Wednesday, August 25, 2010

This Is The Right Direction?

“There’s no doubt we're moving in the right direction."

-- Joey “The Brain” Biden

Yesterday, in an announcement that strains credulity, even for Joe Biden, lying Joe told us there is no doubt we’re moving in the right direction. But Obama didn’t retract that statement. So let’s take a quick look at what Obama apparently thinks is the direction we should be heading.

Team Obama has been touting a positive GDP for the year. But everyone is now lowering their estimate of GDP growth to 1.5% for the year, an anemic number, with more lowering to come. And in case you’re wondering, a positive number does not mean we’ve turned the corner. The Great Depression saw six quarterly bounces in GDP with an average gain of 8%, along with stock rallies to 50% of the pre-1930 levels. . . right where we are today.

Speaking of the stock market, from February 2009 until June 2010, small investors pulled $9 billion out of the stock market. The DOW is down 4% this month, a seven week low.

Bank failures continue to climb. Only 25 banks were closed during the credit crunch in 2008. Since that time, 140 banks failed in 2009 and 118 banks have failed so far this year -- on pace for 200+ this year.

Official unemployment remains at 9.5%, though real unemployment remains around 17%. Various government officials are now predicting that this is the new normal. Teenage unemployment and minority unemployment are at all time highs.

The Federal Reserve reports that factory activity slipped to negative levels in August, meaning economic contraction is coming, i.e. more recession.

Sales of existing homes fell to their lowest level in 15 years, and the drop in sales this last month is the biggest drop since record-keeping began in 1968.

Crude oil futures are down at an 11 week low, and that’s in the middle of the driving season.

Tax revenues continued to fall, this time by 11% from 2009.

Obama’s budget includes a $1.2 trillion deficit, supposedly a decrease from last year’s $1.42 trillion Obama deficit. But this doesn’t count the cost of Afghanistan and Iraq, which are kept off the budget, and it includes fake receipts like estimated receipts from the never-passed cap and trade bill. This $2.6 trillion Obama has added to the debt in his first two years, by the way, compares to the $11 trillion added to the debt in the 40 years since 1970.

China is selling U.S. dollar-denominated assets in anticipation of a collapse of the dollar, and in hopes of replacing the dollar with a new reserve currency. This would be disastrous for our cost of borrowing.

Speaking of China, they and Russia have rejected sanctions against Iran. Russia is now helping Iran finish its nuclear power plant. China is buying gas from Iran. Both have refused to agree to sanctions, even those that would forbid the selling of weapons to Iran. All of this, and Obama’s effete response to Iran, have made war all but inevitable.

Afghanistan is a disaster, with more reports coming out every day that it will never end and cannot end well. The latest involves a report that after nine years of training, Afghanistan’s army still will not be ready to take the field for at least another year.

Obama just flubbed the “worst environmental disaster in history” in the Gulf.

Almost two years into Obama’s term, the Democratic Senate still has not confirmed 118 of his nominees.

Other than that, how was the play Mrs. Lincoln? Is this seriously what Obama thinks is the direction the country should be headed? Apparently so. And this doesn’t count the significant hurdles about to come up. Either the Bush tax cuts will expire, destroying the economy, or they will be renewed, blowing the deficit even higher. The effects of ObamaCare have not yet begun to smack around the economy. Medicare is on the verge of collapsing. Our costs of borrowing are on the verge of going up. The EPA is about to regulate carbon, i.e. everything. When Israel bombs Iran, you can expect serious blow back to reach us, both in international condemnation and in increased terrorism. Not to mention that Obama’s nonactions toward Iran are getting countries like Saudi Arabia thinking about building their own atomic bombs. And so on. . . and so on.

If Joe has no doubt that we’re moving in the right direction, then Joe’s version of paradise looks a lot like hell. And if Obama didn’t realize he needed to shut Joe’s trap, then Obama’s a fool.


Tennessee Jed said...

i think you mistook the cfontext of the statement, andrew. i believe he meant the polls and fall election trends were moving in the right direction, and i would agree. if it is true and november plays out as hoped, the country will indeed be moving in the right direction! :)

AndrewPrice said...

Jed, That could be! LOL! Maybe that is what Joe meant -- "the adults are about to take over the government again."

CrispyRice said...

LOL @ "the adults are about to take over the government again."

Nice summation, as always, Andrew. It would be fascinating to watch this unravel, if it weren't reality!! As it is, ohhhhh crud. Ugh.

CrispyRice said...

Oh, and I wanted to ask you (since you seem pretty smart) -- I read an article yesterday where they were predicting deflation rather than inflation. Can you interpret the for us non-economically-inclined among us? Is that likely to happen and what would that mean in terms of the state of the union and my pocketbook?

AndrewPrice said...

Thanks Crispy. I'm glad you enjoyed it, even if it is bad news.

Let me add, by the way, I have tremendous faith in the American economy. The problem right now is the idiots who are tinkering with it.

