The United States has tried the largest stimulus in its peacetime history, with record $5 trillion borrowing in Obama’s first three years. Yet unemployment is much higher than when he entered office. The more he talks of stimulating the economy — with subsidies to “green” industries, government take-over of private enterprise, massive annual deficits and federal hiring, cash for clunkers, etc. — the less the private sector seems to hire or invest.
Why should this be so, given the recovery trajectories that have historically followed recessions? Some causes of these doldrums are psychological in nature. Those who have saved money and in theory could invest are scared off by uncertainty over new federalized health-care costs, by massive government spending that must be paid back and will cause higher interest rates, and by all the talk of new regulation. Nor are they comforted by Obama’s promiscuous talk about “fat-cat” bankers, his suspicion of those making over $250,000, the curbing of new oil and gas leases, the chest-thumping about BP, the Chrysler creditor mess, and the efforts to shut down a new Boeing plant. When a Van Jones was in charge of encouraging green job growth, the symbolism is not lost on the guy trying to keep a paving company going.
The list could go on but, in short, hundreds of thousands of employers have sized up this quite extraordinary administration and concluded that it does not particularly like those who make over $200–250K per year, and does not appreciate or even know much about private employers. And thus the business community has collectively decided to sit tight, keep quiet, and store up cash until this bunch in the White House leaves.
Words have consequences, and as cute as it has been for the president to talk glibly of limb-lopping doctors and Vegas-junketeering CEOs these last few years, his message finally got through. Yet the objects of his scorn will have their say, too. And so now the job creating community that makes America work is replying, in its stasis, that it likes Barack Obama about as much as he likes them.
the work of Rogoff and Reinhart explains that employment takes much longer to recover after financial crises than other sorts of recessions.
Your ignorance of their work and economic history says a lot about your credibility in these matters.
PS
Reply to this commentLinkReport Abuse"promiscuous" means doing it a lot. How many times did Obama use his "Fat cat" line?
"Rogoff and Reinhart"
Sure, Rogoff and Reinhart. Good luck selling that to John Q. Public in the fall of 2012.
Economists predict that the absolute best case scenario for Obama will be with unemployment hovering around 8.0%, with annualized growth someplace around 2.9%. That spells one word for Obamanation - DEFEAT.
David Plouffe, apparently in the middle of 3-day bender, predicts "that people won’t vote in 2012 based on the unemployment rate". Best of luck with that, David. You'll need it.
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Reply to this commentLinkReport AbuseThat is not what we were told when the stimulus was passed. Remember, unemployment will not go above 8%. Pelosi told us Obamacare would create 400,000 jobs almost immediately. So which is it with you people. It happens fast or slow? I guess the explanation is the same as global warming. When it is hot it is global warming. When it is cold it is global warming.
Reply to this commentLinkReport AbuseThe President said mean things about the CEOs so they've taken their toys and gone home?
Reply to this commentLinkReport AbuseWhy should anyone invest when the PResident has made it clear that he intends to confiscate any rewards from such investing?
Reply to this commentLinkReport AbuseDo you really believe the stuff you post around here? (rhetorical question)
So in your view business owners are not hiring out of *spite*? Do you think they see profitable projects justifying expanding and hiring, yet hold back because Obama said "mean" things? And then how would that square with your apparent image of them being greedy?
Reply to this commentLinkReport Abusenot out of spite but out of self defense ... and what they are defending is their current business and the employee's it currently pays ...
Reply to this commentLinkReport AbuseFirst off: The President is meant to serve the people including the CEOs, who are private citizens. So no, he should not be vilifying any private citizen. He can talk policy, but that is different from saying mean things about any US citizen.
Secondly, I doubt CEOs care if he says mean things to them, it is the policies that he is installing that are working against business.
Guess what, things that work against business also work against employement, and that is what we are seeing today.
I think that should be fairly obvious to anyone.
Reply to this commentLinkReport AbusePsychology of confidence may have something to do with it, sure, and the administration's policies haven't been helpful. But even on psychology, the loss of $14 trillion in total asset values probably has more to do with depressed business sentiment. But I don't think sentiment is driving any of it, really. It is reactive and a smaller effect.
The main thing is so plain that only tone deaf populism on both sides of the political aisle can miss it. The massive destruction of specifically bank capital in the financial crisis, coupled with a crusade to reduce future risk by lowering leverage and tightening standards, have simply and mechanically had a massive effect on total credit outstanding.
Specifically, the debts of the US financial sector have contracted by $3 trillion since the end of 2008.
The accomodative actions by the Fed have only offset about half of that, and before the QE period only about a third of it.
Everyone hates the banks and financiers and beats the tar out of them at every opportunity. Everyone wants to prevent all foreclosures, make bankers pay for every unpaid mortgage twice, give everyone their houses, default on everything from GMs bonds to those of Greece and Ireland, etc. Well, there is an entirely predictable consequence of putting the hit as much as possible on banks.
They. Don't. Lend.
The present state of affairs has it so that every nickel of free cash flow the banks can scrounge, that isn't stolen from them by lawyers or deadbeats, they spend paying down their debts. Because the gains to doing so are twice what they can make lending to deadbeats and more than twice as certain.
