Posted on 01 June 2011.
Obama is a disaster which is about to get worse. Hidden Inflation, too low of interest rates, super high deficits, and accelerated growth to government with no results at helping the economy are about to take a massive toll on America.
Kiplinger Letter stated that this is the slowest recovery to any recession since 1932. If nothing else, Obama owns the failure of this recovery.
According to the statistics presented in USA Today of May 31, 2011, Obama is ineffective in leading America out of this recession. These are the statistics compared to other recessions at the same point in time as this one:
1975 1982 1991 2001 current
Unemployment % 7 7 7 6 9
Housing Starts Index 180 140 150 130 96
Decreased housing demand started the recession and housing demand continues to be falling. What will happen to housing when interest rates are increased? This economy is due for more problems because of Obama’s failure to fix its problems.
These are comments from economists in Kiplinger Magazine of June, 2011:
Mark Zupan (Economist and Dean of the School of Business at the University of Rochester): “Easy money is the big risk …. The root cause of the coming inflation is the Federal Reserve’s easy-money policy in support of the Federal government’s stimulus efforts. Rising government spending has been rapidly swelling our debt (now more than $14 Trillion). And the Fed’s actions erode the dollar’s purchasing power, which means imports become more expensive. In addition, with more dollars now chasing fewer goods and services, the prices for those goods and services have begun to rise. Based on producer-price increases registered so far this year, we could see consumer prices increasing at a 6+% clip late this year…Some people say that inflation is not a risk because of slack employment and because the consumer price index has been rising only modestly. However, the core CPI excludes food and energy.”
Michael Dueker (former research economist at the Federal Reserve Bank): “Too much money chasing too few goods is the classic recipe for inflation. And one ingredient is already here – the $2.2 trillion in stimulus money pumped into the economy by the Federal Reserve…. The Fed will rein in cash to head off inflation. “
Jeremy J. Siegel (professor at University of Pennsylvania’s Wharton School): “One of the biggest threats facing investors is the possibility that massive US budget deficits and the Federal Reserve’s easy monetary policy will lead to significant inflation… Although stocks do well when annual inflation is in the range of 2% to 5%, their performance begins to falter when inflation exceeds 5%…inflation sparks higher interest rates, and interest rates are a key variable in calculating current stock prices…Companies can’t always pass along increased costs, especially in the case of an important raw material such as oil. As a result, many companies will see their profits squeezed. Stock prices also falter in the face of rising inflation because investors fear that the Fed will hike interest rates.”
Stock prices are increasing because of low interest rates. The GDP is increasing because of inflation. Neither one is increasing because of more manufacturing output or a stronger economy. Current GDP growth is less than 2% which is less than the real rate of inflation. The combination of these variables will cause this house of cards by this current administration to implode on itself.
Obama is destroying America. His deficits, bailouts, and too low interest rates cannot solve the root cause problems to our economy. His actions are about to exacerbate these root causes to our problems:
- A Low birth rate to white people from 40 years ago is causing decreased demand for housing today and causing decreased demand for ancillary products of housing like furniture and appliances. That low birth rate is also the reason for insolvency of Social Security and Medicare.
- High union labor rates, high taxes rolled up through the manufacturing supply chain, and a lack of engineering graduates is chasing manufacturing out of the USA.
- The lack of oil drilling is causing an economic cash drain from the USA and causing high energy costs.
- Current tax rates, educators, entertainment, abortion laws, and social mores are encouraging young adults to marry later, have too few children, and purchase fewer homes/home furnishings than previous generations at the same ages.
If interest rates increase, what will happen to 401Ks, to the housing market, and to the general economy? Just look at what happened when Jimmy Carter was president. The combination of high interest rates and high inflation killed the economy. Unemployment exceeded 12% and all forms of assets lost value, especially real estate.
So what is Obama doing to correct these root cause issues? Nothing. He does not know what to do. He is a puppet of Wall Street (especially Goldman Sacks … Bernanke) who gave him a million dollars for his 2008 campaign, a puppet of insurance companies (who wanted Obamacare, especially AARP) who gave him twenty million dollars, and a puppet of unions (who are exempt from Obamacare … especially teachers’ unions).
Wall Street has been making a fortune from the easy Fed money and too low of interest rates as stock prices become more inflated than what company earnings can justify.
Obama let it all happen. He fertilized the root causes to our problems rather than kill them. He is either incompetent or corrupt or both.
Obama lacks the needed executive and business experience to be president of the USA. He lacks a moral compass. He is a community organizer.
Obama needs to go so we can save America from the problems that he has fertilized.
Michael Master is the author of “Save America Now!” It can be ordered at http://www.amazon.com/gp/product/1616235756