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All the Doom and Gloom





jmi256
Here's an interesting article I found that analyzes the current economic situation compared to the rhetoric of the Obama administration. Now I understand that he wants to use rhetoric and fear to force through his agenda, but the result of all this fear mongering has been a further decrease in consumer confidence, which is a key driver in our economic system (for those who have studied Economics, think C-bar). While hes been able to get what he wants politically, it is a huge problem for the US taxpayer and for those who have lost or face losing their jobs.

Quote:

Obama's Rhetoric Is the Real 'Catastrophe'

In 1932, automobile production shriveled by 90%.
By BRADLEY R. SCHILLER

President Barack Obama has turned fearmongering into an art form. He has repeatedly raised the specter of another Great Depression. First, he did so to win votes in the November election. He has done so again recently to sway congressional votes for his stimulus package.

In his remarks, every gloomy statistic on the economy becomes a harbinger of doom. As he tells it, today's economy is the worst since the Great Depression. Without his Recovery and Reinvestment Act, he says, the economy will fall back into that abyss and may never recover.

This fearmongering may be good politics, but it is bad history and bad economics.
It is bad history because our current economic woes don't come close to those of the 1930s. At worst, a comparison to the 1981-82 recession might be appropriate. Consider the job losses that Mr. Obama always cites. In the last year, the U.S. economy shed 3.4 million jobs. That's a grim statistic for sure, but represents just 2.2% of the labor force. From November 1981 to October 1982, 2.4 million jobs were lost -- fewer in number than today, but the labor force was smaller. So 1981-82 job losses totaled 2.2% of the labor force, the same as now.

Job losses in the Great Depression were of an entirely different magnitude. In 1930, the economy shed 4.8% of the labor force. In 1931, 6.5%. And then in 1932, another 7.1%. Jobs were being lost at double or triple the rate of 2008-09 or 1981-82.

This was reflected in unemployment rates. The latest survey pegs U.S. unemployment at 7.6%. That's more than three percentage points below the 1982 peak (10.8%) and not even a third of the peak in 1932 (25.2%). You simply can't equate 7.6% unemployment with the Great Depression.
Other economic statistics also dispel any analogy between today's economic woes and the Great Depression. Real gross domestic product (GDP) rose in 2008, despite a bad fourth quarter. The Congressional Budget Office projects a GDP decline of 2% in 2009. That's comparable to 1982, when GDP contracted by 1.9%. It is nothing like 1930, when GDP fell by 9%, or 1931, when GDP contracted by another 8%, or 1932, when it fell yet another 13%.

Auto production last year declined by roughly 25%. That looks good compared to 1932, when production shriveled by 90%. The failure of a couple of dozen banks in 2008 just doesn't compare to over 10,000 bank failures in 1933, or even the 3,000-plus bank (Savings & Loan) failures in 1987-88. Stockholders can take some solace from the fact that the recent stock market debacle doesn't come close to the 90% devaluation of the early 1930s.

Mr. Obama's analogies to the Great Depression are not only historically inaccurate, they're also dangerous. Repeated warnings from the White House about a coming economic apocalypse aren't likely to raise consumer and investor expectations for the future. In fact, they have contributed to the continuing decline in consumer confidence that is restraining a spending pickup. Beyond that, fearmongering can trigger a political stampede to embrace a "recovery" package that delivers a lot less than it promises. A more cool-headed assessment of the economy's woes might produce better policies.

Mr. Schiller, an economics professor at the University of Nevada, Reno, is the author of "The Economy Today" (McGraw-Hill, 2007).


Source = http://online.wsj.com/article/SB123457303244386495.html
deanhills
jmi256 wrote:
Here's an interesting article I found that analyzes the current economic situation compared to the rhetoric of the Obama administration. Now I understand that he wants to use rhetoric and fear to force through his agenda, but the result of all this fear mongering has been a further decrease in consumer confidence, which is a key driver in our economic system (for those who have studied Economics, think C-bar). While hes been able to get what he wants politically, it is a huge problem for the US taxpayer and for those who have lost or face losing their jobs.


Absolutely! And what difference is Obama's fear tactics with those of Bush? Except this time round it is an ENORMOUS Bill and US citizens should react, otherwise live with it for the rest of their lives. I hope they are going to at least react and show where they stand with this.

Politicians are BAD with controlling money, and especially SICK money of Banks which have FAILED. Now they want to bale out those rich guys of the BIG Banks, which really are not that much interested in the little man in the street, all they want from the little people in the street is their money, and then to shut up. Why not use that money to set up regional People's Banks instead, to which US Citizens would have immediate and direct access? Like smaller building societies? So that that money would go immediately into circulation and to the people it is intended for. The SICK Banks have HUGE loans that belong to RICH PEOPLE! So the small people in the street are being used to bale out RICH PEOPLE!!!! And are made poorer in the process. Not to mention losing their jobs so that the rich people can get richer.

A very simple question to ask is: are people in the US who are supposed to bale the Banks out, going to get richer or poorer in the process? Use common sense here! Next question is to ask what are the loans we are talking about here? And why are we not given a list of those? That should be transparent information when US citizens are supposed to allow the Bill to go through. You will no doubt find that those loans are enormous ones for rich people and rich corporations that did not manage their business well. So now you are going to bale out rich people? In the process you may loose your job as well, and I do not believe you will see any of the money that is going to go into a bottomless pit of those BIG Banks! As they are BIG and have already failed and are SICK.
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