No Runny Eggs

In early January, then-PEBO had his staff deliver a white paper to provide economic justification for the stimulus bill.   As you might remember, one of the key issues for putting the stimulus in place was that it was going to dramatically reduce job loss.   In fact, the argument was that the stimulus would not only reduce job loss but quickly put us into the position of lowering the unemployment rate.   PEBO’s staff put together the following chart to show how unemployment with the stimulus would compare to unemployment if we just left things alone:

What you can see here is that in early January, PEBO believed that without the stimulus package, unemployment would peak at a bit over 9% and then recede.   However, with the humungous, pork laden, we’ll pay for it forever stimulus package, unemployment would peak around 8% and make a rapid descent.

Today, American Pravda notes that 4 states have hit double digit unemployment rates.   That’s not good.   However, that’s not the important part of the article.   Here’s the money line from the article:

Some economists now predict the U.S. unemployment rate will hit 10 percent by year-end, and peak at 11 percent or higher by the middle of 2010.

Barely two months ago, Obama and his ilk saw unemployment capping at 9% if they did nothing.   Now that they’ve done a major something, they’ve pushed unemployment to a potential of 11%!  

Obama had better hope that these economists are wrong.   If not, the growing skepticism from all sides of the political spectrum, will quickly turn into a full scale rout!

Geithner is finally going after the plan I suggested here. With the time stamp, perhaps I could get the $420 Billion?

H/T Greg Mankiw

First, from Rasmussen Reports:

Thirty-one percent (31%) Strongly Disapprove to give Obama a Presidential Approval Index rating of +8.

That’s the lowest approval rating yet for President Obama.   Also noteworthy is that on the day of his inauguration, 40% of the population was “in the middle.”   Today, that number has dropped to 30%.   I can tell you that folks aren’t moving to the “Strongly Approve” category!

Then, there’s this, also from Rasmussen Reports:

Investor confidence has fallen to a new all-time low as expectations of future economic performance continue to decline.

while:

The assessment of current economic conditions fell 28 points between the collapse of Lehman Brothers and the inauguration (from 89.6 to 61.7). It has fallen another nine points since then to 52.3.

Seventy-five percent (75%) of investors now say the economy is getting worse. That’s an increase from 58% since Lehman Brothers collapsed last September to begin the financial industry meltdown. On the day that President Obama was inaugurated, 63% of investors thought the economy was getting worse.

So the current assessment has dropped by 9 points but the despondency over the look into the future has increased 12%.   Somebody want to argue again how at least in investors eyes, President Obama isn’t making matters worse?

And finally,  you know it’s bad when  American Pravda begins to question who owns what part of the problem:

Although the administration likes to say it “inherited” the recession and trillion-dollar deficits, the economic wreckage has worsened on Obama’s still-young watch.

Every day, the economy is becoming more and more an Obama economy.

Yes, yes it is.  

As Allan Sinai, chief global economist for Decision Economics, a Boston-area consulting firm notes in the AP article, we clearly have the right President and administration to handle our economic challenges:

At this stage, there is no easy answer, no easy way out. It’s a question of how we fumble through.

It would be hard to identify a single action the Obama administration has taken that has improved the lives of the people they were elected to serve.   However, if excellence in fumbling will determine how we will come through the economic turmoil than I for one, will rest easy.   Nobody knows how to run the fumblerooski better than Obama!

Update 9:08 AM – Hmmmm, I won’t take one day as a given however, President Obama’s approval rating acheived a new low in this mornings Rasmussen daily tracking poll. Any one day is subject to a myriad of issues. A high one day could be a low the next and vice versa. However, the trend is not PEBO’s friend at this time.

At a graduation ceremony for police recruits in Columbus Ohio, President Obama reinforced his commitment to creating or saving jobs with his stimulus bill.   The 25 graduates are the first, and only jobs that Obama has connected to his stimulus spending.

In the midst of continuing, dramatic job losses there is a ray of hope.   Take a look at this information pulled from the Bureau of Labor Statistics site:

Yup, that’s right.   While  jobs across the spectrum continue to shrink,  there are two groups that continue to break the trend.   Government employment along with Education and Health Services have increased their ranks in each and every month of the past 6.

While President Obama argued that less than 20% of his “job creation and saving” would occur in government, the 25 he has identified so far are all in government.   25 out of 25 looks like 100% to me.   The BLS statistics look to support that analysis.

All animals are created equal but some animals are more equal than others!

The industry term for them is “trailers” but I’m old enough (no, none of my movie experiences included silent films) to remember when the previews of movies were called “Future Attractions.”   Future attractions were put together to give people enough of an insight on the coming movie to decide whether they wanted to see, or “participate,” in the movie experience.   Today, we have a “Future Attraction” of what the United States will be showing.

