Monday, April 19, 2010

Grading Obama One-Third Into His Term


Coming up on the end of the first third of President Obama's term, we can begin to assess the success or failure of his administration.

  • Economy: D Minus
    The stimulus package has helped General Motors and Chrysler avoid collapse, but it merely shifted the burden to taxpayers and creditors. Meanwhile, financial institutions have taken the stimulus funds without necessarily turning on the credit spigot, consequently the housing market has remained severely damaged and businesses find loans for operations difficult to obtain leading to a continuation of high unemployment. [chart from Google]
  • Health Care: D
    While forcing through a partisan "re-form" of the health care system, the Obama administration has alienated a significant portion of the population, threatened the careers of Democratic Party members of Congress, set up the nation for massive deficits related to health care [the CBO allows $500 billion of savings from diverting funds from Medicare and is based on 10 years of revenue to the government versus 6 years of health care coverage... check the chart closely], potentially driven many doctors to consider early retirement, and may well have created disincentives for those considering a medical career. Meanwhile, the idea that more Americans will be covered by health insurance may be more numbers juggling than reality as businesses react to the burdens of providing health care under the new law. [chart source]
  • Military Operations: C
    Contrary to President Obama's initial optimism that the U.S. could simply leave the Middle East and talk ourselves into a lasting peace, U.S. troops will remain beyond his campaign timeline in Iraq while a new quagmire is developing in Afghanistan and Pakistan. Meanwhile, politically correct dictates from the Administration now place the troops in a damned if you shoot when you shouldn't [even if you couldn't know you shouldn't] or damned if you don't and are killed. [picture from CNN]
  • Nuclear Control: F
    While focusing on a new Strategic Arms Limitation Treaty [SALT] with Russia that is more token than significant, Iran continues to move forward toward nuclear weapons capability. Meanwhile, the Obama Administration determines the best it can do is offer up assurances that we will not use nuclear weapons against an aggressor if they do not have nuclear weapons which is supposed to be an incentive for Iran? to give up its efforts to become a nuclear power... at the same time that Secretary of Defense, William Gates, admits that the Obama Administration has no real strategy developed for coping with a nuclear Iran [its not like Iran developing those weapons is a big surprise]. [picture unknown source]
  • Energy: D
    While coming up with a resolution to consider offshore drilling for oil and natural gas [excluding some of the most promising offshore areas], the Obama Administration continue to focus on alternative energy and mandating smaller cars and trucks as its focus for becoming energy independent and "solving" a CO2 "problem" that is quickly being recognized as a non-existent problem. Meanwhile, moving forward on more new safe, dependable, and clean nuclear power plants has fallen into neglect as the Obama Administration continues to push nascent, inefficient, unreliable alternatives while concurrently trying to dismantle coal power which is the source of nearly half the nation's electricity. [chart from NY Times]
  • Immigration: D
    It is difficult to grade the Obama Administration on anything positive it has done to manage the massive influx of illegal aliens into this country because it has done nothing really. Meanwhile, states such as Arizona and Texas are beginning to address the issue of defending the borders which should be one of the Obama Administration's primary responsibilities according to the Constitution. [picture unknown source]
Overall: a good, solid D and working on a D Minus.

My wife considers this grade inflation.



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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
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Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)