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Archive for April, 2011

Evaluating Obama’s Record After More Than Two Years as President

Recently, President Obama kicked off his 2012 reelection campaign.  Looking past all the political jabbering of the talking heads and pundits, the most astounding prediction of all about the next race for the White House is that Obama is expected to raise $1 billion for his campaign efforts.  Given the president’s failure to fulfill his previous campaign’s promises of hope and change, a great question to ask is, who is going to donate that large amount of money to his campaign coffers?

I mean the guy has an absolutely abysmal economic record as president.  Adhering to a dogmatic Keynesian policy, in just two years he has increased the national debt by 50 percent with nothing good to show for it.  Unemployment, counting the underemployed and discouraged workers, was about 19 percent when Obama took office.  Currently that number is at about 22 percent.  After more than two years in office, Obama’s economic policies have given no hope to millions of unemployed Americans.

Of course, all of the spending and inflating of the money supply under Obama is beginning to have a huge negative effect on the economy.  Anyone who has grocery shopped or purchased gasoline lately has certainly noticed higher prices.  Now, many would blame Federal Reserve chairman Ben Bernanke and his ridiculous easy money policy for current rising prices.  They are correct.  But, let’s not forget that Obama nominated Bernanke for a second term as chairman in 2009.  The president had the opportunity to do the right thing and nominate an individual that could have brought sanity back to our monetary policy.  But then again, Obama and his cohorts in Congress need Bernanke to monetize their lavish spending programs to ensure their reelections.

In fact, Obama won’t recognize his or the Fed’s culpability in bringing about inflation.  Instead he is resorting to the famous political technique of scapegoating.  According to Obama, speculators are potentially to blame for high gas prices and thus rising prices in general.  His Justice Department is going to investigate whether speculators are driving up the price of oil and therefore harming consumers.

Well, of course speculators are driving up the price of oil because they know more about how economics work than anybody in the Obama Administration.  They know that with the trillions of new dollars the Fed has pumped into the economy since 2007 oil prices which are priced in dollars are going to go up, probably way up.  They would not be bidding up the price of oil today if they believed that in the future they will not be able to find a buyer for their oil futures.   They are not causing harm to consumers.  Fed policy under Bernanke is the culprit, but the president seems clueless about this fact.  As general prices continue to rise because of Obama’s Keynesian policies, Americans will continue to lose hope that their lives are getting better.

Obama’s foreign policy is as abysmal as his economic policies.  During the 2008 campaign he promised “change that we can believe in”.  If by “change” Obama meant even more war than George Bush provided than he has fulfilled that campaign promise.  Since taking office Obama has not ended the U.S. occupation of Iraq.  He has increased troop levels in Afghanistan by about 30,000.  He has increased unmanned drone attacks over Pakistan killing innocent civilians and providing a recruitment tool for Al Qaeda.  He led the NATO invasion of Libya, which was supposed to be a “humanitarian” effort, but has quickly turned into a regime change operation.  Obama claimed he would not put boots on the ground in Libya and then it was reported that U.S. special operations forces had been on the ground in Benghazi for three weeks training the rebels.  Now, fighting between Qaddafi forces and the rebels is in stalemate and many analysts believe it will take a NATO invasion with ground troops to dislodge Qaddafi from power in Tripoli.  The president has put himself in a tough spot.  If his previous war-like tendencies are any indication, we can expect U.S./NATO troops to be fighting pro-Qaddafi forces in Libya soon.

Barack Obama’s first two years as president has been a catastrophe.  Unemployment and prices are up and we face a national calamity because of burgeoning debt at the state and federal levels.  He has increased not diminished our exposure to war by ramping up military attacks over Pakistan and leading the effort to overthrow Qaddafi in Libya.  These conflicts will only waste more money we don’t have and make us less safe.  Again, it should be asked, if Obama hopes to collect $1 billion in campaign contributions, where will it come from?  My best guess is Wall Street and the Military Industrial Complex.

Kenn Jacobine teaches internationally and maintains a summer residence in North Carolina

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Bernanke is Still Clueless

It has been a while since I criticized my favorite Federal Reserve chairman, Ben Bernanke.  I’ve been busy teaching school and Bernanke like always has been busy destroying the dollar and with it our economy and standard of living.  So, nothing new and out of the ordinary has happened to warrant a post about the 2nd term Fed chairman.  However, last Monday night he made big news when he said that our current price inflation is “transitory”, and based on supply and demand issues in energy and commodities.  He went on to say, “Our expectation at this point is that in the medium term inflation, if anything, will be a bit low.”

So why do I consider Bernanke’s remarks to be big news?  Because when predicting the future economic prospects of our country his prognostications have been less than stellar to say the least.  He never saw the housing bubble coming; he misjudged the seriousness of the problems in the auto industry; and was totally clueless about the potential for big bankruptcies on Wall Street.  What’s worse is that he was still spewing his pablum about how everything was okay on the eve of the financial crisis!  Thus, with his newest pronouncements on our current state of price inflation, why would anyone give his remarks any credence?

