More Economics

The last sentence in the three column long article in the newspaper said it all with the line, "Since Obama took office in January, the economy has lost 3.4 million jobs." To be factually correct, Bush lost 3.8 million jobs but it took him from December of 2007, the accepted date of the start of the current recession, through the January 2009 reporting period to do so. That is a 14 month long cycle compared to Obama's accomplishment being done in 9 months. Neither President should receive any accolades for these numbers. However, the experts are now stating that these unemployment figures will get worst and then stay at an elevated rate at least until 2014. So what will be "an elevated rate"? Will it be the 10% Obama projection or a number much closer to 20%? Since most independent economists say we are at 17% now, my leanings are toward a high point in the 20% range and then a lower, long term calculation at a real 10% level.


Let me remind you that even accepting the Washington line that unemployment is at 9.8%, that still represents a 26 year high. More such records, no matter how cushioned, will be set in the next 6 months.


The traditional approach to boost the national economy calls for financial institutions, banks, to make loans to both large and small businesses; for large and small businesses to expand their operations with those loans; and for these expanded operations to need more employees so more people are hired. These new employees then have money to spend which keeps the whole economic deal afloat. The obvious problem is that banks are not lending. To solve this problem, Obama's advocates are talking about a second stimulus [like the first stimulus did so much good] but these funds would have to come from renewed federal borrowings and thus create even greater deficit spending totals. Any additional deficit spending is all wrong. The amount of money America owes is huge and this sum can only act as a dampening effect as our economy labors to rebound.


The size of the current deficit has even caught the critical eye of Federal Reserve Chairman Ben Bernanke. He has urged that US deficits be reduced but offers not one suggestion as to how to accomplish that purpose. This is yet another government official who has seen this terrible financial problem and is at a loss as to how to correct it. Sounds like a common refrain from the powers in place in Washington.

There are solutions but only one is worth serious consideration. The weak solutions include greater taxation to generate income to pay the bills; a devaluation of the dollar; and a default on internationally held US government debt. The one "serious consideration" is via the 2010 elections limit the ability of Obama to pass his socialist, deficit incurring legislation by shifting the control of both the House and the Senate to conservatives.

With that done, the focus can shift to a White House change in 2012.