Karl Rove: It's the Economy, Stupid

The Wall Street Journal ^ | June 4, 2009 | Karl Rove

[Puzzleman]

Tomorrow will likely bring more bad news for President Barack Obama on the number one issue for voters -- the economy. The Labor Department's monthly job report will almost certainly show unemployment topping 9%, with a couple hundred thousand more jobs lost in May.

It will get worse before jobs get better. Congressional Budget Director Douglas W. Elmendorf recently predicted that unemployment will continue rising into the second half of next year and peak above 10%.

-- snip --

[Puzzleman]

He's probably right.

[HANG THE EXPENSE]

Never pass up the opportunity to ask the rat you know"How's that hope and change thingy working for ya?

[wastoute]

I don't know. I hate to say it but the "market" seems to be responding favorably to Zero's tender ministries. I think Krauthammer pegged it when he described what we are seeing (gummint telling private corporations what to do and threatening them to respond) as Fascism. Initially Fascism works! Ask any older Italian and they will tell you, "The trains ran on time!" Initially.

It would appear that corporations are looking into the future and realizing private citizens won't invest in an uncertain climate (where their investment may be "downgraded" at the Emperor's whim) and seeing "the stimulus" as the only source of funds in the future. After all there are Trillions to be had. It is going to be an interesting ride! Don't unbuckle your seat belts yet, kids, the ride is just beginning!

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[niteowl77]

Never pass up the opportunity to ask the rat you know"How's that hope and change thingy working for ya?

Oh, I don't! Interestingly, the "Bush's fault" responses have become hollow shells of their former selves, but that coincides with an unwillingness to blame Obama for anything (like the Germans saying that if Hitler knew about this or that, he'd stop it). They have found their messiah and they are going to stick with him until he stuffs them in the oven personally.

And even then they will probably blame themselves for inconveniencing The One.

Mr. niteowl77

[Ghost of Philip Marlowe]

There is a lot going on in the market.

A few points:

1. When the government starts printing and spending a trillion NEW fiat dollars, there damn well ought to be at least a big spike in the economy

2. The market can no longer be trusted as an indicator of economic health. Due to electronic trading and now mega-trading agents (Goldman Sachs, e.g.,) the market (such as the DJIA) can have a “great” day of 200 points with very low volume. The point-gain, in this case, means nothing. It used to mean millions of investors were excited and trading healthily. The low volume means very few players are moving around super-high numbers of stocks.

3. Between 1929 and 1933 (1933 - when the Depression really began) the markets similarly rebounded, had a general trend that looked like recovery. Then the bottom fell out. Many thought the 29 crash was over. Many became optimistic. Many returned their life savings into the stock market.

4. This led to the historic “pump and dump.” The big investors who know what the average citizen does not, suckered lots of investors into the market (just as they did leading up to the 1929 crash, of which the big investors also knew). Then, at a certain point in time or when the markets reach a certain point, the big shots pull out, the market crashes, stocks and investments become worthless.

5. All economic indicators currently point to this: despite all of the government's action, they have only succeeded in falsely and temporarily keeping the bottom of the market from falling out. With all their actions, one would expect a much stronger spike than we are in. The other economic indicators (over 500,000 new unemployed each month, high record of credit default, high number of late mortgage payments, high number of foreclosures (even many of the “first time home sales” are by purchasing foreclosed homes), retail sales being held down because people who can are saving and paying down debt, commercial real estate vacancies, high oil inventories, the devalued dollar) all of these indicate that we are far deeper into a recession than 6 months ago (when the Democrats stole power by manufacturing an economic crisis).

6. The real estate bubble only had a rapid deflation to normalcy over the past year. We are fast approaching interest-rate adjustments for two major types of mortgage holders: Alt A and Option Arms. Over the next year each of these mortgage-type holders (and each has more than the Sub-Prime mortgage holders) are going to readjust. Each of these individually will be worse than the Sub-Prime. Also, commercial real estate is about to fall through the floor.

