So much for hope over fear

[DarrinS]

http://www.washingtonpost.com/wp-dyn/content/article/2009/02/05/AR2009020502766_pf.html




"A failure to act, and act now, will turn crisis into a catastrophe."

-- President Obama, Feb. 4.



Catastrophe, mind you. So much for the president who in his inaugural address two weeks earlier declared "we have chosen hope over fear." Until, that is, you need fear to pass a bill.

And so much for the promise to banish the money changers and influence peddlers from the temple. An ostentatious executive order banning lobbyists was immediately followed by the nomination of at least a dozen current or former lobbyists to high position. Followed by a Treasury secretary who allegedly couldn't understand the payroll tax provisions in his 1040. Followed by Tom Daschle, who had to fall on his sword according to the new Washington rule that no Cabinet can have more than one tax delinquent.

The Daschle affair was more serious because his offense involved more than taxes. As Michael Kinsley once observed, in Washington the real scandal isn't what's illegal, but what's legal. Not paying taxes is one thing. But what made this case intolerable was the perfectly legal dealings that amassed Daschle $5.2 million in just two years.

He'd been getting $1 million per year from a law firm. But he's not a lawyer, nor a registered lobbyist. You don't get paid this kind of money to instruct partners on the Senate markup process. You get it for picking up the phone and peddling influence.

At least Tim Geithner, the tax-challenged Treasury secretary, had been working for years as a humble international civil servant earning non-stratospheric wages. Daschle, who had made another cool million a year (plus chauffeur and Caddy) for unspecified services to a pal's private equity firm, represented everything Obama said he'd come to Washington to upend.

And yet more damaging to Obama's image than all the hypocrisies in the appointment process is his signature bill: the stimulus package. He inexplicably delegated the writing to Nancy Pelosi and the barons of the House. The product, which inevitably carries Obama's name, was not just bad, not just flawed, but a legislative abomination.

It's not just pages and pages of special-interest tax breaks, giveaways and protections, one of which would set off a ruinous Smoot-Hawley trade war. It's not just the waste, such as the $88.6 million for new construction for Milwaukee Public Schools, which, reports the Milwaukee Journal Sentinel, have shrinking enrollment, 15 vacant schools and, quite logically, no plans for new construction.

It's the essential fraud of rushing through a bill in which the normal rules (committee hearings, finding revenue to pay for the programs) are suspended on the grounds that a national emergency requires an immediate job-creating stimulus -- and then throwing into it hundreds of billions that have nothing to do with stimulus, that Congress's own budget office says won't be spent until 2011 and beyond, and that are little more than the back-scratching, special-interest, lobby-driven parochialism that Obama came to Washington to abolish. He said.

Not just to abolish but to create something new -- a new politics where the moneyed pork-barreling and corrupt logrolling of the past would give way to a bottom-up, grass-roots participatory democracy. That is what made Obama so dazzling and new. Turns out the "fierce urgency of now" includes $150 million for livestock (and honeybee and farm-raised fish) insurance.

The Age of Obama begins with perhaps the greatest frenzy of old-politics influence peddling ever seen in Washington. By the time the stimulus bill reached the Senate, reports the Wall Street Journal, pharmaceutical and high-tech companies were lobbying furiously for a new plan to repatriate overseas profits that would yield major tax savings. California wine growers and Florida citrus producers were fighting to change a single phrase in one provision. Substituting "planted" for "ready to market" would mean a windfall garnered from a new "bonus depreciation" incentive.

After Obama's miraculous 2008 presidential campaign, it was clear that at some point the magical mystery tour would have to end. The nation would rub its eyes and begin to emerge from its reverie. The hallucinatory Obama would give way to the mere mortal. The great ethical transformations promised would be seen as a fairy tale that all presidents tell -- and that this president told better than anyone.

I thought the awakening would take six months. It took two and a half weeks.

[da_suns_fan]

Its interesting to see the contrast in the two parties.

