Friday, August 27, 2010

Viva la Socialista Obamanomica - GDP 1.6, Krugman Blames Republicans, Obama Stimulus "Too Small"

Krugman lets the cat out of the bag - Critic of Obamanomics now?

by the Left Coast Rebel

More lousy economic news this morning. Viva la socialista Obamanomica! NYT:

Economic statistics released Friday offered the clearest sign yet that the recovery, already acknowledged to be sauntering, had slowed to a crawl.

The government lowered its estimate of economic growth in the second quarter to an annual rate of 1.6 percent, after originally reporting last month that growth in the three-month period was 2.4 percent.

The news came at the end of a week that showed the economic retrenchment that began in the second quarter has spilled over into the summer. Existing home sales in July were down to their lowest level in a decade, and sales of new homes that month were at their lowest level since the government began tracking such data in 1963. Orders for large factory goods, excluding the volatile transportation sector, dropped in July, indicating that recovery in the manufacturing sector is also stalling.

With such grim reports, economists are now concerned that the outlook for job creation, which has been spluttering all summer, could deteriorate further. Companies and consumers tend to be spooked by bad news, and market analysts and economists worry that faltering confidence could cause employers to hold back on hiring.

When will leftists, Obama, and the progressive-collectivists admit that their Keynsian spending experiment is an unmitigated failure?

- They won't - it will take a ballot-revolution, come November.

Case in point, I saw Paul Krugman's latest column trending at memeorandum, "This is not a Recovery." An interesting headline, I thought - but I bet Krugman will still find a way to blame George W. Bush and/or conservatives for the bad economic news.

Actually, he goes a bit further than that, writing:

What will Ben Bernanke, the Fed chairman, say in his big speech Friday in Jackson Hole, Wyo.? Will he hint at new steps to boost the economy? Stay tuned.

But we can safely predict what he and other officials will say about where we are right now: that the economy is continuing to recover, albeit more slowly than they would like. Unfortunately, that’s not true: this isn’t a recovery, in any sense that matters. And policy makers should be doing everything they can to change that fact.
In the case of the Obama administration, officials seem loath to admit that the original stimulus was too small. True, it was enough to limit the depth of the slump — a recent analysis by the Congressional Budget Office says unemployment would probably be well into double digits now without the stimulus — but it wasn’t big enough to bring unemployment down significantly.

Now, it’s arguable that even in early 2009, when President Obama was at the peak of his popularity, he couldn’t have gotten a bigger plan through the Senate. And he certainly couldn’t pass a supplemental stimulus now. So officials could, with considerable justification, place the onus for the non-recovery on Republican obstructionism. But they’ve chosen, instead, to draw smiley faces on a grim picture, convincing nobody. And the likely result in November — big gains for the obstructionists — will paralyze policy for years to come.

The White House has lost Krugman? Perhaps but his solution is a Keynsian bridge to nowhere.

According to Krugman's logic the stimulus should have been much, much more, say....2 trillion? Why not then, 3 or 4? Why stop there? And with 800 + billion (of which much still hasn't been spent) and that which has, has been mismanaged and hasn't helped the economy or recovery - why would an even higher dollar stimulus then 'save the economy.'

Krugman in all of his leftist-brilliance misses a simple point. Deficit spending creates massive uncertainty within private enterprise. They know (as I do) that there is no such thing as a free lunch. Not to Kruggie though, it's always the same old tired dogma.

Isn't it fascinating just what straight-jacket, Leninst-liberalism looks like?

It's a simple yet rigid narrative:

--- Government spending runs the economy , you are an idiot to challenge so, history tells us nothing (as in the Weimar Republic) and an isatiable appetite for your tax dollars, your liberty and the future of your nation by nanny state rulers shall never be satiated.

Via Memeorandum


  1. "Deficit spending creates massive uncertainty within private enterprise."

    Sure does....but you might have brought that to the atttention of Ronald Reagan and or George Bush...seems like deficit spending is all the government knows and all the military industrial complex wants...

    Nothing like welfare and unemployment, government programs borrowed from future generations to fund the profits of corporations today and pay the dividends their shareholders receive...

    "They know (as I do) that there is no such thing as a free lunch."

    Yeah, right....thats why companies get states and local governments to give them all these benefits if they relocate to their states...

    Wages may have stagnated and unemployment is high but the stock market, CEO bonuses are going through the roof....

    Read this:

    YOU might know that there is no such thing as a free lunch, and I will agree with you...but lots of corporations are getting free lunches....

    Oh, and voting republican won't change business as usual...

