Obama Goes Wobbly Over More Economic Stimulus

The Market Oracle ^ | 11-01-2009 | Mike_Whitney

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Obama Goes Wobbly Over More Economic Stimulus

Economics / Economic Stimulus
Nov 01, 2009 - 06:34 AM
By: Mike_Whitney

The recession is over. Thursdays report from the Commerce Dept. confirmed that the economy expanded in the third quarter by 3.5 percent, better than most economists estimates.
GDP had contracted in the four previous quarters in the longest and deepest recession since the Great Depression. Massive government stimulus, cash for clunkers, and inventory restocking accounted for most of the surge in economic activity.

Consumer spending grew at 2.36 percent while consumer credit continued to contract at a near-record pace of 4.5 percent. Unemployment swelled to 9.8 percent, "with nearly nearly 26 million workers—17 percent of the workforce—unemployed or underemployed," according to economist Mark Zandi.
The economy remains extremely weak and is expected to lapse back into recession if the Obama administration fails to provide a second-round of stimulus.

But President Barack Obama hasn't requested more stimulus and recent polls indicate that a majority of people are against more deficit spending.
The administration has done a poor job of explaining the advantages of reducing the output-gap or--for that matter--the overall objectives of Obama's economic recovery plan.
Many people heap the bank bailouts (TARP) with the fiscal stimulus. This is a mistake that's easy to make. But the point needs to be clarified so more people don't needlessly suffer.
It's up to Obama to articulate the differences in policy so the country can muddle through the tough days ahead. The problem is, Obama is afraid to use his skills as a communicator, because he thinks his message will offend financial industry constituents who wield tremendous power at the White House and on Capital Hill.
The bankers and brokerage mandarins are more than happy with the present arrangement, which means that the conveyor-belt connecting the US Treasury to Wall Street will continue to operate at full-throttle diverting ungodly sums of money to broken banks and financial institutions rather than for unemployment benefits, work programs, and state aid.

Obama supporters who think that the president is right to treat the banks with kid gloves, should consider how Franklin Roosevelt dealt with the same situation 70 years ago. His first Inaugural Address, March 4, 1933, sums it up pretty well:

[snip]

[kromike]

“Present”

[PJBankard]

I wouldn't get my hopes up. This may the beginning of what is called a “W” recession.

[FreedBird]

maybe Rush or Fox news can be blamed instead of Bush

[Blood of Tyrants]

Obama is seeing the political winds turning against the liberal agenda and doesn’t want another defeat on his resume.

[PJBankard]

Sorry. For those who do not know what a 'V' or 'W' Recession is:

V is basicly when a the economy goes down than comes back up forming the shape of a V.
W is when the economy goes down, up, down, and than back up forming the shape of a W.

For more informaion:V and W Recession