Skip to comments.Weak GDP raises stakes for Obama, Fed (running out of options)
Posted on 08/26/2010 7:53:09 PM PDT by Bigtigermike
Growth figures are expected to show the economy is almost at a standstill, but the government is running out of options to rebuild momentum.
The widening consensus that the U.S. economy has slowed to a crawl will be hammered home Friday with the government's expected announcement that the nation's second-quarter growth was far more anemic than previously estimated.
Many economists believe the Commerce Department will revise its estimate of growth in gross domestic product to 1.3% or lower, down from 2.4% a dismal performance, especially as the country struggles to rebound from recession.
A bad GDP number would cap a week's worth of troubling developments in the housing and financial markets, and ratchet up the pressure on President Obama and congressional Democrats heading into November's midterm elections.
But just as there is widespread agreement that the economy is faltering, there is also a sense that the federal government is running out of options to rebuild momentum.
"Housing is in the tank. Confidence is going down. The stock market is going down. It's hard to imagine how consumers will spend," said Sung Won Sohn, an economics professor at Cal State Channel Islands and former chief economist for Wells Fargo.
(Excerpt) Read more at latimes.com ...
This is the point where they invent an adversary and rally the country to war.
I do feel sorry for the English. They’ll never know what hit them.
Um, how about cutting taxes and spending?
>> I do feel sorry for the English. Theyll never know what hit them.
Why not the Canadians? :-)
“Running out of options” is a bit optimistic.
I say they will announce 0.8-1 and revise it down later to 0.5.
Now is the time to buy the home of your dreams ~ if you could borrow money.
Thank God, Obama will be back next week.
Things just fell apart while he was not there to guide the country. /s
yah...except to date, the only adversary The Regime has been interested in actively pursuing is the local Citizenry...
thinking a 2-2.2% drop in the markets tomorrow.
Simple, revise the “expectations” downward so you can announce “better than expected”.
But what about those 3 million jobs the GAO just said were created by the Stimulus?????
Mexico’s closer... and we have justification for that war.
I've always been suspicious about those Canadians.
No doot aboot it, eh?
1.3% I laugh at your inane figures.
Try this one on for size.
They will do a snapshot window, three months from now and it will end up being less than 1%.
It’s all yours Barry.
You made bad decisions, dealt yourself three extra hands and then doubled down.
None of your policies, that is your policies have worked.
It’s all you.
>>Um, how about cutting taxes and spending?<<
UTTER MADNESS!! [so say our overlords & masters]
Then again, if I were running for office [age currently prevents me] it’d be on an “Extreme Constitutionalist” platform, meaning:
a) No Department of Energy
b) No Department of Education
c) No Department of Agriculture
d) No NASA (some claim it necessary for defense, if so put it under the appropriate military branch)
e) No BATFE
f) No Air Force (fold them into the Army from whence they came: the Army Air Corp; or amend the Constitution to allow an Air Force Marines are under the Navy which is Constitutionally authorized.)
g) Reduction in the Department of Transportation to little more than maintaining federal roads, rails & bridges.
h) No Department of Labor
i) No Environmental Protection Agency
j) No Center for Disease Control
k) No Medicare
l) No Medicaid
m) No Social Security
n) No Department of Health and Human Services
o) No Department of Housing and Urban Development
p) No Drug Enforcement Administration
q) No Equal Employment Opportunity Commission
r) No Bureau of Industry and Security
s) No FEMA
t) No Federal Communications Commission
u) No Federal Student Aid
v) No Food and Drug Administration
w) No Internal Revenue Service
x) No Securities and Exchange Commission
y) No Selective Service System
z) No Occupational Safety & Health Administration
...and I ran out of letters.
Heres a clue : Cut government spending.
"Surrender pronto, or we bomb Toronto" -President Alan Alda in "Canadian Bacon"
Wrong target! Israel first!!
Last time we fought Canada they burned down the White House.
...Hmmm, you got a point there.
These are two of tenants of my five-point economy recovery plan:
1) Drastically overhaul or even phase out the income tax. The current system costs Americans US$304 BILLION per year in compliance costs, drives jobs out of the country and may have driven circa US$16 TRILLION in American-owned liquid assets into the underground economy or to offshore financial centers to keep these assets out of the reach of the IRS--sheer economic insanity. A major change like Steve Forbes' flat tax plan or even FairTax would encourage Americans to keep their savings and investments in the USA (e.g., bring back most of that US$16 TRILLION now out of the US financial system, essentially the world's largest "private bailout"), encourage Americans to just save and invest more in general, and favors cash financing over debt financing, all good for the US economy.
2) Aggressively reign in the excesses of Wall Street. We need to require real liquidity backing to trade in hedge funds, derivatives, credit default swaps and other "exotic" investments, increase the minimum margin requirements for futures and index trades to 15%, re-impose the 1933 Glass-Steagall Act to "firewall" bank assets from the ups and downs of the stock market, and revise the Sarbanes-Oxley Act. These changes will drastically slow down the speculator-caused violent price spikes up and down that can have serious inflationary or deflationary effects, help protect bank assets, and encourage Americans to invest in stocks and mutual funds that have a more steady return on investment.
