Apr 30 2009

The Economic Train Wreck Keeps Playing Out

While Obama floats high and the conservatives do their drama queen thing, the real political force in this country is moving along with the incredible and unstoppable momentum. The real political force is the economic train wreck which is still tearing its way through the very core of this country, as we can see in the latest quarterly GDP numbers:

The overall figure was stark. GDP, the value of all goods and services produced within the U.S., declined at a worse-than-expected annual rate of 6.1 percent after having fallen at a 6.3 percent rate in the final three months of last year. It marked the worst two-quarter performance for the GDP in a half century.

(click to enlarge) Liberals from DC to the halls of the dying media outlets are trying to claim there are glimmers of hope. They are deluding themselves of course. The economy is shrinking, which means revenues to the government are crashing, which means we are also piling up debt at record levels:

The Treasury Department said Monday it will need to borrow $361 billion in the current April-June quarter, a record amount for that period.

It’s the third straight quarter the government’s borrowing needs have set records for those periods.

Treasury also estimated it will need to borrow $515 billion in the July-September quarter, down slightly from the $530 billion borrowed during the year-ago period. The all-time high of $569 billion was set in the October-December period.

This country will continue to bleed red ink at never before seen rates, and the economy will not be responding. The stimulus bill, has I have noted over and over, is not getting the money into the economy to generate jobs. Here is a snapshot of the funds clogged up in the federal bureaucracy (left hand columns) with nothing getting out to the economy (right hand columns) for 4 Departments and 1 Agency:

This was as of April 14th. I will update it next week when the unemployment numbers come out, but I suspect the bleak state of the sluggish federal government’s liberal experiment on socialistic spending is heading for spectacular failure. The DC liberals actually do believe the fantasy that government spending can turn around an ailing economy, that racking up massive debt doesn’t drain the capitol out of the markets, and that raising taxes on businesses doesn’t cut jobs. I mean, they really did believe this fantasy!

And now they face the reality of a free market. They will see how impotent government pork compares to the American economic engine unleashed by reducing taxes and the burden of government. We will all see it.

So the photo ops, the prime time cheer leading speech to the nation, the fainting spells on the right are all irrelevant diversions. Dick Morris noted important polling data in an article yesterday which illustrates the train wreck coming towards the DC democrats:

But beneath this superficial support, Obama’s specific policies run afoul of the very deeply felt convictions of American voters. For example, the most recent Rasmussen Poll asked voters if they wanted an economic system of complete free enterprise or preferred more government involvement in managing the economy. By 77-19, they voted against a government role, up seven points from last month.

By 62-20, they said government spending, under Obama, was “out of control.”

When we complete this summer of economic wreckage, those numbers will not be stuck just to abject policies. They will be firmly attached to Obama, Pelosi, Reid and the rest of the Democrats who believed in those nonsensical liberal fairy tales about government’s role in free economies. They will, rightfully, be blamed for both not fixing the economy AND for uselessly wasting more taxpayer money in a year than any clowns in history have ever done.

14 responses so far

14 Responses to “The Economic Train Wreck Keeps Playing Out”

  1. gwood says:

    I work in an autombobile dealership, and would agree that the first quarter numbers depict precisely what was happening here on the ground, but something good is now occuring.

    Since roughly the first week in April (taxes?) we have experienced a near doubling of business activity, in both vehicle sales and service. The last twelve months can be summarized as follows: only those who simply had to trade vehicles, due to age mainly, have been trading. We are now seeing buyers who are trading two and three year old vehicles, certainly not out of need, but want. Low gas prices are no doubt contributing in a positive way, but I sense that the fear of the loss of one’s job is also diminishing.

    I am sure that pent-up demand is part of the equation, and with twelve months of time for it to pile up, we may see, at least in the automobile business, a sharp uptick this quarter.

    The outlook is bleak, with Obama at the helm, but the private sector still has powerful recovery mechanisms, most of which are still in place. I am predicting no boom, just a healthy uptick based on what I see here.

    Isn’t it always darkest before dawn?

  2. WWS says:

    It’s also darkest just before it gets completely back.

    Imagine poor Ford, the only one of the three so far to refuse the government bailouts – from now on, they will have to negotiate labor contracts with the owners of their biggest competitors. Want to guess how that will go?

    The government, with it’s ham-handed “recovery” efforts for GM and Chrysler may end up destroying the American automobile business for the rest of our lifetimes. GM and Chrysler run as essentially joint partnerships between the government and the UAW? Seriously, does anyone think that has even a glimmer of a chance of a hope of working? What it does guarantee is that the feds, in order to support their new business partners, will continue to pour tens of billions into a black hole of political opportunism for many years to come. Yes, you could call that survival of a sort – but will GM or Chrysler ever be independant, healthy, companies again? Not a chance.

    The French have been playing at this industrial game for decades now. This story always ends the same way, and that is where we’re headed – not because of fate, but because of the political choices being made today.

    From today’s WSJ:

    “Monday’s offer is so devoid of economic logic or fairness that it confirms the fears of those who said the original bailout would lead to a nationalized GM run for political ends. This fiasco will in part go down on George W. Bush’s copybook, since he first decided GM was too big to fail.

