Robert Samuelson is, in my opinion, one of the most level-headed and independent business/economics journalists around. I don’t always agree with him — but when I don’t, I strongly consider that I may be wrong. His latest piece can probably be read as another shot across the bow of the stimulus efforts coming from the Fed and the Obama Administration:

Despite massive stimulus, rapid growth hasn’t resumed two decades later. Although the Japanese reacted slowly, they adopted the advice of economics textbooks. They raised spending, cut taxes and let budget deficits balloon. Gross government debt soared from 63 percent of the economy (gross domestic product) in 1991 to 101 percent of GDP by 1997. It’s now around 200 percent. The Bank of Japan (their Federal Reserve) cut interest rates, going to zero in 1999 – a policy that, with some slight interruptions, endures. . . .

Japan’s lackluster performance has two main causes. One is the “dual economy”: a highly efficient export sector (the Toyotas and Toshibas) offset by a less dynamic domestic sector. Until the 1980s, Japan depended on export-led growth that created jobs and investment. An undervalued yen helped. “You had 20 percent of the economy carrying the other 80 percent,” says Richard Katz, editor of the Oriental Economist newsletter and the author of several books on the dual economy.

But the yen’s appreciation in the mid-1980s – making Japan’s exports more expensive – doomed this economic strategy. Ever since, Japan has searched in vain for a substitute. Cheap credit (which fueled the original “bubbles”) and many “reforms” haven’t sufficed. Japan’s domestic sector remains arthritic, often protected by cartels or government regulations. Japan has one of the lowest rates of business creation among major industrial countries. One survey ranked Japan 44th in the world in the ease of starting a new firm, reports economist Randall Jones of the Organization for Economic Cooperation and Development. (The United States was fourth.) Indeed, Japan’s best recent years of economic growth (2003-07) occurred when a weaker yen revived exports.

The second cause is an aging, declining population, which dampens domestic spending. For decades, Japan’s traditional family – a workaholic husband, a stay-at-home wife and two children – has been besieged, as anthropologist Merry White of Boston University shows in her book “Perfectly Japanese.” Even in 1989, the fertility rate (children per adult woman) of 1.57 was below the replacement rate of about 2. The poor economy further discouraged family formation. Low wages and insecure jobs make children seem too costly. For men, the age of first marriage is 35, up from 27 in 1990, says White. The fertility rate is about 1.3.

As the saying goes, read the whole thing.  ..bruce w..

Not so well, as it turns out (details over at Big Government). In the meantime, the Obama Administration continues to play games on “jobs created or saved”. ..bruce w..

(Hat tip to Blue Crab Boulevard.) I certainly remember Democrats and the mainstream media (the same thing, really) ranting about the millions of jobs lost under Bush, not to mention the climbing deficits. Funny how quiet they are now. I’m not sure we will see unemployment under Obama get back down to the highest point it reached under Bush (a little over 6%), nor will we ever see the deficit get back down to the highest point it reached under Bush, to wit (via the Heritage Foundation):

Things have gone so well since the Democrats took over Congress (starting in 2006, remember) and the White House. ..bruce w..

You know, the massive stimulus that was absolutely necessary to keep unemployment from rising above 8.0%? Kind of missed the target, didn’t it?

Anyone want to guess what unemployment will be in November 2010? November 2012? I’m willing to bet $1000 that it won’t be down to 7.0% and 5.5%, respectively, as the Obama economic team said it would be with the stimulus package. In fact, I strongly suspect it won’t even be down to the projected “without the recovery plan” levels of 9.0% and 6.0%.

The chart comes from Innocent Bystanders, via Ace of Spades.

UPDATE: Campaign Spot on NRO reminds us of what Pres. Obama said about the stimulus last February:

And the most — the biggest measure of success is whether we stop contracting and shedding jobs, and we start growing again. Now, you know, I don’t have a crystal ball, and as I said, this is an unprecedented crisis. But my hope is that after a difficult year — and this year is going to be a difficult year — that businesses start investing again, they start making decisions that, you know, in fact, there’s money to be made out there; customers — or consumers start feeling that their jobs are stable and safe, and they start making purchases again.

So, what are the things that the Obama Administration and the Democratic Congress are doing to encourage “businesses [to] start investing again” and to help “consumers start feeling that their jobs are stable and safe”? Massive deficits? Massive tax increases? Massive government bureaucracies? Increased regulation? Government expansion into the private sector? Yeah, that will encourage both businesses and consumers.  ..bruce w..

Much like Cash for Clunkers, but on a vaster scale, the Obama stimulus package is being revealed as a fraudulent failure. The Denver Post shows that the numbers here in Colorado just don’t add up:

The federal government reported Friday that Colorado created or saved 8,094 jobs through grants, loans and contracts funded by the American Recovery and Reinvestment Act.

Problem is, the figure is wrong, according to an analysis of recovery.gov data by The Denver Post.