The Republicans were willing to follow George W. Bush no matter how much he spent (or how dumb he was). I guess its the inherent properties that many conservatives have. Namely loyalty, tradition and a respect for the chain of command.

With the democrats, however, no one quite knows who's in charge. Is it Obama? Pelosi? Reid? The Democrats arent willing to do whatever Obama wants, more the other way around.

[clambake]

obama's in charge.

move along.

[FreeMason]

Its interesting to see the contrast in the two parties.

The Republicans were willing to follow George W. Bush no matter how much he spent (or how dumb he was). I guess its the inherent properties that many conservatives have. Namely loyalty, tradition and a respect for the chain of command.

With the democrats, however, no one quite knows who's in charge. Is it Obama? Pelosi? Reid? The Democrats arent willing to do whatever Obama wants, more the other way around.

haha oh shit you are back.:downspin:

[DarrinS]

Its interesting to see the contrast in the two parties.

The Republicans were willing to follow George W. Bush no matter how much he spent (or how dumb he was). I guess its the inherent properties that many conservatives have. Namely loyalty, tradition and a respect for the chain of command.

With the democrats, however, no one quite knows who's in charge. Is it Obama? Pelosi? Reid? The Democrats arent willing to do whatever Obama wants, more the other way around.


McCain's blind allegiance to the policy of bailout was one of the main reasons I voted for Obama. And now Obama is leaving one of the most important bills in US history in the hands of NANCY FUCKIN PELOSI?!!! Are you fucking SERIOUS?

[da_suns_fan]

McCain's blind allegiance to the policy of bailout was one of the main reasons I voted for Obama. And now Obama is leaving one of the most important bills in US history in the hands of NANCY FUCKIN PELOSI?!!! Are you fucking SERIOUS?

Theyre hoping that Obamas popularity will sway public opinion. But most of the country is against the bill how its properly constructed and Obama might take a hit in popularity if he appears too polarized on this issue.

I just like his comments about how tax cuts are proven to have "failed". As if there was ever a controlled environment where one economic theory was ever proven right or wrong. It APPEARS that tax cuts increased the bank accounts for only the rich in the 2000s but also increased money for everyone in the 90s. But there are no absolutes.

Obama's just spouting talking points.

[Winehole23]

McCain's blind allegiance to the policy of bailout was one of the main reasons I voted for Obama. And now Obama is leaving one of the most important bills in US history in the hands of NANCY FUCKIN PELOSI?!!! Are you fucking SERIOUS?Spending bills originate in the house. Big whup.

Besides, this is old news. The bill is being scrubbed and rewritten in the Senate as we speak. There's no telling how it'll come out of the conference committee.

[FreeMason]

This all looks like chaos and all that but think for one second...what if all this is actually going according to plan?

[Winehole23]

This all looks like chaos and all that but think for one second...what if all this is actually going according to plan?Ok, I'll bite.

What's the plan as you see it, FM?

[FreeMason]

The plan is what it has always been; control, power, money. When all is said and done, the government will not only have helped the international banks curbstomp most of America, but our friends in D.C. will own at least half of all real estate in the country.

I think right now and the upcoming months is the "fun time" after all the years of lining up the dominoes. They can finally make the big moves right out in the open. Pelosi trying to push all that pork tells me she at least viewed the times as a great opportunity to make her moves.

Since Obama is pulling the fear card, he could at least scare us all with scenarios of the upcoming inflation haha

[Winehole23]

The plan is what it has always been; control, power, money. When all is said and done, the government will not only have helped the international banks curbstomp most of America, but our friends in D.C. will own at least half of all real estate in the country. Hmm.

A vague power/money cabal plots the downfall of America.

Are you familiar with Lyndon LaRouche?


Has Obama laid down his plans for the country when inflation gets out of control? Or are the citizens not suppose to ask such things at the moment?The government has contingencies for everything, and the planning started way before Obama got there.