Until the banks are making money again, in every sense of the term, unemployment will stay high and growth anemic. I don't know why this is so hard to grasp, but a thriving capitalist economy without thriving capitalists is a round square and a misunderstanding.
We instead have the entire left trying to soak the rich by every means possible, and the populist right want to end the Fed and go back on gold (or something), but default all the way there.
Hating bankers has never made any country rich and it never will.
Reply to this commentLinkReport AbuseGood job concluding "the right" is equivalent to Ron Paul. The "end the Fed" and "go back on gold" contingent is a movement of one. I hope you have more arguments to make why the right is causing the problem than just that one.
Reply to this commentLinkReport Abusechicken or the egg ... nobody is trying to borrow right now ... why would you with depressed revenues and little or no opportunities to start a new business ...
all government spending is a drag on the economy ... until government spending abates the economy will struggle ...
Reply to this commentLinkReport AbuseLong ago, the most effective voice in the 2008 Presidential General Election came from an unknown Plumber named Joe, (it was a sad sign of the entire Maverick Ticket offering). Obama off the teleprompter, admitted his ignorant folly, speaking in fashionable terms about spreading the wealth. It was a major symbol the Democratic Party had learned nothing from the past several decades of failure.
The Clintons boldly lied about the end of big government, rushing immediately upon entering the White House to massively raise taxes, mindlessly attempting to Nationalize US Health Care, beginning to undermine the entire Mortgage Industry via a Whitewater type of exploitation of Fannie/Freddie/Hud, (they even ignored the dangerous threats of Terrorism as a mere law enforcement issue - giving the rights of US Citizens to sincere Combatants in a War).
This isn't just an Obama problem, it is a Democratic Partisan problem. The pathetic denial is partly created by a corrupt Political Machine peddling influence to special interests. But the folly is being propped up by a dominant popular culture, a blind fashion being pushed through various Media Establishments. The naive Partisans now embrace a destructive emotive devotion which vilifies all others who are not blindly following the Democratic Partisan game plan.
All one needs to do is look at the same pattern of Democratic Partisan failure in CA, LA, NY, NJ, MI, etc., to grasp the enormity of the incompetent nonsense hurting Americans. When Democrats were given the House, Senate, Executive in 2008, everyone should have expected this disaster. The Democratic Party simply must be removed from influence, and placed on the dust heap, or we will find Ourselves in deep trouble.
Reply to this commentLinkReport AbuseHard to understand why the business community would hate Obama, when so many of them have made tremendous profits since he took office, and when average CEO pay and compensation is up considerably in that time frame.
Reply to this commentLinkReport AbuseHard to understand why you love him when so many people are out of work, and the rest of us will have to give up doctors that we would like to keep, and everyone's savings are sifting away.
Reply to this commentLinkReport AbuseHard to understand why almost every response to one of my posts here consists of either a straw-man or a non-sequitur.
Do you deny what I wrote was true - that business profits have been up, and CEO pay has been up, under Obama?
Reply to this commentLinkReport AbuseSuccess comes at a premium when racing amongst the ruins of a trashed economy.
Reply to this commentLinkReport AbuseNo, Fish; I think most just don't accept your facetious premise. Want a serious response? Make a serious point.
Reply to this commentLinkReport AbuseBy any standard, I did make a serious point; and the things I wrote were perfectly true. Just because it doesn't fit your narrative, doesn't make it either unserious or false. I do get that you don't want to hear it, but don't care about that.
Business profits ARE UP under Obama.
CEO pay IS UP under Obama.
These are facts, not opinions. Look it up for yourself if you don't believe me.
Given those facts, why exactly are businesses and their leadership against him?
Reply to this commentLinkReport AbuseNo, you made a facetious point, as if everyone who gets a decent paycheck (CEOs) is supposed to throw money out the front door for the hell of it.
"Hard to understand" is not an argument. It is overweening self-regard dressed up as logic.
CEO pay has nothing to do with the problem. CEOs have a responsibility to sharholders to maximize their return. It's a legal responsibility. (Really! It is! Go look it up!)
Given the uncertainty in the economy created by this Administration, those CEOs have decided it's a better bet to park that cash on the sidelines - earning interest - for now until the uncertainty dies down.
YOUR non sequitur of an argument is proof positive that you understand business and economics about as much as Obama does.
Which is to say not at all.
Reply to this commentLinkReport Abuse"CEO pay has nothing to do with the problem. CEOs have a responsibility to sharholders to maximize their return. It's a legal responsibility. (Really! It is! Go look it up!)"
I not only understand our Due Diligence laws, I've participated in several pieces litigation specifically focusing on that responsibility. So save your lectures.
Your argument is a non-sequitur, for it assumes that the business community is somehow doing WORSE under Obama than they were before. However, all the available evidence (in terms of profitability of companies, and compensation of their executives) tells us that these businesses are doing just fine. My portfolio is doing great.
So again, I ask: what's not to like? I understand that the typical answer here relies upon the 'uncertainty' lie, but please, don't waste my time peddling an unprovable and factually false argument, one that relies entirely upon animal emotion.
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