Obamanomics: Bad for the economy...

[ariscus99 1]

As 2009 opened, three weeks before Barack Obama took office, the Dow Jones Industrial Average closed at 9034 on January 2, its highest level since the autumn panic. Yesterday the Dow fell another 4.24% to 6763, for an overall decline of 25% in two months and to its lowest level since 1997. The dismaying message here is that President Obama's policies have become part of the economy's problem.

Americans have welcomed the Obama era in the same spirit of hope the President campaigned on. But after five weeks in office, it's become clear that Mr. Obama's policies are slowing, if not stopping, what would otherwise be the normal process of economic recovery. From punishing business to squandering scarce national public resources, Team Obama is creating more uncertainty and less confidence -- and thus a longer period of recession or subpar growth.

The Democrats who now run Washington don't want to hear this, because they benefit from blaming all bad economic news on President Bush. And Mr. Obama has inherited an unusual recession deepened by credit problems, both of which will take time to climb out of. But it's also true that the economy has fallen far enough, and long enough, that much of the excess that led to recession is being worked off. Already 15 months old, the current recession will soon match the average length -- and average job loss -- of the last three postwar downturns. What goes down will come up -- unless destructive policies interfere with the sources of potential recovery.

And those sources have been forming for some time. The price of oil and other commodities have fallen by two-thirds since their 2008 summer peak, which has the effect of a major tax cut. The world is awash in liquidity, thanks to monetary ease by the Federal Reserve and other central banks. Monetary policy operates with a lag, but last year's easing will eventually stir economic activity.

Housing prices have fallen 27% from their Case-Shiller peak, or some two-thirds of the way back to their historical trend. While still high, credit spreads are far from their peaks during the panic, and corporate borrowers are again able to tap the credit markets. As equities were signaling with their late 2008 rally and January top, growth should under normal circumstances begin to appear in the second half of this year.

So what has happened in the last two months? The economy has received no great new outside shock. Exchange rates and other prices have been stable, and there are no security crises of note. The reality of a sharp recession has been known and built into stock prices since last year's fourth quarter.

What is new is the unveiling of Mr. Obama's agenda and his approach to governance. Every new President has a finite stock of capital -- financial and political -- to deploy, and amid recession Mr. Obama has more than most. But one negative revelation has been the way he has chosen to spend his scarce resources on income transfers rather than growth promotion. Most of his "stimulus" spending was devoted to social programs, rather than public works, and nearly all of the tax cuts were devoted to income maintenance rather than to improving incentives to work or invest.

His Treasury has been making a similar mistake with its financial bailout plans. The banking system needs to work through its losses, and one necessary use of public capital is to assist in burning down those bad assets as fast as possible. Yet most of Team Obama's ministrations so far have gone toward triage and life support, rather than repair and recovery.

AIG yesterday received its fourth "rescue," including $70 billion in Troubled Asset Relief Program cash, without any clear business direction. (See here.) Citigroup's restructuring last week added not a dollar of new capital, and also no clear direction. Perhaps the imminent Treasury "stress tests" will clear the decks, but until they do the banks are all living in fear of becoming the next AIG. All of this squanders public money that could better go toward burning down bank debt.

The market has notably plunged since Mr. Obama introduced his budget last week, and that should be no surprise. The document was a declaration of hostility toward capitalists across the economy. Health-care stocks have dived on fears of new government mandates and price controls. Private lenders to students have been told they're no longer wanted. Anyone who uses carbon energy has been warned to expect a huge tax increase from cap and trade. And every risk-taker and investor now knows that another tax increase will slam the economy in 2011, unless Mr. Obama lets Speaker Nancy Pelosi impose one even earlier.

Meanwhile, Congress demands more bank lending even as it assails lenders and threatens to let judges rewrite mortgage contracts. The powers in Congress -- unrebuked by Mr. Obama -- are ridiculing and punishing the very capitalists who are essential to a sustainable recovery. The result has been a capital strike, and the return of the fear from last year that we could face a far deeper downturn. This is no way to nurture a wounded economy back to health.

Listening to Mr. Obama and his chief of staff, Rahm Emanuel, on the weekend, we couldn't help but wonder if they appreciate any of this. They seem preoccupied with going to the barricades against Republicans who wield little power, or picking a fight with Rush Limbaugh, as if this is the kind of economic leadership Americans want.

Perhaps they're reading the polls and figure they have two or three years before voters stop blaming Republicans and Mr. Bush for the economy. Even if that's right in the long run, in the meantime their assault on business and investors is delaying a recovery and ensuring that the expansion will be weaker than it should be when it finally does arrive.

http://online.wsj.com/article/SB123604419092515347.html

[pattygreen 5]

President Obama has one thing and one thing only going for him. He can talk. He makes the best speeches. But that won't save the economy.

