To understand the basic dishonesty of Barack Obama’s “budget overview” all you need is L-U-V.
There was agony in the incense fogged Hopium dens when we published Obama Budget: Sleeveless, Clueless, Truthless, Hopeless, Penniless. There was even more agony when once again we tutored Liberals about the dishonesty of Barack Obama’s “budget overview”.
There is general agony in Hopium dens because we analyze the dishonesty in the Obama “budget overview” from the viewpoint of real Democrats – not Republicans, not Big Media, not PINO Big Blogs.
We are not the only real Democrats who are taking a sledgehammer to Barack Obama’s dishonest “budget overview”. Yesterday the New York Times asked 11 knowledgeable, or at least prominent, “experts” to answer the questions So when, exactly, will the misery end? When can we expect to see the economy turn around? As we noted, even Frank Rich is getting antsy about Obama’s “budget overview”.
Yesterday we quoted “Oracle of Omaha”, Warren Buffett’s dire predictions “the nation’s economy will be in shambles throughout 2009″ and probably “well beyond.”
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Obama in his “budget overview” bamboozles Americans by saying the recession will be over by the middle of the year, the recovery will have begun. This clearly bogus assumption is meant to deceive Americans into accepting a budget that spends a great deal of money.
The simple way of understanding the Obama deception is L-U-V. Obama says the American economy is a “V”, most economists say the economy is a “U”. The fear is that Obama’s wasteful spending as exemplified in the “stimulus” scam with turn the economy into an “L”. We’ll let Nouriel Roubini explain the “L”, “U”, “V”, lines on the economic graph:
LAST year, the debate over how long the recession will last was between those in the consensus who argued that it would be V-shaped — only about eight months long like those in 1990 to 1991 and in 2001 — and those like me who argued that it would last at least three times as long, 24 months, and be more than three times as deep as the previous two.
Today, as we enter the 15th month, it’s obvious that we are already in a painful U-shaped recession that has become global and will last at least until the end of the year — 24 months, the longest since the Great Depression. Even if the gross domestic product grows in 2010, it is likely to be no higher than 1 percent. And at that rate, with the unemployment rate rising toward 10 percent, we will still be substantially in a recession.
Roubini clobbers the Obama “V” and makes clear we are in a “U” – if not worse:
Even if appropriate aggressive policy actions were undertaken — monetary and fiscal stimulus, bank clean-up and credit restoration, mortgage debt reduction for insolvent households — the growth rate would not rise closer to 2 percent until 2011. So this recession may last 36 months.
And things could get worse. We now face a 1 in 3 chance that, if appropriate policies are not put in place, this ugly U-shaped recession may turn into a more virulent L-shaped near-depression or stag-deflation (a deadly combination of economic stagnation and price deflation) like the one Japan experienced in the 1990s after its real estate and equity bubbles burst.
Nouriel Roubini is a professor of economics at the New York University Stern School of Business, and the chairman of an economic consulting firm so the Hopium addled addicts think he is no match for the inexperienced and unqualified Barack Obama in matters economic.
James Grant (editor of Grant’s Interest Rate Observer; author, “Mr. Market Miscalculates.”) mocks HOPE:
“WHEN you stop asking,” was the exasperated reply of the broker to the pestering client who asked the same question over and over during the 1974 stock-market crash: When will it end?
Nobody knew, or could know. [snip] Instead, he blurted the truth that bear markets end when investors give up hope.
Hope sustains life, but misplaced hope prolongs recessions. At the root of this paradox is the notion that booms don’t just precede booms, they cause them. Modern-day booms are the products of low interest rates and easy credit. People overborrow, overpay and overindulge. They love the things that borrowed money buys, but the debts become insupportable. Then the assets, or some of them, must go. A little selling — of houses, cars, companies, stocks — becomes a lot, and the next thing you know we’re talking about nationalizing Citigroup.
Wishing that this weren’t happening to them, hopeful business people and homeowners resist making necessary adjustments. [snip]
Today’s low prices, painful though they may be, are the market’s own shovel-ready stimulus. Before you know it, the stock market, and the residential real-estate market, too, will be on their way back up again — just don’t ask when.
Abandon all hope, ye who enter Obamaville.
Steven S. Roach, Chairman of Morgan Stanley Asia:
IT would be premature to declare an end to America’s recession at the first sign of a resumption of growth. After the unusually steep declines in the economy late last year and early this year, a statistical rebound in the second half of 2009 would hardly be shocking. It could be driven by the gyrations of the inventory cycle. Or it might reflect the first digs of the stimulus package’s “shovel-ready” projects.
But any such whiffs of growth are likely to herald a false dawn, because the consumer remains in terrible shape. American families have lived beyond their means for more than a decade by borrowing against their over-valued homes. With both the housing and the credit bubbles having burst, their stock portfolios down and their jobs threatened, consumers have been shocked into a new frugality. They are likely to be restrained for years to come. The consumption share of gross domestic product is still 71 percent — down from a peak of 72 percent but well above the 67 percent that prevailed from 1975 to 2000.
This points to an unusually anemic upturn, at best — not strong enough to keep the unemployment rate from rising to near 10 percent over the next year and a half. Since it’s hard to call that a recovery, it looks to me as if this recession won’t end until late 2010 or early 2011.
“False dawn”? That’s another way of saying “false hopes”. Don’t believe the hopey-dopey. Obama is like a lightbulb whose wires are no longer connected – you can screw the bulb into a socket – but it will not give light. False hope, like a busted lightbulb will not light the way.