Although a Colorado Springs Head Start program reported it had created or preserved 269 jobs, the real number was three, according to an interview with a program manager. And although the largest private contract in the state funded with stimulus dollars was estimated at $166 million, the number was off by tens of millions, apparently because of a data-entry error, contract information shows.

Despite the government’s bid to provide unprecedented details of spending, figures for stimulus awards in Colorado, as with an earlier data release, are inconsistent, inaccurate or incomplete so far.

This grand experiment by Congress and the Obama Administration is turning into one of the greatest fiscal disasters in US government history.  At least, until and unless Congress passes “health care reform”.  ..bruce w..

Wondering just where that $1.4 trillion deficit comes from? Veronique de Rugy over at the Corner at National Review Online presents the breakdown:

To be sure, the recession caused lower than expected tax revenue — $419 billion lower. But the bulk of the deficit is made of spending. A lot spending since it amounts to a $1trillion: $459 billion of the deficit came from spending decisions made in the years preceding 2009; $245 billion are due to the financial bailout and $347 billion are mainly stimulus spending.

Why does this matter? Because we have no idea what such big deficits, sustained over so many years, will do to our economy. Remember that for each of Obama’s years in office, the deficit is projected to be larger than any year during Bush’s terms. That’s unprecedented.

..bruce w..

Big Government offers this chart of unemployment trends in post-WW II recessions.  Nice to see that the massive deficit spending on ‘stimulus’ has paid off so well.  ..bruce w..

Nothing to see here. Move along.

. . . and things are already getting interesting.

ITEM: Obama throws the Dalai Lama and the entire country of Tibet under the bus (emphasis mine):

In an attempt to gain favor with China, the United States pressured Tibetan representatives to postpone a meeting between the Dalai Lama and President Obama until after Obama’s summit with his Chinese counterpart, Hu Jintao, scheduled for next month, according to diplomats, government officials and other sources familiar with the talks.

For the first time since 1991, the Tibetan spiritual leader will visit Washington this week and not meet with the president. Since 1991, he has been here 10 times. Most times the meetings have been “drop-in” visits at the White House. The last time he was here, in 2007, however, George W. Bush became the first sitting president to meet with him publicly, at a ceremony at the Capitol in which he awarded the Dalai Lama the Congressional Gold Medal, Congress’s highest civilian award.

There were rumblings about this some weeks back, but I couldn’t track down a firm source and so didn’t post about it. I swear, Jimmy Carter — at least, the 1970s version — is looking better by the minute.

ITEM: You know how Obama is going to pay for Obamacare by combating waste and fraud in the Medicare program? It looks as though he may be throwing Granny under the bus after all:

HARTFORD, Conn. (AP) — The nation’s nursing homes are perilously close to laying off workers, cutting services — possibly even closing — because of a perfect storm wallop from the recession and deep federal and state government spending cuts, industry experts say.

A Medicare rate adjustment that cuts an estimated $16 billion in nursing home funding over the next 10 years was enacted at week’s end by the federal Centers for Medicare and Medicaid Services — on top of state-level cuts or flat-funding that already had the industry reeling.

And Congress is debating slashing billions more in Medicare funding as part of health care reform.

Add it all up, and the nursing home industry is headed for a crisis, industry officials say.

Move along folks, no rationing or cutting of services here.

ITEM: Meanwhile, if Obama is serious about cutting waste and fraud, maybe he should start with the Pentagon:

The agency, which last year was responsible for ensuring that taxpayers got good value for more than a half-trillion dollars in defense contracts, revised audits to curry favor with contractors, promoted a supervisor responsible for such revisions to a top position and rushed through other audits out of fear that the work would be outsourced if employees took too much time, the GAO said.

“Unbelievable problems at Def Contrctng Agncy [sic],” Sen. Claire McCaskill, Missouri Democrat, wrote on her Twitter account just before a recent hearing on the report. “Top of my head is about to pop off.”

“I read a summary of the GAO report last night and quite frankly got sick,” said Sen. Tom Coburn, Oklahoma Republican, adding that he would not use all his allotted time for questions because he was “a little bit too upset to go where I really want to go.”

Oh, wait — this is the organization that was supposed to be preventing waste and fraud.  At least this seems to be something that both parties can agree upon.

ITEM: The TARP Inspector General, Neil Barofski, issued a report saying that US TreasSec Henry Paulson and Fed Chair Ben Bernanke were less than forthcoming during the bailout last year:

BFederal Reserve Chairman Ben S. Bernanke and former Treasury Secretary Henry M. Paulson Jr. misled the public about the financial weakness of Bank of America and other early recipients of the government’s $700 billion Wall Street bailout, creating “unrealistic expectations” about the companies and damaging the program’s credibility, according to a report by the program’s independent watchdog.

Not exactly earth-shaking news, but something to keep in mind as the Obama Administration tries to assure us that their economic strategy is sound and working well. To quote from Raiders of the Lost Ark: “We have top men working on it. Top men.”