In terms of deflation, that is the concern right now among most knowledgeable observers. Partly, this is because we have seen zero inflation even though we've spent so much that inflation should be through the roof. In fact, these are the same circumstances Japan went through for a decade in the 1990s, and we went through during part of the Great Depression.

Do I think we're going to have deflation? I think it's unlikely. I think people are misreading the signals. People think that because no one is hiring at the moment, that must be evidence of deflation. I think it's more a matter of uncertainty about the Democrats and what they plan to do with taxes and regulation. Beyond that, commodity prices remain high and housing prices aren't even falling all that much anymore, and nothing in the consumer world is getting cheaper. So I would say no, it's not happening.

AndrewPrice said...

Cripsy, Let me add why deflation is bad.

The problem with deflation is that consumers have no incentive to buy because they know if they wait, things will get cheaper, AND business has no incentive to make anything because they don't know that they can sell it for a profit because the prices keep dropping.

That also means business stops hiring because it doesn't know if it can afford its labor force. So unemployment rises.

Also, since business usually can't cut salaries as quickly as prices fall, many businesses will go out of business.

Inflation doesn't cause any of these problems, it just cuts your "real income" -- the amount it feels like you have. But deflation can wreck an economy because it causes a spiral effect.

CrispyRice said...

Thanks, Andrew. So deflation just grinds everything to a halt, and no one has any incentive to get things moving again. That makes sense.

AndrewPrice said...

Crispy, Yes, that's the problem with deflation because it creates incentives that keep people from consuming or producing, so the economy basically grinds to a halt.

That's why governments are so terrified of deflation.

Ed said...

You paint a pretty picture of disaster Andrew. Blech!

AndrewPrice said...

Well, it is what it is Ed, it's hard to sugarcoat. In fact, I've been wondering what I could have written to try to present a picture that things are going well, and I honestly can't think of anything to put on the list.

Writer X said...

Biden is obviously spending too much time (or not enough?) in his undisclosed, underground bunker. I love it when they let him out!

Anonymous said...

Andrew: I got to watch repeats of Biden defending the indefensible at least four times last night and this morning. I can't help thinking he may just be our secret weapon. Explaining why Obama's policies don't work isn't easy for a normal person. Biden makes them simple, and throws in "crazy" for good measure.

AndrewPrice said...

Writer X, You and me both. They like to claim that he's just acting the part of the "attack dog" for the administration, but there's a huge difference between attacking and fantasizing, and Biden is clearly in fantasy land.

Plus, his verbal gaffes are priceless!

AndrewPrice said...

Lawhawk, Biden is so awful, that I honestly sometimes wonder if he isn't trying to sabotage their side. But then, his whole history tell us that he's just an idiot.

Mjolnir said...

Great explanation about deflation, AP...just like in diabetics, a slight spill over the norm, (inflation), is easier and safer to deal with then their glucose level crashing through the floor...

Scary times, pal. It would be funny, if it weren't SO dangerous...

AndrewPrice said...

Thanks Mjolnir! Good analogy to diabetes and absolutely right. Being higher than normal does a little damage every day, but going low can do serious damage very quickly that just keeps getting worse.

I agree with you about Obama. His whole presidency would be funny if it weren't happening to our country. There is no reason that we need to go down this path of falling employment and wealth, but Obama and the Democrats need to see beyond their ideology to understand that. And I don't think they're capable of doing that.

Joel Farnham said...

Right direction?

An economist is saying we are caught in Depression, not a Recession.

I guess Biden forgot to send out the memo.


This November is going to be a blowout and I can feel the anger now. It is getting palpable.

AndrewPrice said...

Joel, I think you're right about the blow out.

History says that it's hard to maintain the kind of anger it takes to get a blow out. BUT.... these guys just won't stop stoking the anger.

We might be in a depression, it's hard to tell until it's over. One thing is for sure, they've done everything they could to make it happen.

DUQ said...

I heard that Christmas this year was going to be a big time for deals for anyone who actually has any money. Orders for manufacturers are already in, but people are shopping less and less. Not there are many people left with any extra money!

AndrewPrice said...

DUQ, It does sound like a good year to wait until the last minute to do any shopping!

Of course, all that will change as soon as Obama's policies finally kick in and save us all. Yeah, sure.

StanH said...

I was going to call B-B-B-Biden, a blithering idiot, but then realized how insulting that would be too blithering idiots. These people are an economic train wreck, the likes of which this country has never seen. The pantheon of failed presidents has a new king, and his name will forever be known as Barry the Blundering Bolshevik the America hating Bastard of Hyde Park, IL whose incompetence is truly revealed while sitting next to the number two, Jimmy (the peanut) Carter. God help us gang!

AndrewPrice said...

Stan, LOL! We said!

You're right of course, Obama has easily passed Carter as the most economically inept President we've ever had. 2012 can't come soon enough!

Ed said...

@Stan, LOL! So true, so true!

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