Anyway, if he laid out his plan for hyperinflation now, people would freak, and it might scotch the stimulus. He'd be admitting fiscal imprudence.

Recommending IMF style economic austerity to Americans might cause an insurrection. Besides, as ES pointed out elsewhere, our outcome could be much worse than Argentina, so why get everybody's hopes up about IMF loans and fiscal austerity?

I do agree hyperinflation is a big big danger for us. I think that greed, irresponsibilty and ignorance more led us to it than bad intentions. We just differ on this, I guess.

[George Gervin's Afro]

are conseratives against the politics of fear?

[Nbadan]

I think their actually against being against the politics of fear....

[Nbadan]

see....nothing like GOP fear.....


WASHINGTON (CNN) -- Leading Republicans warned Sunday that the Obama administration's $800 billion-plus economic stimulus effort will lead to what one called a "financial disaster."

"Everybody on the street in America understands that," said Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee. "This is not the right road to go. We'll pay dearly."

CNN (http://www.cnn.com/2009/POLITICS/02/08/congress.economy/index.html)

I wonder how many of the record earmarks Shelby got in the doing-nothing Congress?

[angrydude]

If it was wrong for Republicans to do it, it is wrong for Obama to do it.

Just because Republicans are hypocrites doesn't mean you have to be one.

[Spurminator]

If it was wrong for Republicans to do it, it is wrong for Obama to do it.

Just because Republicans are hypocrites doesn't mean you have to be one.


You clearly don't understand the game.

[DarrinS]

'Doom' talk scored as 'not presidential'
Poses risk for 'Yes, we can' candidate


http://www.washingtontimes.com/news/2009/feb/09/ramped-up-obama-rhetoric-could-backfire/



From crisis to catastrophe. Off a cliff. Dark, darker, darkest. Mortal danger of absolute collapse. Armageddon.

President Obama and top Democrats on Capitol Hill are deploying these and other stark predictions of doom and gloom to push through their economic-stimulus package. In terms not heard in Washington since the late 1970s under President Jimmy Carter's watch, the new president has sought to terrify Americans into supporting the $800 billion-plus bailout bill.

While President Bush was accused shortly after taking office in 2001 of "talking down the economy" - and for saying the economy was "slowing down" - Mr. Obama is using ever-heightening hyperbole to hammer home his message. But the strategy brings great risk for the "Yes, We Can" man, who just three weeks ago told America in his inaugural address that despite "a sapping of confidence across our land," his election meant Americans had "chosen hope over fear."

See related story: Overseas challenges cascading on Obama

"Mr. Hope has to be careful not to become Dr. Doom," said Frank Luntz, a political consultant and author of the book "Words That Work: It's Not What You Say, It's What People Hear."

"The danger for him is using the Jimmy Carter malaise rhetoric, particularly for Mr. Obama, who was elected because people thought he was the solution. There's only so much negativity they will tolerate from him before they will feel betrayed," Mr. Luntz said.

Brad Blakeman, a senior aide to Mr. Bush from 2001 to 2004, said the new president's language is immature.

"It's not presidential. An American leader needs to be hopeful and optimistic - and truthful. Everything he says is parsed; everything he says is searched for deep meaning. When he goes to 'DefCon 5' on the economy and says that we're on the brink of catastrophe, it's absolutely insane."

See related story: EXCLUSIVE: Partisan dirt digger joins WH office

With his fiery rhetoric, the new president runs the risk of terrifying consumers and investors, which could depress the economy even further. While the economy is bad, it is a far cry from Great Depression levels, when as many as 30 percent of Americans were unemployed, compared with the 7.6 percent now.

Every president must walk a rhetorical tightrope when talking about the economy, a lesson Mr. Bush learned quickly, being bashed just after taking office for delivering somber news. The United States was just entering a mild recession - it had been in one, it turns out, for about nine months - and the new president said so.

Liberals went berserk.

