Jul 11 2009
The President Of Denial
I seriously have my doubts about the Obama Administration’s new plan to deal with the failed liberal stimulus experiment by employing a heavy dose of  aloof denial:
President Barack Obama said his $787 billion stimulus bill “has worked as intended†as he pushed back against Republican criticism that his recovery program has failed to rescue the economy.
“It has already extended unemployment insurance and health insurance to those who have lost their jobs in this recession,†Obama, who is traveling today in Ghana, said in his weekly Saturday radio and Web address. “It has delivered $43 billion in tax relief to American working families and business.â€
And yet it has clearly failed – as the following graph illustrates. The dark blue lower line was the promised result, the middle light blue line was what would happen if we did nothing, and the red line is what we got from the liberals’ failed experiment.
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What does this young and inexperienced president think he is doing? How can he say it is working as intended when it has failed to even come close his administration’s promised results? Who does he think he is kidding?
“As a result of the swift and aggressive action we took in the first few months of this year, we’ve been able to pull our financial system and our economy back from the brink,†he said, deflecting calls for a new round of stimulus spending and saying that his plan was intended to work not in a few months but over two years.
Emphasis mine. Look at those projections from the Obama administration again and note where they said we would be right now. Of course they promised their fantasy liberal experiment would have an immediate impact – it’s their damn chart and their damn blue lines! Now it seems the administration is try to move the gold posts, pretending there never was any hope of immediate help for jobs:
In an advanced text of his weekly radio speech, Obama said the stimulus plan approved by Congress and signed into law in mid-February “was not designed to work in four months — it was designed to work over two years.”
In their initial projections from January they predicted the job losses would have leveled off now and would be heading towards job growth. Not in 48 months, in 4 months. It’s their chart, their promise to America.
Obama is admitting what many have been saying, a turn around in jobs will not happen for OVER A YEAR.
Just eight of 51 economists in The Wall Street Journal’s latest forecasting survey said more stimulus is necessary, suggesting an average of about $600 billion in additional spending. On average, the economists forecast an unemployment rate of at least 10% through next June, with a decline to 9.5% by December 2010.
All of a sudden the real plan, the secret hidden plan, has come out. Instead of fixing the economy this year, with their just as ridiculous predictions of strong fourth quarter growth, the plan now is months and months of economic hell:
Onward, then, to the toughest economic challenge Summers [Director of the US president’s National Economic Council] faces today: the recession. Here, Summers turns sombre: “I don’t think the worst is over … It’s very likely that more jobs will be lost. It would not be surprising if GDP has not yet reached its low.
But according to President Obama is plan is working, it is on track, all is going as planned! If President Obama and the Dems think America will buy this pile of denial they are truly delusional.
In fact, if Obama wants to accelerate his demise and bring the GOP back to life, he couldn’t pick a better plan. And if that is his real plan (to screw up so badly on US jobs he brings the GOP back from the brink of oblivion), then that effort really is working!
Voters now trust Republicans more than Democrats on eight out of 10 key electoral issues, including, for the second straight month, the top issue of the economy. They’ve also narrowed the gap on the remaining two issues, the traditionally Democratic strong suits of health care and education.
As a strategy to address the continuing degradation in the job market, the act of aloof denial is definitely unique. It will fail, but it sure is novel.
“As a strategy to address the continuing degradation in the job market, the act of aloof denial is definitely unique.”
Not when you have a press who thinks of you as “a sort of a God” and will cover for you until hell freezes over.
We have two major problems today:
1. A press that is “in the tank” for the administration and will not report in a critical manner.
2. No opposition politicians who will speak up for fear of having their closets gone through and the skeletons therein exposed. Democrats don’t have to worry about that kind of treatment. Anyone who opposes Democrat policy does. You oppose their policy, they get personal into your life.
I have never seen a more irresponsible journalism trade in my life. They have made a mockery of the profession.
The only way Obama can honestly say that the stimulus bill is working as intended is if the stimulus bill was intended to (1) pay off his supporters, (2) make the economic situation worse, or (3) both.
