Posted on 11/11/2008 6:17:52 AM PST by grumpa
WHY OBAMA WILL DEEPEN THE DEPRESSION
By Charles Meek Austin, TX
There are at least 5 reasons why Obama will deepen the depression.
(1) President Obama will institute policies that will prevent wages from dropping to market rates. This is exactly what Herbert Hoover and his successor Franklin Roosevelt did in the 1930’s. Such policies by Hoover and Roosevelt dramatically increased the unemployment rate. By preventing wages from adjusting to market forces during the Depression, businesses were unable to afford to keep people employed. As a result, the unemployment rate skyrocketed to 25%. Barack Obama is of the same ilk, and he will not be able to resist policies that keep wages, and thus, unemployment higher than the free market would dictate. In this cycle, an unemployment rate between 10 and 15 percent is a very real possibility.
(2) He will raise capital gains taxes. We are in a period when capital is desperately hard to come by. Great American companies are begging our own government and foreign sources for capital. Raising the cost of capital by raising the capital gains tax rate is exactly the opposite of what we ought to do. It will choke off capital and deepen the depression. In addition, every notch upward in the capital gains tax rate will bring a notch downward in the stock market. Every notch downward in stocks will add more fear and will keep Americans from spending to support the economy.
(3) Obama and his pals in Congress will raise taxes not only on the upper echelon but also on the middle class. He has promised free health care, free college, free child care, free this and free that. Guess what. There is no free lunch. The working class will be hit with higher taxes along with the employer class. According to the National Taxpayers Union, Obama’s fiscal agenda will cost $344 billion per year. This agenda will force higher taxes on everyone. Herbert Hoover dramatically raised taxes in 1932 during the Depression. Economists now recognize this as perhaps the biggest tax blunder in American history. This sucked money out of the productive economy and sent the economy into a death spiral. The handwriting is on the wall; Obama will repeat the mistakes of the Great Depression.
(4) Obama’s policies will skyrocket the federal deficit. It is clear that his spending priorities far outweigh his revenue enhancements. Under normal circumstances, our economy can handle more debt during a recession. But in a period of asset deflation and credit contraction which began when debt was already too high, to balloon the deficit further is to risk the very foundation of our economy. His spending policies will expand the already incredible deficits created by the Bush TARP program. The risk is worldwide loss of confidence in the US government and its debt and a potential collapse of the bond market.
(5) Obama is committed to spending huge amounts of money on uneconomic ventures—such as the auto industry and solar energy. The American auto industry is hopelessly uncompetitive against the Japanese manufacturers. In large measure because of the monopolistic power of labor unions, American manufacturers suffer a $1500 per car cost disadvantage. Throwing more money at the problem will not help unless the unions capitulate—an unlikely event. Government loans to the auto industry will never be paid back. It is a black hole. As for solar energy, it will account for only around 5% of the U. S. energy needs by 2020. And it is multiples more expensive per kilowatt hour. Every dollar spent by the government to support this industry, like other government wasteful spending, is money down a rat hole. And no doubt, Obama will find many other uneconomic projects to support.
These things will be explained to President Obama. But he will reject them because of his ideology. Obama is a left-wing ideologue. Other Democrat presidents have been fairly utilitarian. But not this man. Nothing will stop Obama from pushing leftist/socialist economic policies on our country. And the results will be disastrous.
Mr. Meek can be reached by email at cmeek01@msn.com.
Is there a link?
Great read, very informative.
But can that benefit him?, and what can we do?
With all due respect there is no depression at least not yet...
Minimum wage is already slated to go up to $7.65(?) next summer.
The end of lefist ideas, along with the end of laissez-faire capitalism, might just leave us in a position to recover.
How does a middle-class family prepare for a depression?
I was going to point that out. Of course, all manner of denial will cease when Bush leaves office. Up will be down, doncha know.
Obama will increase fuel costs by raising taxes or his windfall profit tax.
This will further hurt the lower and middle classes with across the board price increases on all goods and serves.
The govt is printing TONS of new money so now inflation will rear its ugly head.
I had to take a class in economics in highschool. I’m confused why they don’t still require that. But by God, you better dress out for PE! Can’t have any fat people, but churn out the dumbies!
>>Americans are so completely ignorant about economics, I am not hopeful.
Not ignorant - just short attention span. Tell me, which takes longer: Explanation of supply and demand OR I promise free (whatever)?
For eight years, Libs had a single recurring theme: “Bush lied.” They drummed that into everybody’s head until people actually believe that. Conservatives have to shorten their message - not change it.
In a way, his failure will boost the Republican party. It is deja vu 1976 all over again. I hope he doesn’t ruin the country so badly that no good Republican like Palin or Jindal would like to run.
There used to be a thrift/survivalist thread around here that talked about stocking up on provisions and things like that - anybody seen it lately?
Here’s a recent thread on frugality:
http://www.freerepublic.com/focus/f-news/2128937/posts
The one I had in mind is from years ago - dunno if it still exists.
As long as there is one stupid person in the world, leftist ideas will never die.
“How does a middle-class family prepare for a depression?”
Get out of debt, even if this means working two jobs for a time.
I don’t buy into that theory at all, either. Can anyone name one instance where leftist ideals have “ended?”
But, I thought Obama was going to pay for my gas and mortgage? /s
Buy rice. Buy beans. Lots of both.
I was talking to a lib last night (a relative) - so frustrating.
Defending every socialist policy in the works yet
VEHEMENTLY DENYING
that it even IS socialism.
Then, she had the audacity to say that wealth redistribution was “Christian” - denying that there was any force or coersion involved in government redistribution.
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