Has the Obama administration made the right moves to fix the financial crisis? The answer to that is not clear cut, not by any stretch of the imagination. Yes it has is the answer, if by yes you mean that it has made the best moves possible to shore up the system as best as possible, so as to make sure that our financial house does not collapse. No it hasn’t is the answer if you think that there need to be fundamental changes to the way the system is run. And curiously, both answers are right.
Without the bailout of the auto industry, the economy would be in much worse financial straits. Past experience shows that once manufacturing sector jobs are lost, they stay lost. Ask someone who used to work in the steel mills in Pittsburgh. Without the auto bailout, GM and Chrysler would have collapsed and taken, between themselves and the ancillary closings of companies that had contracts for and worked with these two, an additional 3,000,000 or so jobs throughout this country.
Where would unemployment be if you added those jobs to the already swelled unemployment rolls? How much more deep would we be in the hole now?
The stimulus has held or saved over 1,000,000 jobs, according to current data. That is 4 million jobs that have been saved, directly or indirectly due to government intervention. If you blame the President for the ills of this nation, be magnanimous and give him credit for not allowing the nation to completely fall apart, and keep things from falling completely out of control.
So much for government as evil ogre trying to steal your freedom.
Unemployment is very bad, but it has stabilized. Don’t think so? Do you remember last January? Last February? When Jobs were being shed at a rate of nearly three quarter of a million jobs a month? Now I wouldn’t call us even remotely out of the woods just yet, but I think it is fair to say that this White House’s policies have had some effect. Jobless claims in February had been on a high and steady upward trend for over six months, and since then, that number has slowly, but surely fallen month by month, from a high of over 650,000 per month in February to just over 500,000 a month last month, and that number looks to be lower than that when the numbers are reported on Wednesday, with the consensus range for that number being around or just under 500,000. Before the great recession hit that number was generally around 300 to 350 thousand per month.
Not out of the woods just yet, like I said, but things are leveling out, and if this, the lagging indicator that it has been of the health of the economy, is leveling out, then that is a very good sign indeed.
Now, has the President been 100% on point economically? No, not even close.
If you make an analogy that this economic crisis is a house on fire, and we know who set the damned fire, then why haven’t the arsonists been arrested? Why did AIG and Citigroup get the sweet deals they got, and why have we been left holding the bag? I understand that these deals were signed off on under the previous administration, but is the current administration helpless? Does Goldman Sachs, and their ilk, have their tentacles so completely wrapped around the fed and the government that we can no longer do anything to stop them from robbing us blind?
I disagree with the calls for Treasury Secretary Geithner to resign, but there needs to be much stricter control of the business of investment, a much greater reigning in of both the fed and the wall street trillionaires who steered the ship of state into an iceberg.
And someone needs to go to prison for raping the economy. Several someones.
Capitalism works, but unrestrained capitalism can be tyrannical, as we are seeing and have seen in this current crisis. No one forces anyone to make bad investments or take risks, but wall street created an atmosphere where in order to make the most profit, more and more exotic instruments became the norm, and it ceased to be investing in companies and markets and became gambling. Gambling is not investing and the entire market in recent years has become one giant casino, run by the gamblers, thanks to deregulation.
America was not created “of the gamblers, for the gamblers, by the gamblers” The President needs to successfully challenge the powers on wall street and bring them to heel, make the government truly independent of them, and continue the work on the issue of unemployment before we can say that this administration’s economic policies are truly 100% on the right track.
Then and only then, will America truly begin to feel like it’s on the right track. Some, but not all, of the right moves are being made, in time that will show, I think. I hope the rest will be made soon, we can only watch and wait.
Recovery though, is inevitable, it’s just a few years away. Be patient.
That’s it for me. Later!
Today’s nuggets, Via wikiquote: I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk. But I believed then, as now, that the benefits of broadened home ownership are worth the risk. Alan Greenspan
The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. John Maynard Keynes.
The economic repercussions of a stock market crash depend less on the severity of the crash itself than on the response of economic policymakers, particularly central bankers. Ben Bernanke