[…] I seriously have my doubts about the Obama Administration’s new plan to deal with the failed liberal stimulus experiment by employing a heavy dose of  aloof denial : President Barack Obama  said his $787 billion stimulus bill “has worked as intended†as he pushed back against Republican criticism that his recovery program has failed to rescue the economy. “It has already extended unemployment insurance and health insurance to those who have lost their jobs in this recession,†Obama, who i Read more: The President Of Denial […]
[…] I seriously have my doubts about the Obama Administration’s new plan to deal with the failed liberal stimulus experiment by employing a heavy dose of  aloof denial : President Barack Obama  said his $787 billion stimulus bill “has worked as intended†as he pushed back against Republican criticism that his recovery program has failed to rescue the economy. “It has already extended unemployment insurance and health insurance to those who have lost their jobs in this recession,†Obama, who i Read more: The President Of Denial […]
[…] The Strata-Sphere, Pajamas Media, Hugh Hewitt’s TownHall Blog, Shot in the Dark, Hot Air, Don Surber and Pundit […]
[…] The Strata-Sphere, Pajamas Media, Hugh Hewitt’s TownHall Blog, Shot in the Dark, Hot Air, Don Surber and Pundit […]
Obama said that the plan was going as it was designed. First he thinks it was great that he was able to pass the largest financial piece of legislation in Americas history. One for the ego……something to be oh so proud of, just shows how wonderful the American people think he is…..maybe even God like!
Lots of money has gone out to shore up state services, police, firefighters, and teachers. Also we know that unemployment insurance and helping people keep medical plans is big.
They always knew that shovel ready jobs would take 2 years. Why, because the bill states that they can be let to only union members and must be approved by the Feds, not states. So if projects were shovel ready, the aren’t any more because they have to go through the Fed process.
The big lie was that unemployment would not go above 8%, but they needed to tell that lie because it was the only way to convince people that there was a hurry, and if we hurried we could keep employed people employed. So it seems Obama thinks he has enough mojo to lie and all will be well. I am surprised his crack shot financial team would let their reputation be used in that way. Presumably they will have a job outside the government and will need every bit of their reputation in tact.
Here is an example of why it is going to take years to recover …
A house next door to a friend of mine sold at the peak of the market for 645K. That house is now worth about 250K and is in foreclosure. That is the destruction of about $400,000 of wealth. Mutiply that by all houses sold in that community in 2006 and you have a HUGE destruction of net worth for a lot of people.
That particular community is made up of mostly Hispanic agricultural workers; exactly the people that were needed for FannieMae and FreddieMac to meet their quotas. Home values were artificially inflated by increasing demand with easy loans. More demand bid the cost of the homes up as you had potential buyers bidding against each other for available homes.
Barney Frank wants to re-inflate the housing market by bringing back easy money, flooding the market with buyers, and using demand to push prices back up. Won’t work. Many people have already been foreclosed on and have lost their money; reinflating the market at this point is closing the barn door after the horse has gone for them. Also, an artificial inflation is not sustainable once you A: reach the bottom of the barrel and there are no more buyers to put into the market or B: interest rates rise causing default of marginal loans.
They government had a housing Ponzi scheme collapse and their answer now seems to be to try to create a new one.
Normally a reduction in the cost of something (housing) would result in more demand as more people can afford it. But this case is “special”. All that home equity was causing people to refinance, pull out that equity, and spend it. This was injecting billions of dollars into the economy. When the housing market crashed, this injection of dollars into the economy stopped. This results in a rise in unemployment. When people aren’t working, they aren’t buying houses. We had an entire economy built on a Ponzi scheme with no reserves to handle even a moderate downturn in the market. As soon as mortgages began to default, a string of dominoes began to fall with banks going broke and mortgage default insurers going broke, the whole system fell apart.
Frank wants to set all those dominoes back up again.
The way to stability is the old fashioned way. You don’t build wealth by being given easy money, buy something, and let an artificial rise in price subsidize your future. People holding tulip futures learned that the hard way centuries ago.
Obama MUST find a way to spur small business. Every single unemployed person is a potential freelancer … potential sole proprietor. Obama needs to find ways to make it easier to start small business and keep them running.
Reduce taxes for the self-employed. Reduce minimum wages to allow people to hire new workers for small business. Reduce the paperwork for small businesses so hiring people isn’t a pain in the rear.
Build wealth the old fashioned way … EARN IT.
KEITH HENNESSEY responds to President Obama’s oped on the economy, with an old-fashioned Fisking.
Can be found at KeithHennessey.com or a “Instapundit”, Glen Rennolds.
Bingo, Crosspatch, you’ve got it!!!!
Extrapolate out to the conclusion that most people are still scared to face – we are looking at a lost decade, similar to Japan’s lost decade in the late 80’s and 90’s.
Commentators keep talking about “when the recovery comes in 2010” – there ain’t gonna be any meaningful recovery in 2010. This is not a normal recession – this is a once every other generation breakdown and reset of the entire financial system as we know it. Things are going to get MUCH much worse before they start to get better.
Suggestions for Obama:
1. A lower tax rate for self-employed individuals with a gross income under 1 million dollars. (many sole proprietors could show a million dollar gross with very little net).
2. A lower tax rate for individuals having less than 20 employees. (note: not corporations with fewer than 20 employees … INDIVIDUALS with fewer than 20 employees).
