Thursday, January 14, 2010

Continuing the Downward Economic Spiral

From the first few Drudgelines today:

New jobless claims rise 'more than expected'...
Retail sales drop in December; Sales for all of '09 plunge by record amount...
Record year for foreclosures...
Dollar 'Crisis' Looms if USA Doesn't Curb Debt...

We have real unemployment at 17.3% - at least - and that number is, according to AP today, on an upward trend. On top of that, "[r]etail sales unexpectedly fell in December, leaving 2009 with the biggest yearly drop on record." For the year, retail sales were off 6.2% from 2008, a year when retail sales dropped 0.5%. 2009 is by leaps and bounds the worst year of decline on record for retail sales. Also, foreclosures were up 21% in 2009 and are expected to go higher in 2010.

Obama has proposed a new tax on some of our nations largest "financial companies" to make up for the costs of TARP. Designed to raise $117 billion, the tax would hit certain financial companies with over $50 billion in assets. It would exempt government controlled companies such as GMAC. This will of course drive up the costs of banking for all of us, but it does enjoy the support of Barney Frank - a man with a proven track record of some economic consequence to our nation. This comes on top of the recent decision of our government to de facto fully nationalize Fannie Mae and Freddie Mac, making the taxpayer liable for all the losses they incur.

Now another organization, this time a think tank - The Committee On The Fiscal Future Of The United States - is sounding the alarm that the "U.S. soon raise taxes or cut government spending to curb its debt, and failure to act will risk a crippling dollar crisis as investor confidence ebbs . . ." Tell us something we don't know. Our debt stands at over 50% of GDP and is continuing to rise. Social Security is still a time bomb, and Obama is attempting to deal with Medicare by making the situation far worse.

There is some really good news for the economy however. We were told just the other day that the Obama administration, as if by magic, created or saved, 2 million jobs with the pork laden stimulus. And yes, that would be the same stimulus wherein Dems allocated all of 2.6% of $789 billion to funding small business programs and tax breaks.

Time to quote Ed Morrissey at Hot Air:

We’re not in a recovery, especially not in employment. Production may have incrementally improved in 2009Q3, but hardly enough to stimulate job creation. Rep. John Carter uses similar data at Big Government to make the same point. The economic policies of the Obama administration have lengthened the recession and delayed what would be the normal recovery process, mainly by signaling to investors and businesses that costs will go up in taxes and energy prices, as well as burdensome mandates on health insurance. As a result, people are not investing their money into job-creating risk but are sheltering their cash instead.

The US needs a change in direction, and fast. Another Porkulus will give the illusion of action while deepening our debt and creating more need for higher taxes in the future. We have to make investment attractive, and the only way to do that is to cut taxes, pare back government programs, close the deficit through belt-tightening, and get Congress out of the private sector.

Update: Hot Air also has some excellent graphs showing how deep this recession is compared to all other post-WWII recessions. This is by far the deepest and the longest, with no end in sight.

1 comment:

Gnostic said...

Being a Brit I detect a distinct odour of deja vu here. It seems that Gordon Brown farted and Obama is breathing in deeply.

We are being governed by lunatics.