The Obamabots vs. Reality

Many Obama supporters are currently crowing over the fact that the unemployment rate has decreased, but as usual, they’re not looking at the bigger picture:

The U.S. recovery is little more than an economic ‘sugar rush’
Liam Halligan @ the UK Telegraph

The recent growth-burst is built on monetary and fiscal policies which are wildly expansionary, wholly unsustainable and will surely soon come to an end. When the sugar-rush is over, and it won’t be long, the US will end up with a serious economic headache. Investors should keep that in mind.

In the immediate aftermath of “sub-prime”, QE helped a wide variety of financial institutions to avoid facing up to their losses, covertly recapitalizing Western banks that were, to all intents and purposes, insolvent. For a while, the rest of the world put up with it.

Now America is being blamed, rightly, for artificially depressing the dollar, so unfairly boosting US exports at the expense of those from elsewhere. At the same time, a lower greenback cuts the real value of the huge debts that America owes overseas creditors – not least the Chinese.

That’s why the Fed must surely call it a day when the current round of QE is due to expire at the end of June. Yes – American price pressures are ticking-up, with long-term inflation expectations as measured by the University of Michigan’s respected consumer survey rising from 2.8pc in December to 3.2pc in March. But mere domestic inflation won’t stop the Fed’s political masters from ordering more money-printing.

The only currency the White House understands is power politics – and Beijing is turning the thumb screws. Xia Bin, a long-standing adviser to China’s Central Bank, recently referred to the unbridled printing of dollars as “the biggest risk” to the global economy. “As long as the world exercises no restraint in issuing dollars,” he wrote, “then the occurrence of another crisis is inevitable”.

Were it to happen, another round of money-printing – QE3 – would cause a major diplomatic protest led by countries America cannot afford to upset.

Aren’t leftists supposed to care about what’s going on internationally?


One thought on “The Obamabots vs. Reality

  1. There's a more important issue than this. Unemployment statistics are bullshit.

    Several problems with those figures:

    1) They treat seasonal hires as expected job gains and losses and adjust for those expectations, rather than reporting truth. If jobs fall by 1% in April, the cause is assumed to be the loss of consumer job demand due to the post-Christmas/Valentines/Easter hangover period where gift giving hits bottom…the tables say jobs always fall by 1.4% so the number that gets reported is +0.4%, not -1%.

    2) Unemployment doesn't correctly track people employed in jobs beneath their potential earning power or in part time jobs when they need full time jobs. My friend Shannon struggles to meet ends partially with a lame 20-hour-a-week job at a vet clinic near here but has the capacity to be hired full time to do much better-paying work if only those jobs existed. Right now, she counts as “employed” even though even with her salary and her boyfriend's salary, they can't quite make their monthly bill payments and must go deeper and deeper into debt to survive.

    3) If you remove GOVERNMENT employment – which is by its' very nature NOT a measure of economic wealth or stability since it generates ZERO wealth – most of Obama's created jobs are gone from the board. And in reality, most of those jobs will disappear shortly because we won't be able to afford them.

    4) Unemployment statistics don't account for standard of living. Our GDP has not grown substantially even as the jobs increase…when a stock does this (goes up in value despite the underlying wealth that causes the demand for it not changing) every analyst in the world calls that a bubble and knows it's only a matter of time before it bursts. We have an employment bubble on our hands. People are getting hired a bit more at the moment, but it's to poor-paying jobs which will not free them up to contribute more to the economy because there's no room in the economy to create those jobs.

    5) I challenge any left-wing strategist to explain to me exactly what Obama has done in terms of legislative action that has helped to trigger this economic “recovery”…(waits for the crickets to get shouted down by someone with something of substance to say)…that's what I thought. Obama's taken no significant action that could be even arguably linked to the recent job “surge”…he can't be credited with it anyway…anyone with half a year of economics classes under their belt (including me) knows that economic pressures force the overall market in slow moving waves that have long response times. Myopic left wingers claim that Reagen caused the 1990 recession and that Clinton presided over a huge economic boom. The reality is that Reagan's policies created the room for the boom to occur (though a huge chunk of it probably had nothing to do with any president and more to do with the dawn of the tech age) and Clinton's relatively conservative economic policies capitalized nicely on the bubble, leaving no safety net for when it burst and handing the blame to Bush Sr.

    The insane scrutiny being placed on a deeply flawed statistic that responds much more slowly than the news media makes the average American believe has got to stop. Unemployment may be 8.(whatever)%, but unsatisfied workers and long-term underemployment haven't changed a whit, the GDP continues to be stalled, and the stock market continues to struggle. See the big picture…I beg you all.


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