Posted by Michael A. Kamperman on October 30, 2011
The Occupy Wall Street movement has already had two huge successes. First and foremost it has altered the debate from deficit cutting at all costs back to lack of jobs are the number one issue America is facing, not deficits. Secondly, it has given our President a much needed wake-up call that it’s all about jobs, jobs, jobs. Finally, the President has made a couple of moves in the right direction. He has acknowledged many graduating students have student loan payments that are too high for their too low incomes. He has also moved forward to insist that Fannie Mae and Freddie Mac refinance mortgages that are current without an appraisal and without a new title insurance plan forcing the transfer of the existing plan to the refinanced mortgage. But why not offer the same terms to FHA and VA mortgages? Why not offer the same terms to all mortgages held by all federally backed financial institutions like banks and credit unions? And where have these low hanging fruit moves been hiding at the White House? These moves should have been made months before the last election, not months before this one. The reason these moves are being made now is the President is feeling political pressure from the Occupy Wall Street movement. The lost and forgotten have risen up and the President has sat up and taken notice.
Now the President finds himself boxed in by the deficit cutting super-committee he approvingly signed off on just a couple of months ago. In fact, if a deal is not reached on how to lower the deficit, then across the board cuts will automatically go in on all discretionary spending, including defense. If the President is serious about helping the young people motivated to have their voices heard, then he will reject any deal that cuts their future Medicare and Social Security benefits period! It is the wrong way for our country to go and it is not necessary. Secondly, he needs to give up his politically charged class warfare rhetoric about raising taxes on the rich and call for the passage of jobs bill by using all of the savings from the ended Iraq war as the pay for. The jobs bill has a chance to put some of those young people into a good job, while raising Warren Buffet’s taxes may feel good but it won’t create one single job.
The Occupy Wall Street movement is also providing cover for the Federal Reserve to move forward on quantitative easing 3, probably this week. In Ben Bernanke’s famous helicopter speech he talked about the importance of coordinating monetary policy with fiscal policy despite the supposed independence of monetary authorities. Look for the fed to go big once again on purchasing mortgages to lower the cost of refinancing distressed mortgages even further. This is sound policy and will even be more effective if the President expands it to all federally backed mortgages. I want to give a shout out to Chris Wallace who criticized Rick Perry’s jobs plan for only aiming to create a far too insufficient 2.5 million jobs. Finally someone in the media is asking where are the plans to create tens of millions of jobs. Wake-up President Obama, he is talking about you too.
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.
Posted by Michael A. Kamperman on August 5, 2009
We are not in an economic recovery, not by a long shot. If estimates are correct the unemployment numbers for July will show somewhere between 300,000 to 450,000 job losses. That would not be a sign of slack hiring but of continued firings. Hiring is a lagging indicator once a recovery takes hold. Continued firing is a clear sign there is no recovery. Confusion about the concept of “net exports” in the GDP data is leading many to misinterpret the state of the economy as being more positive than it really is. U.S. imports and exports peaked in the third quarter of 2008, with exports reaching $1.913 trillion. In the fourth quarter of 2008 total dollar exports fell to $1.706 trillion, followed by a drop to $1.509 trillion in the first quarter of 2009 and a drop to $1.483 trillion in the second quarter of 2009. Yes, the rate of decline is slowing. But the GDP data claims “net exports” added .45% to GDP in the fourth quarter of 2008, added 2.64% positive growth in the first quarter of 2009, and finally added 1.38% to positive GDP growth in the second quarter of 2009. Our actual exports have fallen by over 20% in the last three quarters and yet our GDP calculation claims “net exports” have added 4.5% to our economic growth. The firing data offers a clearer picture of the true state of the economy. Firing is not a lagging or leading indicator, it is a current indicator. If the July unemployment report estimates are accurate, then the economy was still falling and not in a state of recovery in the month of July. Yet July is part of the third quarter when the average forecast of economists is calling for positive GDP growth.
Many look to China as a source of economic strength and positioned to lead a global economic recovery. The latest data out of South Korea says otherwise. According to Bloomberg news, “exports to China, South Korea’s biggest overseas market, fell 15.7 percent from a year earlier in the first 20 days of July. Exports to the U.S. slid 26.5 percent in the period while shipments to Japan fell 32.6 percent, today’s report showed.” China claims a 7.9% second quarter growth rate and yet, just like the U.S. and Japan whose economies are in an acknowledged deep slump, China is importing much less than it did last year.
The economic strategy being employed by the White House is being driven more by the political advisers than the economic advisers. Today the President and his Administration began making a concerted effort to convince Americans the economy is doing better than expected, and the stimulus plan is working as intended. Considering the stimulus plan was supposed to keep unemployment around 8% in 2009 and it will soon reach 10%, just what is the objective of this plan of denial and obfuscation? The objective is to paint the picture the President has a solid plan for the economy. No, he doesn’t. What the President needs to do is say the economy is in much worse shape than expected and that is unacceptable. He should say the stimulus plan, while helpful, is proving to be not nearly effective enough in stopping the economy from declining. He should say he is willing to stake his Presidency on restoring jobs in America and will do whatever it takes to make that happen. President Obama, I will tell you what your political advisers should have already told you, your Presidency is already staked to the unemployment rate.
Posted by Michael A. Kamperman on July 22, 2009
I personally like President Obama, a lot. He loves and plays basketball, and so do I. He is smart, articulate, inspiring, and personable. If he fails, America fails. If America fails, we all fail. So yes, absolutely I do not want to defeat him, I want him to succeed. But I’m afraid the economy was pushed into the back seat tonight at the President’s health care conference. We all know health care financing is screwed up in America and needs reform. We do not need to treat sore throats for people without both health insurance and money in the emergency rooms of hospitals all over the country. We do not need to see lower middle class people lose their life savings if they have an unexpected health care emergency. But a robust American economy is what pays for the best health care in the world. The President is wasting political capital on an important issue, but not the most important issue. The current estimates are that 1.5 million Americans will run out of unemployment benefits before the end of the year without receiving a job offer. Tonight, the President claimed that the stimulus bill not only saved jobs, it has created jobs. Mr. President, the only measure of job creation for a President is for the unemployment rate to go down, not up. Any other measure is arguing how many angels can sit on the head of a pin.
Unfortunately, the President is signaling that the economy will have to take a back seat to his more pressing issue of health care financing reform. Mr. President, there is no more pressing issue in America than good paying jobs. I will tell you what your advisers, so called, don’t have the guts to tell you. If unemployment keeps going up rather than down, then you will be a one term wonder. So please do not tell the American people your administration has “created” jobs. Instead, please create them.
Mr. President, how can you actually create jobs? First, fix the broken credit markets. Second, understand that America is the world’s leading economy, not an economy that “is unprepared to compete in the 21st Century.” We are the world’s leading economy in high tech and biotech. We have chosen to outsource our manufacturing to China and others and we can rescind that decision at anytime. The way forward to escape the new great depression is not to become the next export driven economy. My question to you is export to whom? My advice is shake up your Whitehouse team and get some economic advisers that will give you straight talk. You are not the next FDR. When FDR became President the country had an unemployment rate well over 20% and everyone knew we were up the creek without a paddle. But this is not the spring of 1933, it is the spring of 1931. In 1931 the vast majority of Americans did not realize they had already entered the Great Depression. Currently, the vast majority of Americans do not realize we have entered a new great depression. When they figure this out they will blame you, not President Bush. I’m not saying you shouldn’t reform health care. I am saying that if you don’t rescue the economy, then you can kiss your second term goodbye.
