I think Obama and the Democrats are going to do very well today.
The following groups will be disappointed in the first Obama administration and in this order:
1- The far Left.
2- Many Black Americans
3- Arabs and Muslims
4- Characters like Chris Matthews.
pl
So far, this appears to be holding up as prophecy. pl
“Among all forms of mistake, prophecy is the most gratuitous”
(George Eliot)
When the “good” employment results were announced on Thursday (10.0% unemployment down from 10.2% with “only” 11,000 jobs lost), treasury interest rates went up, the dollar strengthened, and the stock market, initially strongly higher, ended a little bit up. As I will describe below, all of these events were anathema to the Obama Administration.
Were these results doctored to support the re-appointment of Bernanke? Time will very definitely tell.
Bernanke’s solution to the economic crisis caused by American financial institutions flooding the world with bad debt was to “make good” on that debt with future federal tax receipts. He paid off the financial institutions with several trillion dollars in taxpayer money.
Now, there are several things the matter with his actions, but the one that has the full attention of the Obama administration is interest rates. Increasing interest rates are the great bogey man for the Obama Administration. Interest rates must stay low. When you’ve just borrowed several trillion dollars without the authority of anyone except yourself, borrowed several trillion dollars to pay off a tiny group of plutocrats, higher interest rates are to be feared, feared and resisted.
How can interest rates be kept low? Simplistically put: bad news. High unemployment. Shaky banks. Sputtering economic growth. These are the things that permit Bernanke to keep interest rates at zero for the foreseeable future.
So, you have an administration whose entire strategy is built on maintaining a continual stream of bad news, all the while saying that it is dedicated to a bright future.
And employment is at the very center of this. Rising employment is inflationary. There are no exceptions. Any real decrease in unemployment must be met with higher interest rates.
War fits into this scenario beautifully. In the first place, it is horrible news. Victories? Body counts? It’s all a horror show. One must expect continual war from Obama. And, of course, in a period of economic hardship and high unemployment, soldiers are easy to recruit.
I confess to being one of the voters who voted for Obama and supported him fully who is now disgusted and angry. But my disgust is very targeted. Close Guantanamo? Etc. Etc. Yes, these are disappointments. But appointing men who have been fired as college Presidents and have been in bed with the crooks stealing from the people? This was completely unexpected.
It appears that you can take the politician out of Chicago, but you can’t take the Chicago out of the politician.
Cynicism breeds strong in my heart, and yet I had the audacity to hope (for a return to constitutional law, an end to signing statements, and some action to demonstrate that no one is above the law).
Apparently, Obama does not understand what Bush and most republicans do, it is very important to cater to one’s natural support base. The handling of Terry Schivo was political masterpiece.
I suspect this is another aspect of the Chicago machine – where all that matters is supporting moneyed interests. My prediction is that in 2010 the unenthusiastic Democratic base will not turn out while the Republican base will, and then lame duck status and gridlock will set in.
Always remember that from D-Day 1944 until December 16, 1944 the stock market declined. On the arrival of the news of the new German offensive in the Argonne Forest the market skyrocketed. The market loves the expenditure of public funds and deaths of young Americans. The new merchants of death are the financiers of Wall Street. Here is a quote from the 1963 section of the brilliant historian William McNeil’s “Rise of the West” when in discussing the decline of Byzantium on page 516 he writes the following:
“Mercantile and artisan enterprise should probably not be expected to flourish in communities dominated by rentiers and office holders, if only because successful traders or other economic entrepreneurs are prone to withdraw from risky and troublesome ventures and use their funds to buy an office in the government or to invest in sound-rent producing properties. In extreme cases, when fiscality becomes an unchecked prinicple of administration, specualtive capital is like to find far richer rewards through the purchase of governmental office than in any economically productive venture. Yet such offices are lucratvive only because they permit their holders to ambush the money and goods of the public at large. Government becomes, in effect, a great siphon concentrating wealth in the hands of a small group of insiders, who cultured luxury may disguise the rapacity of the regime which sustains them. Taxation easily becomes confiscation, and tax gatherers soon being to resemble marauding robbers. Economic devolution and a radical retrogression of trade and industry may be the unintended result.”
Today, right now, if you are not funded by either the government or the military-industrial-academic complex which are the products not of wisdom but corruption and continuing war then you really are going to have a difficult time in the Present American scheme of things. Disclosure am a retired civil servant offered several lucrative post-retirement opportunities all premised on misuse of information and friendship gained while employed. As a result living largely on my civil service pension! Still it is generous compared to today’s retirees. But then I did have several years of service starting at $95/mo thanks to Lyndon Johnson who told me my friends and neighbors had selected me for service in the Armed Forces of the United States. Relying on the letter from Lyndon I know he had absolutely nothing to do with that result. Being facetious of course. Note the exclusion of most of those on PL’s November 2008 list from the rentier (financier) class and the military industrial complex. Ah where is the renogtiation board to captive obscene war profits when we (US) needs it! Where is the recapture effort for mistake outlays by the FED! Hoping the Senator keeps Bernake out of the government after January.
