not lend. Here is the tricky part, if they loan at 3 to 4% over a long period of time, they lose money. Would you lone a friend $1000 for 10 years to only make $100 back on that investment? Understand the figures are not correct, just giving an example that for MY investment, not being able to use or tie up money for 10 years to only make a small amount is not good business. Here is the rub, This is business, not charity, I would not want my investment company to tell me I don’t have any profit for 10 years because people need my money and that is fair. So let us ask, what god is the abattoir of what is fair? Who decides? If some government god takes all of my neighbors money and gives ti all to me, is that fair? Maybe to me and the government god, but in reality it is thief. When this is allowed, soon that god will be replaced and my neighbor will be in charge of their government god taking all my money because it is only fair. THAT IS NOT FREEDOM AND LIBERTY! THAT IS MARXISM…
Government is not the Church or charity. Nobody was elected to be a god or a high priest to administer charity. Government belongs to the Citizen Voter NOT the People belong to government. Freedom and Responsibility are synonymous, If governments assumes responsibility in any area it is called prison.
Government investment is no more then removing water from one side of a lake and putting it back in the other side. If I have money in one pocket, then put in some in the other picket and then reach into that same pocket to pay back the first pocket, how much money have I made in that transaction? So to government “stimulus” does that same thing except it reduces to worth of money in the end.
Discussion of Obama’s actions or intent is now as useless as discussing the color and texture of Hitler’s mustache, or of trying to reason with “mstr” and other radical leftists. The only question left now is whether or not there remains a sufficient majority of voters who possess the capability to comprehend the meaning of freedom, free markets, and opportunity to unelect the current manifestation of depraved Socialism who inadvertently won the driver’s seat in 2008; or, if, in fact, it was not inadvertent at all, but a conclusion of the terminal slide to the Left that has been ongoing.
But, it is not a simple matter of fixing a mistake; it is more a question of whether or not the Republic has been replaced by a true democracy, in which the legions of self-absorbed voters will permanently promote those who will reward them. Is it possible that Americans of integrity and traditional values are now in a minority? That we slept through the takeover by the Left and only now see it?
Until November, there is no point in discussion, because until then we won’t know where we are going, or if it is too late for the Republic. I cannot express my contempt for socialism; but, how did we not recognize it before it covered us up to our earlobes? And, what honest person would say that this has not happened?
Barack Obama – The country’s Downgrader Extraordinaire has one more downgrade to his credit – our nation’s unity.
they can’t get the numbers straight is it 20 thousand or 5 thousand? jobs
The Liberal War on the Constitution and Religion
The battle launched by Barack Hussein Obama’s administration’s insistence that Catholic institutions violate their collective consciences and church law on artificial birth control has less to do with contraception than with liberal disdain for America’s Constitution.
The ongoing uproar over contraception simply reinforces the disdain shown when our alleged “constitutional scholar” president arrogantly complained to Matt Lauer that Congress was impeding his insatiable lust for power and autocratic rule by performing checks and balances on the executive branch and by his earlier declaration that he would, unconstitutionally, bypass the legislative branch to accomplish his goals.
The president was recently joined by an Associate Justice of the Supreme Court in his public contempt for the US Constitution.
Arch-liberal Ruth Bader Ginsburg appeared on Egyptian television, praised other national constitutions, but said of ours, “I would not look to the U.S. Constitution if I were drafting a constitution in the year 2012.” As a member of SCOTUS, Ginsburg is charged with interpreting that 225 year old document yet doesn’t consider it worthy of emulation.
As a reminder to the constitutional scholar . . .
(Read more at http://www.genelalor.com/blog1/?p=12673.)