7. The newly printed money is still largely in digital form. It has not been pumped out into the economy because the banks are holding it to A) recoup their losses, and B) wait until the economy shakes out a bit before they start lending money. When that newly printed money goes out into circulation and when the people decide to spend a little (they are being encouraged by the MSM spinning that ‘people are feeling a little better about the economy’) all of that money hits the streets and inflation REALLY starts to increase — like most of us have never seen in our life times (yes, it will be worse than under Jimmy Carter because the dollar does not have the global respect it once did). When inflation occurs, it is followed by a spike in unemployment as employers try to adjust their budgets to the devalued purchasing power of the dollar.

Predictions:
1. The economy will be fairly stable for the most of the remainder of the year. The MSM will continue to spin it as “recovering” and the Socialism of Obammie the Commie as “actually starting to work, though many had their doubts.”

2. The DJIA will creep back up (perhaps to 9500) artificially, for the main part, but also by smaller investors who start to get back in.

3. The holiday season will see great sales (sign of deflation) and massive spending.

4. By this time next year or by late next summer: hyperinflation, unemployment well over 10%, dollar worth practically nothing (.50 cents maybe? If we're lucky. I don't know). GDP slashed to unsustainable. Many of the “little things” that we now take for granted as near-staple items (you know, like 1.5Q of ice cream) will become luxuries for the elite or for super-special occasions. Just walk through your grocery store and see all of the things you really do not need. They will disappear. This is what happened in the USSR under Obammie the Commie's style of “business management.” The necessities will be in very short supply.

All of this, of course, assumes that there is no major international incident. If China and Russia succeed in dumping the US Dollar as the world reserve currency, all of this happens overnight. If a major military conflict breaks out, again, this all happens overnight, because we barely have the funds to defend ourselves.

Personally, I think the true power-players that control Obammie the Commie's puppet strings are intentionally destroying the US Dollar and the markets and taking over the major industries (just as the Fabian Socialists did in England). They don't have to control everything with an iron fist the way the communists did (though they are communists). They only need to destroy the citizen's confidence in putting their money in the markets; thus channeling them to invest in T-Bills, etc. (’lend’ their earnings to the government), and control those industries upon which all other business and industry depends (energy, for example) and US sovereignty is an emaciated skeleton of its former self.

By killing the US Dollar and destroying our image as a reliable economy and trading partner, they will force us to accept a global currency administered by a global central bank.

Glenn Beck spends a lot of time trying to redefine things. I think he is doing this to distance himself from those with a ‘bad’ reputation, like the anti-communists from the 1950’s and the John Birchers, all of whom have earned the reputation as crazy extremists. Funny thing is, what those groups predicted is exactly what we are facing and what Beck is trying to avert.

Make no mistake about it, the push is for global communism, as our parents regarded that system, which is not an economic system but a method of enforcing totalitarianism, just as socialism is. Lenin did not call himself a communist, he called himself a Socialist, as did Marx.

[ichabod1]

An old Italian lady told me, in Italian, that under Mussolini the trains NEVER ran on time, you just weren’t allowed to call attention to that fact. I’ve never forgotten that.

[Hardastarboard]

we barely have the funds to defend ourselves

Great post, and unfortunately probably prophetic. I have been concerned about your key point above for quite a while. If we have a major conflict, that takes money, by the thousand cubic yard container (modern warfare is more logistics dependent than ever before, especially for fuel and ammunition for the automatic weapons everyone uses now).

[HANG THE EXPENSE]

I dont know about that as my neighbor who liked to yank my chain about bush(I wasnt too wild about bush in the last 4 years)has been very,very quite.I think he knows what a mistake he made voting for bamster.What an idiot.

[linn37]

Meanwhile Obummer is overseas hugging and kissing the very people who want to kill us. Nice.

[FastCoyote]

You just stated concisely what a lot of us think. I could even throw in some more downward accelerators - but what’s the point. We all know there is noyhing propping up yhe current optimism but hot air. et Obama bask in the sun for another 8 months, the heavy crapola hasn’t even hit the fan yet.