"Every time we turn around, this guy is bad-mouthing the economy. Is that lifting our spirit or dumping on it in order to sell his tax cut?" liberal comentator Bill Press said on CNN. Newsweek's Jonathan Alter, in an article headlined "Thanks Ever So Much, President Poor-Mouth," said, "Even if Bush turns out to be right in his predictions of gloom, that doesn't mean he was right to make them." The New York Times lectured Mr. Bush, saying that presidents were supposed to be "cheerleaders for the nation's economy."

But Mr. Bush tried that, too. As the United States recovered from the economic devastation caused by the 9/11 attacks, the president constantly talked up the economy, asserting that the American work force could compete with any in the world, and he assured Americans that happy days were right around the corner. Even as the currrent recession took hold, he continued to portray the nation's future in optimistic tones.

For all his effort, he was portrayed as a Pollyannish rube whose naivete so clouded his vision that he could not see the stark reality of the economic situation. How else to explain his optimism in the face of $4-a-gallon gas or exploding unemployment, or presidential statements a year ago, such as "I don't think we're headed to a recession, but no question we're in a slowdown."

Mr. Obama has gone much further than that. Just Friday, Mr. Obama said a report that 600,000 jobs were lost in January meant "it's getting worse, not getting better. ... Although we had a terrible year with respect to jobs last year, the problem is accelerating, not decelerating." Last week he said, "A failure to act, and act now, will turn crisis into a catastrophe."

But he isn't the only Democrat ramping up the rhetoric while talking down the economy. House Speaker Nancy Pelosi of California said last month that our economy "is dark, darker, darkest." Rep. David R. Obey of Wisconsin said, "This economy is in mortal danger of absolute collapse." And Sen. Claire McCaskill of Missouri said of the economic-stimulus bill, "If we don't pass this thing, it's Armageddon." :wow

[Winehole23]

Are We in a Economic Depression?

There are several criteria that an economy must meet to be in a depression:

Massive decrease in business activity
Falling prices
Reduced purchasing power
Excess of supply over demand
Rising unemployment
Other economic factors.

Is there any empirical evidence for deflation worries?

U.S. Inflation Rate Forecast

Year Over Year Change in Consumer Price Index Percent

Month Date Forecast
Value 50%
Correct +/- (http://www.forecasts.org/info/error.htm) 80%
Correct +/- (http://www.forecasts.org/info/error.htm) 0 Dec 2008 -0.09 0.0 0.0 1 Jan 2009 -0.7 0.5 0.9 2 Feb 2009 -0.9 0.7 1.1 3 Mar 2009 -1.4 0.7 1.2 4 Apr 2009 -1.7 0.8 1.3 5 May 2009 -2.2 0.9 1.4 6 Jun 2009 -2.9 0.9 1.5 7 Jul 2009 -3.2 1.0 1.6 8 Aug 2009 -2.6 1.0 1.7


http://research.stlouisfed.org/fred2/data/BOGAMBNS_Max_630_378.png


http://eastcoasteconomics.files.wordpress.com/2009/01/excresns.png?w=630&h=378
http://research.stlouisfed.org/fred2/data/PSAVERT_Max_630_378.png


The above charts suggest that we are currently seeing deflation concerns because banks are increasing their excess reserves faster than the Fed is expanding the monetary base; in other words, all the additional money printed by the Fed is getting soaked up by banks and the consumer is seeing decelerating inflation. This trend is bound to reverse suddenly and drastically once credit thaws, though. At that point do you think the Fed will be able to drain excess cash from the system fast enough to prevent massive inflation?