Venezuela’s dictator, Hugo Chavez, has announced that he will be nationalizing a rice production plant owned by Cargill:

“Prepare the decree, we are going to expropriate Cargill. We are not going to tolerate this,” Chavez said.

Just another rant of a Tyrant you say?   An irrational act that is based on thuggery and emotion.   An act that is devoid of rational thought or law?   Au contraire!   Chavez has a perfectly legal reason for his expropriation:

Chavez said he ordered the takeover because Cargill — one of the largest privately owned U.S. companies — avoids producing basic rice that is subject to government price controls.

Chavez set the rules that he thought would get the outcome he wanted.   Cargill looked at the rules and said “we can’t make any money doing that,” so they  looked at the rules, set by Chavez, and found a way to stay within them and make money.   The problem is that Cargill’s “outcome” is not the “outcome” that Chavez envisioned.   Thus, Chavez is crying foul and is threatening to take the plan over so that he can not only dictate the terms but dictate the outcome.

Huh, that’s funny.   Not “ha ha” funny but “isn’t that ironic” funny.

In October the TARP plan was put into place.   It was an “EMERGENCY” so one of the largest government interventions ever, was put into place with legislation that boiled down to “whatever the Secretary of Treasury says.”   Nearly immediately following the implementation, there was citing of banks who had received TARP funds doing things that their new “investors” didn’t like.   Annual recognition trips, purchasing of foreign banks, payment of “performance” bonuses, were some of the activities over which “foul” was cried.   Of course, the problem, as with Chavez’s is that the rules didn’t preclude these activities so little other than shaming them, was able to be done.

Shortly after TARP, the auto industry knocked on Congress’ door asking for alms.   Congress, having learned that providing money with no rules left them looking foolish, responded by providing a set of rules to go with the automaker loans.   These new rules ran to the opposite side of the balance.   The new rules boil down to “you will have a bunch of rules that we will have the right to change whenever and in whatever manner we choose to.   You will have no input to these rules.   The rules will not be based on any real business objectives but will be based on what we feel would be best for us.”  

There’s no doubt that Congress’ new approach to dictating outcomes will have no greater success than their original approach.   The issue isn’t whether Congress gets the rules right.   The issue is that government never, ever, ever is able to dictate economic outcomes, the best they can do is provide a framework that allows capitalism to best work.  

There’s one other lesson from this exercise.   Government is never, ever, ever a benevolent overseer.   Government in all forms, is far too susceptible to removing rational thought and believing that “because they say so” is a good enough reason for something to occur.   The result is that the more Government is involved, the less likely the outcome will be one that is able to be accomplished without significant distortion or disruption of an economic enterprise.   Also, Government’s response to not getting the right outcome is to further restrict economic options, even to the point, as with Hugo Chavez, of taking over companies who don’t comply with their vision.

Hugo Chavez’s Venezuela, scenes of America’s Future Attractions.

Revisions/extensions (6:03 pm 3/5/2009, steveegg, who is slacking in his copy editing duties) – Fausta has more background on the Venezuelan end of this story. I’m shocked, SHOCKED that neo-Communists would have the same food-shortage problem the old-line Communists had.

Also, R.S. McCain has pretty much the same conclusion, as he takes a look at the exit of capital from the markets.

R&E part 2 (6:13 pm 3/5/2009, steveegg) – There’s a couple of updates in the Reuters story that bear mentioning:

– The Cargill plant that is causing Chavez to nationalize Cargill’s rice business is designed to specifically make parboiled rice and not the “basic” white rice Chavez wants made.

– Venezuelan nationalizations used to be paid for by cash, but are now paid for by debt. It seems Chavez is writing checks his treasury can’t cash.

Within a couple of minutes, in the same press conference with British Prime Minister Gordon Brown, President Obama said:

"What you’re now seeing is, profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long term perspective on it."

And followed it up with:

“What I’m looking at is not the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing. And, you know, the stock market is sort of like a tracking poll in politics. It bobs up and down day to day, and if you spend all your time worrying about that, then you’re probably going to get the long-term strategy wrong.”

In his first comment, Obama  spoke as if he had  some inside knowledge and wanted to convey it.   It was almost as if he was saying, “OK, I’ve done what I need to do and things will settle from here.”

In his second statement, Obama dispelled the notion that he has inside knowledge, or if he had, ever cared about the stock market value.   “I don’t care what happens to the stock market, I”m moving forward, I know best,” was the implied statement.

