It Feels Like It’s Slip Slidin Away

Posted by Michael A. Kamperman on June 5, 2010

The supposed V-Shaped recovery the U.S. economy had entered has been shown by the recent unemployment report to be non-existent.  Just because business is better than it was 12 months ago coming out of the depths of the financial crisis doesn’t mean the economy is on strong footing.  We only created 20,000 non-census jobs and once again people are being pushed out of the labor force to keep our unemployment rate at a phony 9.7%.  This is the best we can do after we threw a TARP Too-Big-To-Fail life-line to the Zombie Banks, spent 75% of the stimulus money, and juiced the housing market a second time with an $8,000 first time home buyers tax credit combined with an open spigot of FHA mortgage credit.  Now the tax credit is over and the states are assembling 2011 budget plans without the stimulus funds used to smooth over the depression of the last couple of years.  And the unexpected BP blowout is rapidly shredding the economies of the people of the Gulf.  The recent unemployment report does not include any of the aftershocks of these events.  The next one will.   The seeds of the poorly named double dip recession (what recovery?) that have been sown the last few weeks have sprouted.  Europe is in disarray.  Geithner’s message to stress test their banks and continue stimulus spending has fallen on deaf ears.  The Summer/Volcker/Geithner strategy to have America consume less, save more, produce more, and export more has found no takers.  We need a new plan.  Yet I fear none is coming. 

What I also fear is the Obama Presidency is imploding right before our eyes.  Regardless of one’s political persuasion this is very bad news.  At the very moment our country desperately needs visionary leadership we are on the verge of going rudderless.  The failed BP blowout preventer has apparently blown apart the Obama Presidency.  Night after night of images of oil soaked marshes with no sign of the cavalry charging to the rescue have exposed the President to be out of touch with the people and unable to get on top of the situation.  For some odd reason the President continues to allow BP to stay in charge of the cleanup efforts of our Gulf rather than turning the effort over to our all-hands-on-deck military.  The people get it that BP has to find a way to seal their well one mile under the ocean.  The people don’t get why BP is dictating the pace and the effort of the clean-up of our Gulf.  Neither do I.  The ramifications of this are best explained by liberal talk show host Chris Mathews who stated “if the oil keeps flowing into the Fall the Democrats could lose 100 seats in the House.” 

The economy desperately needs a much bigger dose of stimulus than it has received so far.  It’s not going to get one.  The President is already weakened to the point that he was unable to get the Senate to extend unemployment benefits to the end of this election year.  Normally a no brainer for a Democratically controlled Senate.  They will try again this week.  The deficit hawks have gained control of the debate.  After this election cycle many more of them will swarm the Halls of Congress.  It was especially disheartening to hear President Obama praise the unemployment report yesterday as good news and continuing signs of progress.  He is clinging to hope and a prayer that his economic programs will work eventually.  Importantly, he has failed to articulate the case for more stimulus spending.  Now it is too late.  We’re “Slip slidin’ away-slip slidin’ away-you know the nearer our destination-the more we’re slip slidin’ away.”  It’s now all up to Ben Bernanke and the Fed to lead us to the economic promised land.  The number of people pleading for quantitative easing from the ECB has grown exponentially in the last few weeks.  Soon the chorus of those calling on the Fed to print money will grow exponentially as well.  There is no other way out.