THE short answer is not soon. [snip]
This interacting spiral is what makes this recession exceptional.[snip]
If governments are quick and clear in their intentions and intervene in a coordinated way in both the real economy and the financial sector, we will probably have an unusually long and deep global recession through 2010. If they don’t, it is likely to be worse than that.
Even New York Times columnist and High Church of Obama Archbishoprick Frank Rich admits that Obama is “fuzzy”.
The self-correcting nature of markets will ultimately prevail. We should not underestimate the power of monetary policy; with the sharp increase in the nation’s money stock starting in September, monetary policy is now extraordinarily expansionary. I believe, though without great confidence, that the recession will end in the second half of this year.
Federal policy is damaging the economy’s prospects. [snip] But government spending can’t lead the way to sustained recovery, because its stimulating effect will be offset by anticipated higher taxes and the need to finance the deficit.
Heavy-handed federal intervention into the management of companies from banks to auto makers will also delay recovery.
Obama gets a weak bit of agreement from a conservative that the economy will begin to recover this year. But as to the economic recovery the conservative does not give Obama any credit for the unlikely recovery.
Obama loving Google chairman, Eric Schmidt:
The result, I hope, will be that by the late summer our economy will start to show signs of life, with a slowing rate of economic contraction and small but noticeable upticks in areas like auto sales and real estate. By the end of the year, we may see some growth, with gains in employment to follow a few months later. In early to mid-2010, as banks recover and begin to lend, we should see further progress with consumers taking advantage of the once-in-a-lifetime economic opportunities emerging from this historic collapse.
The Obama lovin’ Google chairman trys to agree with Obama, but fails.
TODAY’S financial crisis is the biggest in recent history, when measured by its speed, the scale of its capital losses or its global reach. Yet viewed from another perspective the crisis is surprisingly ordinary, following the same path as dozens of previous bubbles. [snip]
If we go by the first measure we may see two or more decades of readjustment. If we go by the second, we are still probably in the early stages of the credit correction, meaning that while the technical recession could be over by the end of the year, the broader credit cycle will likely remain a significant drag on economic activity well into the next decade. Either way, we have a long way to go.
George Cooper will soon be force-fed Hopium.
THIS recession, which began in December 2007, has already lasted longer than the average postwar recession. If it turns out to be as bad as the most protracted of the postwar downturns, we will touch bottom next month.
But my strong suspicion is that we are now in something more like a Great Recession. It won’t produce as steep a fall in American output as the Depression did, but it may prove to be as prolonged. [snip]
This is a crisis of excessive debt, the end of the Age of Leverage. It will take longer than a few more months to resolve bank and household insolvency, especially with asset prices continuing to fall so rapidly. Even with zero interest rates and huge deficits, Japan suffered a “lost decade” in the 1990s — and that was when the rest of the world was doing well. This recession is taking place as the rest of the world is doing even worse than the United States. The collapse of trade as measured by East Asian export data is petrifying.
So far in this recession, remember, we have had only two consecutive quarters of declining gross domestic product. At the moment, I find it quite easy to imagine two consecutive years of contraction. And I don’t rule out two more lean years after that.
Quick get the Hopium needles ready – Niall is not being hopey-dopey. Niall says “L”.
HERE’S the hard truth: Nobody knows when this recession will end. Economic forecasting is a dark art, and predicting when recessions begin and end is its weakest link. That said, my best guess is that growth will return in the fourth quarter of this year. [snip]
If the economy continues to slide through the third quarter, as I anticipate it will, this will be the longest American recession since World War II. [snip]
But here’s the rub. My forecast assumes that no other (big) shoes will drop. Sad to say, shoes have been dropping like rain.
Obama, like George W. Bush, might have some shoe problems.
We are without question in a deep recession. According to a model developed by one of us that draws on past recession experience and has proved quite useful, the chance that we will be in recession in March is 92 percent, in April 85 percent, and so on. [snip]
The good news is that the odds of this recession lasting into the fourth quarter of 2009 are below 50 percent. But the dice will be thrown each month, and we could get lucky and be out earlier — or unlucky and be stuck in the doldrums.
Carmen M. Reinhart is a professor of economics at the University of Maryland:
WHEN our economic woes began, analysts took some solace that the longest American recession since World War II lasted 16 months, and that on average our recessions lasted less than a year. But as this contraction continues into its 15th month, we have been forced to look to more severe precedents.
Counting the months of decline, however, is a narrow gauge of distress. A better metric is the length of time it takes the economy to recover to the level of per capita income at its prior peak.
After the most severe banking crises around the world in the postwar period, the economy has taken an average of four years to return to its previous peak in personal income. After the Depression, it took the United States 10 years.
For those without L-U-V who need empirical evidence of how bad things are, today the stock market is sinking so deep (below 7000 on the Dow Jones Industrial Average, lost 300 today) not even our Pink dolphins can detect the depths to which Obama is taking us. And, it’s getting worse. The economy is getting worse.
As bad as things are, they can still get worse, and get a lot worse,” said Bill Strazzullo, chief market strategist for Bell Curve Trading. Strazzullo said he believes there’s a significant chance the S&P 500 and the Dow will fall back to their 1995 levels of 500 and 5,000, respectively.
Obama bamboozles us with a “V”. We are already in a “U”. If we listen to the inexperienced, unqualified, bamboozling Obama – we will go low into an “L”.
Americans need to get away from the strutting buffo operetta captain of this sinking L-U-V boat.