He is VERY self confident. So much so, he seems to me almost arrogant. Proverbs teach that 'when pride comes, then comes disgrace, but with humility comes wisdom.' He is not a very humble man. The bible states that 'the wisdom of man is foolishness to God.'

[plain 12]

But he has not made any prideful statements, patty. Therefore, you can't be reasonably certain that President Obama is not a humble man.....you can only speculate that he may not be.

[pattygreen 5]

That's true, Plain. I don't know his heart. I only can judge by what I view of him. To me, he seems very sure of himself. His stance is beeming pride. He has introduced so much 'change' into the government so quickly, it's like he wants to show that he knows a better way. Yet, as a christian, I know that God would disaprove of embryonic stem cell research(for it kills babies at their earliest stage) and abortions and homosexual marriages and wasteful spending,(never mind that he's spending money that he doesn't have on wasteful things), and lying (line by line through the stimulus package and NO earmarks, remember). Because I am a christian, and I believe these things are wrong, I feel that He is being prideful and unwise at the same time with his 'changes'. Granted Pres. Bush could have and should have maybe done some things differently, but what president was perfect? At least IMO he had the above mentioned things in order, and now Pres. Obama has reversed them. What about the fact that He says he is a Christian. If you are a follower of Christ, then you should be reading His word. And if you did, you should know the things that God would find acceptable or not. As the leader of the country, dosn't He want us to be in right standing with God? God has blessed this country because the majority has not chosen to bow their knee to another God. He may take away His blessings if we continue in our sin. It is true that the 'Wisdom' of man is 'Foolishness' in God's eyes. Obama's 'wisdom' of making those changes is 'foolishness' then. As far is his being prideful, I must admit that I am only specualting, for only God knows his heart. You are right.

[Jesusislove 26]

Obama can not fix things overnight. He is doing his best, in an economy like this we must stay and think positivie. Obama is setting the example of thinking positive. No, I do not agree with everything he is doing, but at least he is doing something. He need to focus only on the economy right now, he is everywhere.

One thing about the great depression that many are ovelooking is that they came out of it. America did not stay there, so we will come out of this! God is Good.

[pattygreen 5]

Trell, when you say 'at least he's doing something', I respond with 'what.' What is he doing? I would rather he do nothing, and maybe things will get better on their own (I'm talking economically here) then what he is doing right now.

[Jesusislove 26]

If we look for faults we will find them, I have a tendency to look for the good in everyone, even if they don't see the good in themselves. No one really knows the answer to fixing the economy. All the financial experts say, they do not know what can fix it, so all I can do is pray, but one thing for sure we are coming out of this.

[pattygreen 5]

Are you sure? We are coming out of this? I am not worried, mind you. I trust in God alone for my needs. But, not everyone believes in God. To them, it can be kind of scary. But, you're right. Prayer is the answer.

[Jesusislove 26]

Yes, I am very sure, and will continue to think positive. I can not think no other way.

[pattygreen 5]

I see that his approval rating is down to 42% now.

[BethFromVA 5]

..."Obama lied; the economy died"....

Hehehe, I like it! :thumbup:

[BethFromVA 5]

President Obama has one thing and one thing only going for him. He can talk. He makes the best speeches.

Only when the teleprompter is working. :w00t:

He is VERY self confident. So much so, he seems to me almost arrogant.

Almost?? He is so arrogant I heard Donald Trump wants lessons. :thumbup:

[BethFromVA 5]

One thing about the great depression that many are ovelooking is that they came out of it. America did not stay there, so we will come out of this! God is Good.

Yes, but I think you forget what brought us out of the Great Depression: WAR.

However we now live in a country where many tree huggers would rather save the spotted horned owl than save people, even when war is brought to us. So I guess the only other thing to do is spend money we don't have on things we don't need and leave the bill for kids we don't have yet. :thumbup:

[BethFromVA 5]

No one really knows the answer to fixing the economy. All the financial experts say, they do not know what can fix it, so all I can do is pray, but one thing for sure we are coming out of this.

Your average American knows how we fix it: KEEP GOVERNMENT OUT OF IT.

Government has never touched ANYTHING and made it better. Never. And the problem now is that government, by lending all this money, becomes part owner in companies and can start dictating policy they have no business getting involved in. However, the libs are in control and are thumbing their collective noses at everybody while they spend more money in a month than GWB did his entire 8 years (that had everybody up in arms, but not a peep now) and giving their buddies perks and earmarks. While we all batten down the hatches and do with less -- and in many cases do without jobs -- these guys are still partying like it's 1999. They are drunk with power and money, and they no longer listen to the American people.

[pattygreen 5]

For once we agree upon something. Amazing!