If you want to make radical change, you have to make basic changes to the institutions. You cannot expect to double down on debt and expect the economy to improve.
One of the pluses of the Kennedy Administration was he began acting on the Recession of 1959/1960 immediately with the "Best and the Brightest." They attracted the talent necessary for financial free markets.
Treasury Secretary Timothy Geithner cannot fill the ranks of his senior staff because there are no "True Believers," who can support this "Spend Your Way To Success." If there are those who have adopted this ideology, they do not have the credentials and credibility for the bureaucratic back-up that a cabinate level Secretary needs.
President Obama's choice may have passed the Senate selection, but it has not passed the credit community as a choice. It did not help to alienate them with his last weekend speech of February.
I know these steps won’t sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they’re gearing up for a fight as we speak. My message to them is this:
"So am I."
For those who were alive and lived through the JFK and LBJ foreign wars and economic policies, Big Government is the "old way of doing business," the answer was to spend your way out of a recession.
Those with those credentials and that experience will not be joining this Administration with this Congress. They are in retirement.
For those in business who went through the Stagflation of October 1981 through July of 1982 and April of 2001 through October of 2001, even short term inflationary spending that results in printing more money has long term consequences. Those who dealt with that are up close and personal with those President Obama has deliberately alienated.
For those favored few who succeeded in surviving since the Great Depression, they can tell the story of a contracting economy where the Gross Domestic Product dipped every day for four years. For every three months you have economic depression, three years are needed to recover or turn around. That will not start until the Government stops bleeding red and printing green.
That is just for the economy, not the individuals invested in it. Those who were and are planning for their retirement, their recovery will take 15 years. As much as this may cost the corporate "fat cats," they will still have a comfortable life.
It is those business people who are considered "rich," and invested their whole life earnings that have lost and will lose. It is those who put away for their retirement, including into 401(k) investments, that will change their whole lives.
Here is a quick review for those who do not know what a Recession is. When not attacked by inflation, a Recession is when the Gross Domestic Product (GDP) has failed to increase while the population has increased (in billions in actual and in 2000 dollars):
Jul-1948 $273.9 $1,654.1
Oct-1948 $275.2 $1,658.0
Jan-1949 $270.0 $1,633.2
Apr-1949 $266.2 $1,628.4
Jul-1949 $267.7 $1,646.7
Oct-1949 $265.2 $1,629.9
Jan-1950 $275.2 $1,696.8
Apr-1957 $459.2 $2,294.6
Jul-1957 $466.4 $2,317.0
Oct-1957 $461.5 $2,292.5
Jan-1958 $454.0 $2,230.2
Apr-1958 $458.1 $2,243.4
Jul-1958 $471.7 $2,295.2
Jan-1960 $526.9 $2,517.4
Apr-1960 $526.1 $2,504.8
Jul-1960 $528.9 $2,508.7
Oct-1960 $523.6 $2,476.2
Jan-1961 $527.9 $2,491.2
Apr-1961 $539.0 $2,538.0
Those are the periods without double digit inflation or unemployment. These are periods of Stagflation where, while the dollar figures for the GDP may have increased, they were due to inflation:
Apr-1947 $240.5 $1,568.7
Jul-1947 $244.6 $1,568.0
Oct-1947 $254.4 $1,590.9
Jan-1948 $260.4 $1,616.1
Jul-1981 $3,178.7 $5,329.8
Oct-1981 $3,196.4 $5,263.4
Jan-1982 $3,186.8 $5,177.1
Apr-1982 $3,242.7 $5,204.9
Jul-1982 $3,276.2 $5,185.2
Oct-1982 $3,314.4 $5,189.8
Jan-1983 $3,382.9 $5,253.8
Apr-2001 $10,128.9 $9,905.9
Jul-2001 $10,135.1 $9,871.1
Oct-2001 $10,226.3 $9,910.0
Stagflation is much more difficult to deal with as increased spending with the means of production decreasing means more dollars chasing the same goods.
One of the reasons healthcare costs have increased is the demand created by a greater population has not increased the means of providing for that service. Adding more Federal dollars to chase that same resource has increased prices rather than numbers of those providing services.
These are some of the figures for the last eight years of our Gross Domestic Product and they include both the unadjusted GDP and the GDP adjusted for inflation:
Jan. 2001 $10,021.5 U $ 9,875.6 A
Jan. 2006 $12,959.6 U $11,217.3 A
Jan. 2007 $13,510.9 U $11,357.8 A
Oct. 2007 $14,031.2 U $11,620.7 A
Apr. 2008 $14,294.5 U $11,727.4 A
Jul. 2008 $14,412.8 U $11,712.4 A
Oct. 2008 $14,200.3 U $11,525.0 A
Experience has shown that no administration exists in isolation from the Speaker of the House, where bills for budgets begin. So, it is more insightful to look at them as a combination.
The first year, and the worst year for the Bush/Hastert Administration resulted in a 3.11% increase in GDP. The full six years of the Bush/Hastert resulted in a growth of 34.8%, or an annual rate of over 5.1%.
The Bush/Pelosi Administration from January 2007 to October 2008 resulted in below that 5.1%. In the period from October 2007 to October 2008, it was 1.2%. As you can see, the decrease in GDP, after adjustment for inflation, began before April of 2008.
This can be traced back to Pelosi's introduction and Bush's signing of the "Supplimental Appropriations Act of 2007" introduced in January of 2007. As a Senator, President Obama voted for this.
This was further aggravated by the "Economic Stabilization Act of 2008" that included the TARP amendment for bailouts. Again, as a Senator, President Obama voted for this.
While a great deal can be attributed to President Bush, failing to sign or writing a veto on spending by Chairwoman Pelosi is not one of those things. The same is true of Senator Obama's/President Obama's support either.
While there is generally a problem with recruiting "The Best and the Brightest" for President Obama's Administration, it looks like an impossible task for the Treasury to Recruit them knowing the issues of the last two years of policy and the present deliberate alienation of the "special interest" called Business.
Of course, the most clear expression of a special interest is the use of earmarks. The Pelosi/Obama Administration claims to seek reform, yet fails to do this in practice. No reputable economist or attorney can resolve that issue. That kind of double-think scares away qualified candidates from not only the Treasury, but every other part of the Executive Branch.
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Republican Leaders in the Senate & House
Senator/ Republican Leader Mitch McConnell's official YouTube channel http://mcconnell.senate.gov The official YouTube channel of Senate Republican Leader Mitch McConnell http://mcconnell.senate.gov/ http://www.youtube.com/user/RepublicanLeader
Senator Jim DeMint's Official YouTube Account Following the November elections in 2006, the senator stood up against big spenders in Congress and stopped over 10,000 wasteful pork projects. Famed Washington journalist Robert Novak called him a "hero."He was recently ranked as the Senate's most conservative member by National Journal and as the No. 1 senator voting for responsible tax and spending policies by the National Taxpayers Union. DeMint understands the greatness of a country is found in its people and values, not in its government http://www.youtube.com/user/SenJimDeMint
Republican Leader of the House, John Boehner House Republican Leader and a staunch opponent of pork-barrel politics, John is fighting to eliminate wasteful spending, create jobs, and balance the federal budget without raising taxes. He has challenged Republicans in the 111th Congress to be not just the party of “opposition,” but the party of better solutions to the challenges facing the American people. Under the new House GOP leadership team John leads, House Republicans have formed “solutions groups” to develop principled alternatives on the issues that matter most to American families and small businesses, and launched the GOP State Solutions project, an initiative aimed at bringing reform-minded Republicans at the state and federal levels together to promote common-sense solutions from outside the Beltway.
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