Pat
The conclusion you arrived at is an example of your astuteness and analytical ability. Admirable!
arbogast
Your point on interest rates is well taken. Each one percentage point increase in rates means an additional $80 billion in interest expense for the Federal government. With a significant portion of the Federal debt needing to be rolled over in the next 4 years rates naturally are a serious concern for the government and the economy.
This is why the Fed for all intents and purposes is trapped. If they stop the monetization program as scheduled for next quarter rates will naturally tick up – particularly for agency debt and MBS leading to higher mortgage rates as well as for Treasury debt with the growing issuances. If they continue to extend the monetization they risk dislocations in the currency and bond markets.
We have seen that the policy is always reflation to “solve” the downside of the previous reflation begeting the next downside. As we have seen during the previous 3 reflations this decade, the asset classes that most catch the upsurge are those that already have the inflationary bias. In the current reflation it happens to be emerging markets and consequently commodities. This is fomenting increasing financial instability in places like China.
We have not addressed any of the global financial problems that manifested themselves last year. Instead we have exacerbated the instabilities with easy money policies on steroids. There is no pain-free exit strategy now!
Bernanke during his reconfirmation hearing raised the political taboo – social security and medicare benefits that are too rich for our indebted taxpayers to honor as is. This is true for both public and private pension benefits as the baby boomers start to draw down in increasing numbers over the next several years.
Obama like the leadership of both parties is in cahoots with the kleptocracy – so the can is being kicked down the road with the strategy of “hope”. I wonder how our politics evolves over the next decade?
Good call!
I confess I continued to hope for several months thereafter.
Anyone who believed Obama really meant what he said about “change we can believe in” is bound to be disappointed by the “same as it ever was” spectacle of his first year in office.
There is: (1) the same coddling of Wall Street gonifs that was a hallmark of the Bush Administration; (2) the same basic war policies; and (3) the same embrace of extra-legal secrecy and privilege by the Executive Branch.
The third is the most troubling to me. It represents “bipartisan” institutionalization of executive abuse of authority, and complete contempt for the separation of powers.
I had hoped Obama would pass on the poisoned chalice offered him here by Cheney, but Holder as AG is almost as shameless an advocate for an unaccountable DoJ as Mukasey was. As Scott Horton observes, DOJ to the Rescue… of John Yoo.
Disgraceful, just disgraceful.
If “appointing men who have been fired as college Presidents and have been in bed with the crooks stealing from the people . . . was completely unexpected” for arbogast, Holder’s water-carrying for John Yoo is the last straw for me.
In this respect, the damage done by the Bush Administration to our form of Government is . . . permanent.
Arbogast:
Of course the statistics are crooked. If you google gdp you will find articles describing some of the obvious [mistreatments, imported parts of cars treated as USA made, rather than imported price, etc].
The blog you wish to inspect is:
http://www.shadowstats.com/alternate_data
Where the author bases the analysis on old time standards before Reagan, Clinton et al added changes to make things appear better for the government eg. in inflation medical cost are treated as approx 5% of
GDP, rather than the actual 12-13%, thus hiding the high rate of inflation in this field].
Admitting higher inflation, would raise the social security and inflation adjusted pensions of the Federal Government [and all other governments] – clearly impossible when there is deficit already [e.g. wars and military spending] and the Social Security Fund consists of Treasury Bonds, which would have to be cashed asap there is more going out than coming in in SS payments — an automatic increase in federal; deficit.
Good luck in MISbelieving spin!
(O == W) == true;
Arbogast:
A detailed analysis of the falsity of the unemployment report by the Labour Dept [10 point analysis]
http://www.atimes.com/atimes/Global_Economy/KL08Dj05.html
Enjoy and learn
I voted for Obama and I am left leaning in most areas and I am also disappointed in many of his positons, however I am very thankful that he is our president and not McCain/Palin.
I will defintly be voting Democratic in the next election because a vote for an independent could possible give the election to a Republcan and with the party imploding that would be a frighting thing. Obama may be a Chicago style politician but he does not have teabags hanging off his hat, and get all his news from Limbaugh and Beck.
I voted for Obama and I am left leaning in most areas and I am also disappointed in many of his positons, however I am very thankful that he is our president and not McCain/Palin.
The point is that Obama campaigned on the promise that he was different, so much so that he was worth voting for instead of a tool to vote against a far worse alternative.
What we really have in Obama is another Clinton Administration. I may as well have voted for Hillary: at least I would have known what I was getting.