Did you mention Pensions unfunded, SS and Medicare bust, capital gains and death tax in 2010, deadweight unionism, etc.? The list goes on and is scary.

[Ghost of Philip Marlowe]

I believe that is part of Obammie the Commie's plan.

The Cloward-Piven Strategy (I coin the term “economic chaos” to apply their strategy to the national economy) method of the left, if successful, means that we cannot afford to defend ourselves militarily. That forces us into negotiation and diplomacy — not to avert conflict (which is the purpose of negotiation and diplomacy), but as a substitute for national defense (when diplomacy fails or when we have been attacked).

For details on Cloward-Piven:
http://www.discoverthenetworks.org/groupProfile.asp?grpid=6967

[Ghost of Philip Marlowe]

I didn't mention those, but you are absolutely correct.

The list is very lengthy. It's early and I was writing in other places and not ensuring a complete list.

SS is about to prove a Ponzi scheme like the world has never seen, one that will Madoff look like a shop lifter at the local five and dime.

The bailout of state-run pension funds will occur, and it will significantly aid in tanking our economy.

[mo]

“Make no mistake about it, the push is for global communism, as our parents regarded that system, which is not an economic system but a method of enforcing totalitarianism, just as socialism”

Its a contemporary manifestation of slavery....

[SueRae]

Good (but scary) thoughts. I don’t give it that long for it to start unraveling but like you say, any major event would accelerate the downslide immediately.

The sneakier part of the stimulus is holding a large portion of it back to flood the depressed voting blocs just in time for the 2010 election season. Of they manage to succeed, and stay on this track after 2010; I fear that the future will be bleak for a long time to come.

[wastoute]

Thank you for your lengthy and thoghtful response. I agree entirely but in my post I was just wondering if there might not be a brief period where "Facism works" interposed between the "sucker's rally" and TEOTWAWKI. I think that it was you are referring to in "run up to DOW 9500". You are absolutely right and years ago when I read a "paper" paper I remember paying attention to volume but nowadays you don't see that posted.

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[kellynla]

We live in the richest country on the planet with enough oil, natural gas & coal to fulfill our energy needs for hundreds of years and I won't even get into the nuclear energy & desalination possibilities while we are borrowing money from the Chicoms to stay afloat and paying for the War on Terror on BOTH ENDS every time we fill up at the pump. All this while our country is being run into the ground from D.C. by “Larry, Moe & Curly”!

11/2010 and then 11/2012 won't come soon enough for me...
I only hope & pray that we still have a country left to vote in and that the Gelding Old Party gets a testicle & spine implant in the meantime.!

Semper Fi,
Kelly

[Charles Martel]

An old Italian lady told me, in Italian, that under Mussolini the trains NEVER ran on time, you just weren’t allowed to call attention to that fact. I’ve never forgotten that.

I always suspected that was the case.

[kellynla]

“higher inflation, higher interest rates, higher taxes, sluggish growth, and a jobless recovery”

Haven’t we been here before...
Hussein will be another Jimmy Carter...”one & done!”

[hoosier hick]

There are two areas where I don’t agree with Mr. Rove’s assessment. The “stimulus” was never intended to stimulate the economy. The $500 billion back-ended spending was a $500 billion downpayment on Obama’s re-election for 2012. Add that to what most assumed would be an already recovering economy, and things will look peachy by the summer/fall of 2012— at least temporarily, which is all he needs. The other thing is that Beltway-types still do not get the bigger impact of Obama’s policies on the macro economy: the uncertainty he creates in the business climate with his policy declarations keep small businesses from starting and expanding. Real economic and employment growth cannot happen without small businesses leading the way. No matter how much lending is available, business owners are not going to apply for loans in an uncertain business climate....

hh

[bray]

He’s in Saudi Arabia trying to sell our worthless bonds.

Pray for America and Our Troops