  2. A case can be made that deficit spending (govt)when limited to spuring an economy in recession back to health and growth is a positive idea.

    But for that to make any sense, or have any long term positive effect requires that the deficit be paid down during the prosperous times. Something we have failed to do as a nation, prefering to live the good life on borrowed money and borrowed time. Increasing social welfare programs at the same time.

    Food for thought...And this doesn't include unfunded liabilities. Numbers I am pulling from memory, but they are close.

    1971 our national debt was approx. 9 trillion dollars.

    Currently our national debt is approximately 59 trillion dollars.

    A 655% increase over a 40 year period. On average a 1.25 trillion annual figure.


    There are three ways to begin reigning in the national debt as I see it;

    1) cut spending and freeze it for up to five years. start with the MIC (military industrial complex and move in to entitlement spending)

    2) raise taxes, and move to a flat tax with zero exemptions and deductions for business or individuals. For individuals making less than 50K taxes could be progressive... lower income less taxes... at 50K the flat tax no exemtions or deductions.

    3) the most sensible... a combination of spending cuts and restructuring the tax code with the result generating more tax revenues to pay down the debt.

    Sounds easy? It ain't, as the mess we are in attests to.

    A twist... My guess is we will fail to make meaninful cuts, tax increases are politically unpopular,and so we will crank up the presses printing more paper money thus diluting the value of the dollar further and enter a cycle of hyper inflation such as the Weimar Republic noted by LCR.

    Fiscal conservatives should be looking at the huge fiscal crisis this country is facing for the forseeable future and begin to do something about it if they regain control of Congress in November.

    Voting Republican (or Democrat) won't change business as usual. Until the nation sends the message to fix the problem... even if it hurts for awhile.

    Moving away from the unsound Keynesian economics of the past is wise. The task is putting something in place that makes sense now, and for future generations.

    Perhaps it is time for a truly motre limited government. It is also time to end the fiscal insanity and the solution likely will require multiple avenues of attack.

    Business as usual will only create more of the same that got us here in the first place. And we have been a long time getting here.

    Perhaps the gold standard wasn't such a bad idea after all.

  3. In 1970 the Dow Industrials finished at 681.60 and today it is over 10,000...

    Which is in line with your numbers for the government deficit...

    If you use the stock market as a measure of the size of the economy it really isn't all that surprising that government debt has increased as the economy has grown.

    What has not kept pace with the growth in the stock market and or government debt is the wages of the average American household.

    More and more American families are dependent on government for their livelihood because our economic system is creating wealth but it is not trickling down.

    Then we turn around and give tax breaks to those who benefit the most from the stimulus and the Wall Street Bailout...

    Until you break the death grip that big business and special interests have on our economy and our government nothing will change...

    Government debt will increase and more and more Americans will watch as their standard of living decreases....

    Don't blame the liberals or progressives for that....and don't call conservatives, neoconservatives, or republicans progressives if they are part of the establishment that promotes this insanity...

    When you call GWB a liberal you offend me...I did not vote for him you did....I saw the stupidity of policies and recognized that his 'ownership society' actually meant that the citizens of this nation would be OWNED...

    We are indentured servants now of Wall Street and crony capitalism...

  4. All of this aside. I find it interesting that it was Richard Nixon, a republican that took the U.S. off the Gold Standard. Which anchored our money in precious metal.

    In other words it had value. Every since our currency has been nothing but paper, backed by nothing other than the FED's "word" if you will.

    This made it absolutely easy for the government to just turn on the presses and print more money when it felt more was needed. Which of course devalues the dollar more each time.

    It becomes a never ending cycle and Obama is doing the same thing only at a heightened level. And the party goes on.

    I make no apologies for calling GWB a liberal. He was a liberal spender and it matters not what he used the money far. He still spent liberally and to the nations detriment. Obama continues. I do not see GBW as a conservative as they should be and I see BHO as being manipulated by the invisible hand that is really responsible for our plight. As was GWB.

    As to your reference that the wages of American's have failed to keep pace with those of CEO's with their exorbitant bonuses I agree.

    It is why I like Henry Ford, the CEO as you know, that believed he would become wealthy if he built cars his workers could afford to purchase. It improved everybody's life style.

    Your closing remark "we are indentured servants of Wall Street and CRONY capitalism" rings true to a large extent. I believe Rand would agree with you perhaps more than I even might. :-)

    Now as to the solutions... You did not address my points. Some way or another the National Debt (including unfunded liabilities) will have to be dealt with. The liberal view that all it takes is to throw money after every issue and problem won't work any better than GWB'S stewardship of the economy did.


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