3) Aggressively use the Sherman and Clayton Antitrust Acts or replace these acts with a modern version and use them to break up some of the biggest companies in the USA. Too much concentration of power in a relatively small number of companies can have disastrous economic results, as we've seen from the failed monopolies during the 19th Century era of robber barons and the deadly effect of the failure of Lehman Brothers because another financial company with huge influence, Goldman Sachs, won't support them. I'm sure you know that Goldman Sachs was heavily involved in the type of margin trades that caused the 1929 stock market crash and they used a series of complex credit default swaps to "clean up" the Greek economic balance books so Greece could join the Eurozone--with the usual disastrous results down the road. Indeed, Apple, Incorporated, the current darling of the tech industry, should be split into two parts (one based on the Macintosh desktop/laptop computing platform and one based on the iPhone/iPad mobile computing platform) to prevent the type of power concentration that Microsoft nearly pulled off in the late 1990's.
4) Aggressively audit EVERY Federal, state and local government agency. Use the audit results to look for bureaucratic overlap and agency bloat so we can cut the size of government at minimum 30% immediately and eventually cut it by as much as 60%. Government spending is running out of control and cutting government spending 30 to 60 percent would go a long way to towards freeing up funds for private business expansion, something real necessary for long-term economic growth.
5) Begin a decade-long phase out of the Federal Reserve Note fiat currency and replace it with a new US dollar backed by a combination of gold, silver, platinum, palladium, copper and nickel--the most common metals used for bullion blocks and coins used in legal monetary transactions. As historical precedent has shown, money backed by "faith in government" instead of a real tangible asset like the metals I mentioned lose value and causes no end of inflationary problems that can wipe out economies over time.
lol they caused the biggest part of this mess. now we suffer
Negative intrest loans will be the last straw.
Expect the feds to ask to see your wallet when you take the kids out for ice cream.
Sh*t is about ready to hit the fan. Geez, hang on tight.
And regulations including the new 1099 rules.
Reagan showed how it was done not all that long ago. It's amazing how both parties have forgotten.
If Uncle Sam would cut spending by 50-60% and taxes by 25% tomorrow, this would all be a bad dream in 3years.
Over at DU they are now claiming Obama is play 11 dimensional chess!
I think you misread that.
Barry is plain Demented or Delusional and is getting body checked by the economy.
They are running out official “Socialist Approved” options. It sickens me that there has been absolutely NO discussion of Conservative ideas (cut spnding, cut marginal tax rates, etc.). This is what happens when there is no competition between ideas, and the media has totally thrown in with the socialist agenda.
This is the point where they invent an adversary and rally the country to war.We're not quite there yet...
I do feel sorry for the English. Theyll never know what hit them.
Buy the dream home and unfortunately, ever rising property taxes will steal it away from you.
The gov isn’t out of options. Debt is deflationary. Cut the debt and you will cut deflation. End the debt and you will begin the end of the recession.
Does this mean that when they revise the figure to a more realistic 2.0 to 2.2 from 2.4 that it will be considered good news? No economist in his right mind expects the drop to be half of the original...
Leave him alone, he’s buying shrimp and trying to eat his waffle.
Would you buy a home if you knew that whatever the purchase price in 5 years it would lose 20-25% of its value/resale value?
But their leaders are of the same ideological stripe as Obammie the Commie. And he loves their thuggery. As another suggested, Canada would be his preferred “local” adversary, though he would have trouble attacking Socialists, too. His excuse for attacking Socialist England would be that they have been a too-close partner of Evil America. Guilt by association and all that.
Otherwise where would I live?
Remember, homes should ideally first serve the purpose of providing shelter.
Yes, I agree.
But the danger is that if house prices fall another 20% or so (as I believe they will), that this is not an isolated occurrence, but one symptom of a systemic disease. And the problem with that is that you will be stuck (if you want to play by the rules) paying a lot of money each month that you will never get back — money that you may desperately need to spend on other things, like food.
A lot of realtors are saying this is the perfect time to buy, as they always do. I just don’t think a lot of people are going to agree. We now have over 9 months of backlogged inventory. I don’t think people believe they will not be able to buy a home cheaper if they wait till next year, and that mentality will perpetuate until the bottom has been clearly defined.
I said if it's cheaper to buy than to rent, then buy, otherwise rent.
Then you arrange to destroy several million surplus homes.
BTW, I checked on how references to that event in the Roosevelt years were working out and discovered that even Glenn Beck has used this story several times in the last couple of years.
I've been using it on the internet since 1996 ~ and it's a good one. Amazing how many people imagine that you can force up the price of a single commodity by simply reducing the supply on hand.
It doesn't actually work that way ~ and Audie Murphy could have told you that if "they" tried to raise the price of pork his Mom still couldn't pay it so he'd continue to supplement the family diet with "free" wild squirrel meat, and I must say, squirrel is a lot more tasty than pig any time, and beats the heck out of beef, chicken or prime Norwegian rat ~
Back to the point ~ you may think you have control of the commodity that's dropping in price but you don't. There are always displacements available, and they will pop up if the public can't pay the price.
For example, I can't afford another house at the moment ~ so no matter how low the prices go I'm not going to buy one, and if you burn down an empty house in my neighborhood what we end up with is a trash strewn concrete foundation!
That's not progress of any kind.
“Maybe a negative 1% prime rate would do the trick. Call it the Cash for Cashiers Checks program.
Indeed, it is time for an audit.
Just for starters, I’d like to see receipts for the Porkulus money. I want to know exactly who or what entity has parked the cash.
fire-up the presses..
Waffles and shrimp grits...
They haven’t run out of options, they have run out of socialist options but the options that work are not being tried nor will they be until we get conservatives in office.