ISM Non-Manufacturing Index since Inception (1997)
http://image.minyanville.com/assets/FCK_Aug2007/Image/Nico%202/sedac4.jpg

Richmond Federal Reserve Manufacturing Survey
http://image.minyanville.com/assets/FCK_Aug2007/Image/Nico%202/sedac3.jpg

The Chicago Purchasing Managers Index
http://image.minyanville.com/assets/FCK_Aug2007/Image/Nico%202/sedac2.jpg


GDP Quarterly Change Since 1994
http://image.minyanville.com/assets/FCK_Aug2007/Image/Nico%202/sedac1.jpg


http://img.skitch.com/20090206-xa255hndn8749y9h1fq2ca6bxn.render.png

Unemployment Rate, Courtesy of Shadow Government Statistics
http://image.minyanville.com/assets/FCK_Aug2007/Image/Nico%202/sedac8.jpg
Unemployment, seasonally adjusted:

http://data.bls.gov/PDQ/graphics/LNS14000000_20043_1234202071115.gif

[shelshor]

Its interesting to see the contrast in the two parties.

The Republicans were willing to follow George W. Bush no matter how much he spent (or how dumb he was). I guess its the inherent properties that many conservatives have. Namely loyalty, tradition and a respect for the chain of command.

With the democrats, however, no one quite knows who's in charge. Is it Obama? Pelosi? Reid? The Democrats arent willing to do whatever Obama wants, more the other way around.

This has been obvious for a few years:
I belong to no organized party. I am a Democrat.
----Will Rogers, US humorist & showman (1879 - 1935)

[Winehole23]

Well, is there something to be afraid of or not, DarrinS? Any of the graphs posted upstream make an impression on you? Is any of it scary?

The fear is completely realistic IMO, and the comparison with Japan's lost decade if anything understates the downside potential. What's unrealistic is the suggestion that depression can somehow be averted, or that the stimulus bill is the solution.

[Winehole23]

That said, it seems to me completely prudent and realistic for the government to put people to work or otherwise to attempt to alleviate misery, when the hidden hand of the market punches us in the mouth.

[DarrinS]

Well, is there something to be afraid of or not, DarrinS? Any of the graphs posted upstream make an impression on you? Is any of it scary?

The fear is completely realistic IMO, and the comparison with Japan's lost decade if anything understates the downside potential. What's unrealistic is the suggestion that depression can somehow be averted, or that the stimulus bill is the solution.


Well, when we keep hearing the "D" word and "armageddon", etc., it makes your common investor pull all of their money out of the market. It ends up being a self-fullfilling profecy, no?

[FreeMason]

That said, it seems to me completely prudent and realistic for the government to put people to work or otherwise to alleviate misery, when the hidden hand of the market punches us in the mouth.

Dodd, Frank, etc didn't mind getting pleasured by the invisible hand.

[Winehole23]

Well, when we keep hearing the "D" word and "armageddon", etc., it makes your common investor pull all of their money out of the market. It ends up being a self-fullfilling profecy, no?There's a spiritual dimension to economics, sure, but didn't you notice the graphs? Economics is also empirical. You'd prefer Pollyanna to Cassandra?

Bad talking the economy didn't bankrupt the dealer/brokers, AIG and the megabanks.

[Winehole23]

Dodd, Frank, etc didn't mind getting pleasured by the invisible hand.Neither did anyone else.

[Winehole23]

Is there an empirical basis for fear?

Yes or no, DarrinS.

[DarrinS]

Is there an empirical basis for fear?

Yes or no, DarrinS.


Is losing 1/3 of my 401k empirical enough for you?


But, constantly repeating the montra of doom, armegeddon doesn't inspire me to put all my money back in stocks. I assume millions of other people feel the same way.

[Winehole23]

But, constantly repeating the montra of doom, armegeddon doesn't inspire me to put all my money back in stocks. I assume millions of other people feel the same way.Our economic system no longer rewards savings and thrift, but obliges speculative risk. With all the attendant risks. Caveat emptor.

There's a sucker born every day. If you don't know who the sucker is when you approach the card table, you're the sucker.

Instead of keeping all the cows healthy, so they could milk them every day, the financial sector barbecued them instead.

Sorry for your loss, DarrinS. Better luck next time. Maybe you'll find a better game.