ITEM: On the other hand, misleading the public about the soundness of these institutions may have been just the right thing to do, if I read the always-excellent Robert Samuelson correctly:

Something analogous happened over the past year. Scholars will debate which interventions — the Federal Reserve propping up a failing credit system, the Troubled Assets Relief Program, Obama’s “stimulus” plan and bank “stress test” — counted most. Regardless, they all aimed to reassure people that the free fall would stop and thereby curb the fear perpetuating the free fall. Confidence had to be restored so the economy’s normal recovery mechanisms could operate. This seems to have happened. By last month, the consumer confidence index had rebounded to 53.1. Housing prices had stopped falling. By the Case-Shiller index, they’ve increased for three months.

Read the whole thing — it’s not an apology for the Administration but rather an analysis of just how close we may have come to a full-blown economic depression.

ITEM: Still, there are plenty of jobs available — they just require skills different from those held by the folks who have been laid off:

It’s become especially hard to find accountants, health care workers, software sales representatives, actuaries, data analysts, physical therapists and electrical engineers, labor analysts say. And employers that demand highly specialized training — like biotech firms that need plant scientists or energy companies that need geotechnical engineers to build offshore platforms — struggle even more to fill jobs.

The trend has been intensified by the speed of the job market decline, Koropeckyj said. The nation has lost a net 7.6 million jobs since the recession began in December 2007. Yet it can take a year or more for a laid-off worker to gain the training and education to switch industries. That means health care jobs are going unfilled even as laid-off workers in the auto, construction or financial services industries seek work.

“So we have this army of the unemployed” without the necessary skills, Koropeckyj said.

This is a constant issue in the modern economy, as some sectors dwindle and others continue to expand. But it’s a lot harder to deal with as unemployment approaches 10%.  Happy days are here again!  ..bruce w..

"The stimulus is changing the trajectory of our economy." -- Joe Biden, September 3, 2009

Don Surber zooms in on the relevant portion of reality vs. hope-and-change. Obama and the Democratic Congress sold us on a horrific “stimulus” package with the threat of 9.0 % unemployment if they failed to act. They acted, and unemployment is now approaching 10% and may hit 12% next year. In the meantime, the national deficit has exploded and will be massive for years to come.

The sad thing is that for less than half the cost of the “stimulus” package ($304 billion vs. $787 billion) , the US Government could have simply suspended all corporate income taxes for an entire year. For another $20 billion or so per year, the US Government could have suspended the dividend and capital gains taxes indefinitely. Those two changes would have done more to create actual jobs and revive the economy than all the make-work “shovel ready” projects that the Obama Administration touted (but is now strangely silent about — except, of course, for Joe Biden, but nobody is paying much attention to him these days).

If unemployment really is in double-digits next year, then look for the Republicans to take control of the House and make modest gains in the Senate. ..bruce w..

This wonderful chart, put up by Veronique de Rugy over at The American, is even better than the chart that I’ve used off and on for months to show the staggering deficit projections resulting from the Obama Administration unsustainable economic policies. As per de Rugy’s explanations, here’s what the color bars mean:

• the orange bars (up through 2008) show the actual deficits from the last year of the Clinton Administration and the first seven years of the Bush Administration (kind of makes you wistful, doesn’t it?)
• the purple bars show the deficit projections as of September 2008, two months prior to the Presidential election
• the black bars show the deficit projections as of January 2009, after the bailout efforts of the outgoing Bush Administration
• the red bars show the deficit projections as of this August, resulting entirely from the actions of the Obama Administration and the current Congress

In other words, you can’t blame Bush for anything in red. As de Rugy points out (emphasis mine):

. . . Obama is right to note that he inherited a large deficit in fiscal 2009. But as we can see here, he is responsible for growing the deficit beyond expectations in fiscal 2009 and thereafter. In fact, in its January 2009 projections, the CBO built in most of the Bush-era policy spending, including the TARP bailout (which President Obama voted for as a senator) and the takeovers of Fannie Mae and Freddie Mac. In spite of his rhetoric, President Obama bears most of the responsibility for the red part of the bar in fiscal 2009, which includes, among other things, some auto bailouts and $31 billion of additional funding for the omnibus bill, the share of the stimulus funding spent in that fiscal year.

. . . Obama’s deficits are frightening but they promise to get worse. Each month that goes by the president adds spending to the deficit. The August 2009 projections for instance, do not include any of the president’s healthcare reform spending and they assume that the “temporary” stimulus spending will not be prolonged past fiscal 2011. Finally, they also assume that the economy will recover soon and that it will grow enough to generate increasing tax revenue, in spite of the president’s plan to impose new taxes and regulations on the private sector. In other words, the deficit will likely continue to deteriorate beyond the current projections.

Good thing that the Obama Stimulus package has done so much for unemployment and the economy, eh?  ..bruce w..