We can give Bernanke credit for one thing.  He didn’t deny prices for many things are rising.  Cotton is at its highest level in a decade.  Copper is at its highest price in forty years.  Corn, wheat, and soybeans are up.  Of course, all Americans are seeing steeper price levels at the pump as oil has risen above and remained over $100 a barrel.  But, for Bernanke to state that the situation is temporary is not credible.  To be sure, there are extenuating circumstances behind some of the cost increases.  Weather conditions in some parts of the world and Middle East unrest have had an effect somewhat on crop and oil supplies.  However, given the trillions of dollars Bernanke has injected into the stagnant economy through low interest rates, quantitative easing, and monetizing of the federal debt it’s no coincidence that these commodities which are priced in and bought with dollars are seeing price increases.

In fact, since about 2001 when George W. Bush and the Republican Congress began doubling the national debt, the Fed’s monetizing and low interest rates caused steady commodity price increases.  Prices dipped in 2008, due to the recession, but have accelerated upwards again beginning in about May of 2009.  Simply stated, the current inflation is a continuance of the long term trend begun before the financial crisis.  Given even lower interest rates, quantitative easing, and the monetizing of an even larger debt load since Obama took office, a reasonable observer would assume commodity price increases will not be temporary and will be even more significant.  But the Fed chair insists that in the long –run prices will stabilize at lower levels.

In October of 2009 this commentator wrote an article indicating that Ben Bernanke was between an overheated printing press and a hard place.  The gist of the piece was that Bernanke’s reckless monetary policies were placing him in a bind.  If he continued down the path of loose money there would be high inflation to pay.  If he reversed course and tightened the money supply the stock market bubble would burst and his benefactors on Wall Street would be harmed.  It seems that Helicopter Ben is at the point where he has to make that decision.  Taking his most recent comments into account, it seems he has made his decision.  As usual it is in the best interests of Wall Street.

Article first published as Bernanke is Still Clueless on Blogcritics.

Kenn Jacobine teaches internationally and maintains a summer residence in North Carolina

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Austan Goolsbee’s Cruel April Fools’ Joke

On Friday, the Bureau of Labor Statistics (BLS) released the latest jobs report for the U.S. economy.  In March, non-farm payroll employment rose by 216,000 jobs.  According to the report, employment gains were seen in both the goods-producing and service-providing sectors.  This job creation lowered the overall government unemployment number by 1/10 of 1 percent to 8.8 percent.  Naturally, the data was applauded by the White House.  Although acknowledging that more work needs to be done to produce more jobs for American workers, Austan Goolsbee, President Obama’s leading economic advisor, indicated he felt the jobs report for March was “quite solid”.

Upon closer inspection of the numbers, it is clear they are anything but solid.  To put things into perspective it would take eight years of similar monthly gains to bring the economy back to full employment.  That means that many who have lost their jobs in the last 3 years would not find new ones until 2019.  In other words, the job gains of March are too small to call them “solid”.

If March’s job gains are any indication of what we can expect in the future, American workers better get use to a much lower standard of living.  The March number included gains in temporary help (28,800), leisure and hospitality (37,000), and retail (17,700) – jobs that pay generally lower wages and provide few or no benefits like health care.  Indicative of these low paying job gains was the average hourly earnings number published in the same BLS report.  It showed no increase from its previous level in February.   Thus, while the economy added jobs they are not the kind a recovery is based on.  Anything but good jobs cannot be considered “solid”.

Of course, Goolsbee’s opinion is flawed from the get-go as the number the BLS uses to report unemployment is highly defective.  It doesn’t count the underemployed (those unemployed or working part-time but desiring full-time work).  Gallup polling found their current underemployment number for March up slightly to 20.3 percent of the U.S. workforce.  This number is 2.3 times greater than the BLS number and is moving in the opposite direction.  So while Goolsbee applauds the BLS report, according to Gallup the unemployment situation is much worse and continues to deteriorate.

Lastly, Goolsbee’s comment that the March jobs report is “quite solid” can easily be debunked when you consider that government will be paying for much of the job gains.  In March, the health care sector continued to add jobs as it has throughout the financial crisis.  But, who ultimately pays the salaries for these jobs?  The government does through entitlement programs like Medicaid and Medicare.  What about the health benefits of the new temporary, food services, and retail jobs?  You guessed it – the government.  At a time when more Americans are on food stamps than ever before and many U.S. workers have been collecting unemployment for more than 2 years, real job growth would be more self-sufficient.  Since most of the gains in jobs for March are not, you could argue that the meager gain in employment is negated by the need for government to foot the bill.

At the end of the day, there is little to celebrate in March’s jobs report.  The unemployment rate is much higher than the phony number the BLS has published and the jobs produced were woefully inadequate in terms of number and pay.  That is why Austan Goolsbee’s comment that the jobs report for March was “quite solid” is nothing more than a Cruel April Fools’ Joke.

Kenn Jacobine teaches internationally and maintains a summer residence in North Carolina

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