    But rather than use his early popularity to force hard decisions through the bankruptcy code, President Obama has decided in essence to have the feds run GM and Chrysler. This inevitably means running them for the benefit of the UAW that is so closely tied to the Democratic Party. Next up will be tax changes and regulations intended to coax, or coerce, Americans to buy Gettelfinger Motors cars. This tale of taxpayer woe is only beginning.”

    http://online.wsj.com/article/SB124105303238271343.html#mod=djemEditorialPage

  3. Toes192 says:

    oh my…Tears in Alaska… Tx WWS for your excellent opening line… ROLFMAO

  4. ivehadit says:

    Now the UAW runs and has ownership of Chrysler…exactly what barack obama wanted to have happen. GM should be next. And the government owns the banks.

    Let’s have some solutions to defeating this socialism that has taken over this country. We have defeated socialism and communism before so let’s get going. All ideas welcome.

  5. Frogg says:

    ” the private sector still has powerful recovery mechanisms, most of which are still in place.”

    That’s true, Gwood. However, they must remain in the “private sector” to work. Government meddling can ruin things faster than one can say “Jack Rabbit”.

  6. Frogg says:

    “Imagine poor Ford, the only one of the three so far to refuse the government bailouts – from now on, they will have to negotiate labor contracts with the owners of their biggest competitors. Want to guess how that will go?” -WWS-

    My solution….

    Everyone buy Ford from now on. Make it bigger than the government! LOL!

  7. KauaiBoy says:

    This from the online opinion poll from obama’s “home” state of Hawaii, where gun sales have skyrocketed and ammo is relatively scarce. I think the word is polarization and not in a global warming way. But then again I voted early so the lazy leftists may still be sleeping as is their useless nature.

    One vote per person, please.
    Multiple votes will be deleted.

    THE WHITE HOUSE
    How would you grade President Obama’s performance during his first 100 days in office?

    1) A 131 28.67%
    2) B 72 15.75%
    3) C 46 10.07%
    4) D 62 13.57%
    5) F 146 31.95%

    Total votes: 457

  8. Dave in W-S says:

    “Imagine poor Ford, the only one of the three so far to refuse the government bailouts – from now on, they will have to negotiate labor contracts with the owners of their biggest competitors. Want to guess how that will go?”

    Could this be legal grounds for Ford to get out from under the UAW? If the UAW had a strong vested interest in the success of my direct competitor, I would just have to show them the door.

    I wonder if there is any legal precedent?

  9. Frogg says:

    10 Charts –We haven’t hit economic bottom yet:

    http://www.doctorhousingbubble.com/the-schism-between-wall-street-and-main-street-green-shoots-for-the-banking-oligarchy-and-crap-shoots-for-others/

    In this article I want to look at 10 charts that clearly show we are nowhere near a bottom. These charts will also show that for trillions in bailouts, we have seen a marginal gain in the real economy.

  10. Frogg says:

    I think some backlash is already coming Obama’s way. The President of the Small Business Assoc was on the news this morning blasting Obama for lying about what he would do to support small businesses. This guy was won over by Obama during the election due to promises Obama made to benefit small business. He campaigned for Obama as well as made donations to his campaign. Obama even used his support on his webpage during the campaign (now scrubbed clean). This guy now says that Obama has hurt small businesses and almost all help is going to big corporations.

  11. momdear1 says:

    Let’s face it. What we have is just another charismatic third world African despot in the making. He has already shown that he is intent upon gaining absolute control of this country by shutting down all opposition by censoring and rationing air time and media coverage of his critics, and running the printing presses overtime to print up money used to seduce businesses into letting him get his camel’s nose under the tent so he can take control and dictate policy on who can be hired, how much each employee can be paid, what kind of product can be made, etc. The only thing left is to change the laws so he can be elected El Presidente for Life. His Redistribution of wealth via printing money and “Taxing the rich to pay for social welfare programs for “the Poor” and unmotivated is akin to the land redistribution policies in certain, once prosperous, African Countries where ignorant, unmotivated natives now squat ,starving, on untilled land that was once prosperous farms, and curse the former owners for “taking the wealth with them.”

    Our country lost it’s leadership position in manufacturing to China not only because Bill Clinton sold us out to China for campaign contributions, propped up it’s failing Communist economy by throwing open our borders to wholesale dumping of cheap Chinese made goods, and electronically transferring the entire contents of our patent office to China, but because Social Planners destroyed our competitive edge by mandating that the less than most qualified be promoted to leadership positions under Affirmative Action programs designed to redress real and imagined grievances that were hundreds of years old. completely ignoring the fact that most poor people are poor because they do not have the intelligence to become rich and most rich people are smarter than the average person.

    We now have a Charismatic, semi educated product of our corupt education system, totally ignorant of the laws of economics and financial management, announcing to the world that since the US is the richest country in the world it is going to solve everyone’s problems by sitting down and talking to them and if that doesn’t work we will rebuild their economies with our money and give their jihadist constituitants the incentive to love and appreciate us because of our generosity. Notwithstanding that these same jihadists are destroying and blowing up our well intentoned efforts as fast as we build them, this fool just keeps on keeping on with the same old same old. Ronald said it best. “PEACE THROUGH STRENGTH” That is the only language that works. .After the Mayflower Compact’s “From each according to his ability and to each according to his need” policy failed because of sloth and indolence, it was changed to “If you don’t work, you don’t eat.”

    The moral is: If the government will just get out of our way and stop trying to tell us how to do everything, I believe this country can save itself.

  12. [...] And this in March: This country will continue to bleed red ink at never before seen rates, and the economy will not be responding. The stimulus bill, has I have noted over and over, is not getting the money into the economy to generate jobs. [...]

  13. [...] through congress in February 2009 would be the foundation of dramatic democratic failures in 2010. Here is what I wrote in April 2009: This country will continue to bleed red ink at never before seen rates, and the economy will not [...]