Is it possible for Obama to utter the two statements and be consistent?   Can he reconcile an attitude for the complete disregard of the major indexes and a bullish call for stocks?   Yes he can!

I think we can safely put aside the nonsensical talk that occurred around Obama’s election, that speculated, perhaps hoped, that he would “govern from the center.”   There is no doubt that Obama is implementing what previous to November of 2008, would have been completely unthinkable.   Take overs of the major banking institutions and the auto industry, increasing debt by multiple trillions and by virtue of a “stimulus bill” and his budget, inserting government involvement deeper and wider than ever before seen.   Obama is from far, far away Leftville and is intent on reshaping America to reflect his view of what America as Leftville, should look like.

The next question than is “What does Leftville look like?”   Here again, we can quit with any nonsense of what some want Obama to say and go directly to his words.   In nearly every major speech since his election, Obama has included the phrase “Shared sacrifice.”   “Shared sacrifice” in the New Obama Dictionary, means that all should be equally dependent upon the government.   The problem that Obama has is that in the 234+ years of the country, that hasn’t been the plan.   The result is that there is a large class of folks who have accumulated levels of wealth that allow them not to be dependent on the government.   When I say “wealth,” I don not mean people with millions of dollars.   I’m referring to people who have saved, paid their bills on time and when they retire, will be able to do so not taking world tours each year but by continuing to pay their bills and perhaps, if they’re lucky, leave a small monetary remembrance to their heirs.   At one time these people were considered “successful” but no more.   With a desire for “shared sacrifice,” Obama needs to find a way to quickly remove the means that the “successful” have that allows them to be independent of the government.   How to do it.

Here again, Obama and the folks around him have given us his exact plan.   In the words of Rahm Emanuel, “never allow a crisis to go to waste.”   Obama is continuing to exacerbate and fan a crisis to acheive his vision.   Let’s go back and look at his comments from today in reverse order:

“What I’m looking at is not the day-to-day gyrations of the stock market, but the long-term ability for the United States and the entire world economy to regain its footing. And, you know, the stock market is sort of like a tracking poll in politics. It bobs up and down day to day, and if you spend all your time worrying about that, then you’re probably going to get the long-term strategy wrong.”

Of course he’s looking at the stock market.   Does anyone really believe that there is a day of 3%, 4% or greater drops in the market that he and his staff are not aware of it?   Baloney!   The only truth in Obama’s statement is that if he worried about it, he would get his long term strategy wrong.   If your strategy is to erase wealth from a broad section of the population than you purposely ignore the market.   You also  sow fear, confusion and mistrust so that the market is unable to find footing.   Do this long enough and you will erase huge amounts of 401Ks and other investments.

OK, so if you’re intent on erasing wealth why would you come out and tell people:

"What you’re now seeing is, profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal if you’ve got a long term perspective on it."

Simple.   At the end of December, 74% of the markets value was sitting on the sidelines in cash.   I would guess that that number has increased as the market as continued to drop.   It’s hard to quickly erase wealth in the stock market if the money isn’t in the stock market.   How do you fix that?   As President you tell people that it’s OK to get back in the market.   You do that while continuing to push forward with all the policies and plans that market has told you have no value.

Obama is the master of saying one thing and acting in a manner that is completely contrary.   Remember, this is the man who said he agreed with the Supreme Court’s decision on DC handguns and is now trying to move gun restriction legislation forward.   This is the man who said he was not supportive of late term abortions but has nominated the person singularly responsible for keeping “Tiller the Killer” in business.   Believing Obama’s words without any evidence of action supporting those words is naive and ignorant.  

The only thing we can say about Obama is that while his lips may be saying “yes” his actions almost always, will say something else.

One role I had was in marketing for a major wireless provider.   My job was to identify trends and come up with pricing and promotion ideas to increase sales.   There were times were I would trial a concept, see a couple of preliminary successes and make a recommendation to roll the program out market wide.   On more than one occasion as I tried to explain the trend I believed was forming, I would hear from our General Manager something along the lines of “2 points does not a trend make.”

Reports out that TCF bank has decided that the restrictions that come with TARP are more impairing than the loans are beneficial.   Thus, they are looking to pay back their $361.2 million to the Treasury.  

And with that, here  are the lessons to be learned:

Government programs, no matter how well intentioned,  never, ever, ever, ever help businesses run more efficiently.   Don’t believe me?   Ask anyone who has ever had an SBA loan.

and

Government programs, no matter how well thought through, will always, always, always  have unintended consequences that for some period of time, will disrupt and distort the very function they were created to aid.   Again, don’t believe me?   Just ask anyone who receives farm supports.

I know that 2 points don’t make a trend but I’m guessing that three certainly does the trick!