3. Reduce federal minimum wages to 2007 levels for all employers.
4. Reduce federal minimum wagest to 2002 levels for employers with less than 10 employees.
Here is why things are REALLY going to get worse:
Say you bought a home in 2002 for 300K. In 2005 or 2006 you refinanced it for 600K (going market rate) pulling out 300K in equity that you used to remodel, buy an RV, new furniture and put a kid through school. You refinanced in 2005 with a 5 year ARM figuring prices would be even higher in 5 years allowing you to refinance and pull out even MORE equity.
Now it is 2010, your 5-year ARM is ending, you have a 600K mortgage and a home that is now worth 250K even with the remodeling you did. You are forced to refinance or come up with 600K cash. But you can’t refinance because your house is under water and you blew the 300K equity you pulled out in 2005. It’s gone. Your kid now has a bachelors degree.
You are a “prime” mortgage. You have never missed a payment. You have a stable job but are now looking at migrating from county park to county park in your RV because you are about to lose your home. But your bank is about to take a hit for 300K on your mortgage and maybe 1,000 other mortgages like it. A 30 million dollar hit is major for a small bank.
The next wave of damage is not going to come from defaults. It is going to come from the refinancing of short term adjustable loans that are due to expire in 2010 and 2011. Those are “prime” mortgages and are going to be the tsunami that swamps the Democrats.
Oh, and the Democrats seem to see two ways to avoid the scenario in my last post. Barney Frank wants to re-inflate the housing market with cheap cash which just kicks the can down the road a bit and sets us up for failure later … hopefully (for him) while Republicans hold congress and the Democrats can blame them for it. Barack Obama wants to inflate the entire economy with Cap and Tax. That will cause the entire economy to inflate resulting in hosing costs going up with the cost of everything else. The bet being that a mortgage valued in pre-bubble dollars would be easier to repay in hyper-inflated dollars. That solves the old mortgage problem but would make interest rates on new mortgages over 20% and he won’t be able to inflate the market enough quickly enough. In order to avoid this problem we would need to see a couple of years of triple-digit inflation. If that happens we are in worse trouble than just housing.
The Democrats have painted themselves into a corner.
Y’all might want to have a look at this.
Claiming Obama is the “The President Of Denial†may run counter to the best way to make “Change” happen.
Of course, the “stimulus” is working as planned.
No that is a vague enough statement .. but planned to do what ?
There was talk just after the “stimulus” was passed that there would be another just before the election next year, but then it went silent after the Europeans, our partners in repairing the financial markets, said a recovery was underway and no further stimulus would be needed. So now, starting with Joe Biden, the ripples have begun to activate another “stimulus” tsunami.
AJ, you’re forgetting the Big Goal.
The eradication of statism as an ideology.
It’s not about simply winning elections. The GOP went down that path the last ten years, and found it leads nowhere.
It is the war of principles that must be won. The conflict that Reagan fought in 1980, the battle that Gingrich continued in 1994. The entire idea of Government solving problems by grabbing power over the economy must be as discredited as solving problems through genocide.
Obama, his corruption, and, above all, the statist ideology must be made as repellent as fascism to future generations. THAT is the goal.
You are absolutely right, Mike M! We can all compare how George W. Bush handled the biggest financial crisis we have ever had which was the attack on the WORLD FINANCIAL CENTER vs obama’s DEMOCRAT caused imho, econmy..
Checkmate, George W. Bush.
I do wonder what Carville is saying in his daily phone calls with Begalla/Steph…
And did you all hear about the check card bill…what’s REALLY in it? The GOVERNMENT will come in to settle labor disputes if a resolution cannot be reached within 120 days, if I am not mistaken…
OUTrageous!
The looming Option ARM crunch.
Nearly twice as many mortgages are set to recast in January ’10 than June ’09. This is one of the reasons we see the financial companies hoarding huge reserves of cash. There are two more waves of foreclosures coming, both on “prime” mortgages. They know it is coming and real estate markets in the bubble areas are not rebounding.
AJ,
I know this may be off target for this post but I think that Palin may be moving herself politically to the center in order to grasp the huge middle of America. The America that wants sensible conservative natured government. She is endorsing “conservative” Democrats in this
http://www.washingtontimes.com/news/2009/jul/12/palin-stump-conservative-democrats/
article. Who cares, as it seems, what party they are affiliated with, but are they conservative in nature seems to be the group she is gunning for. If she is backing conservative Democracts and Republicans then I think that puts her in a unique position aside from everyone else in typical political discourse but right in the middle of America. Most of us are libertarians at heart and conservative in our daily lives so it seems to me to be a good fit for her to target.