Does Obama Have What it Takes to Turn the Economy Around?

“The Reagan Counterrevolution” - Peter Schiff

I condensed the following article and took out the main points that I felt were important. I sure hope Obama is smarter than Schiff gives him credit for or else things look grim for America. It’s rather interesting being an American living in Canada because as soon as Obama was elected president, I noticed small differences in the way Canadians refer to their fellow neighbor to the south.  Our public image has been so bad for so long that at least it’s a start, but I’m not so sure that Obama really has what it takes to turn our economy around, but time and economic policies, will tell.

I will say that something good has come out of Obama’s election, and that it has stirred up quite a buzz among younger voters. It’s clearly evident if you visit YouTube at all, and I can’t remember in my lifetime there ever being such an excitement about a President. Normally it’s like, who won?

Ok..here are the key points I wanted to highlight from Schiff’s article.

Our economic problem:

What nearly all politicians, on both sides of the aisle, fail to understand is that the current contraction and credit crunch is necessary to restore order to an economy that is horribly out of balance. Years of misguided fiscal and monetary policy and market-distorting regulations have resulted in reckless borrowing and spending on Main Street, pervasive gambling on Wall Street, and rampant fraud and corruption at every intersection. America’s borrow and spend economy, and the bloated service sector that evolved around it, must be allowed to topple, so that a more sustainable economy grounded in savings and production can rise in its place. Any government efforts to delay the adjustment and spare us the pain will backfire, turning this recession into an inflationary depression.

Obama’s solution:

The President-elect has promised to cage the destructive forces of capitalism, impose more regulation, raise marginal tax rates, increase government spending, and restore prosperity by redistributing wealth from those who earned it to those considered to be more deserving. Like most of his generation, Obama believes that economic growth results from consumer spending, primarily from the middle class. Any policy that keeps the consumers headed to the mall will be promoted.

The result:

America will lose any resemblance to the economic titan of the 20th Century. Our standard of living will decline sharply, our economy will be ravaged by inflation, tens of millions will be unemployed, more individual liberties will be surrendered, and rugged individualism will be supplanted by the nanny state. In short, Latin America may extend north to the Canadian border.

While I’m thinking about it, Trader’s Narrative did some good work concluding that Wall St. does prefer a Democratic President. Check out it, as it’s rather fascinating. Besides, I really wanted to end on a positive note.

Comments

[Asbytec:]

You nailed it. I am not sure the politicians do understand the problem or the fix. Throw our tax money at it, give us all tax breaks, redistribute wealth? No, we need real fundamental change like jobs, a strong currency, and less reliance on credit.

2008 Nov 09 08:33 AM

[fg144331:]

I realize that this is 'so called' a free economy, but I receive a new credit card
app almost every week. Some people can't resist using them, that is one of our
problems and trying to keep up with the 'Jones'' is another. I have one card for internet use and pay cash for everything else. I see people using credit cards at the grocery store!

2008 Nov 09 09:15 AM

[brmwia:]

I use a credit card at the grocery store and any other purchase I can becasue of the rewards offered. But, I have the brains/discipline to pay my credit card off in full every month. For the last 3 years, 100% of my xmas shopping was done using the reward points from my credit card and I paid zero interest on my card.

On Nov 09 09:15 AM fg144331 wrote:

> I realize that this is 'so called' a free economy, but I receive
> a new credit card
> app almost every week. Some people can't resist using them, that
> is one of our
> problems and trying to keep up with the 'Jones'' is another. I have
> one card for internet use and pay cash for everything else. I see
> people using credit cards at the grocery store!
>

2008 Nov 09 11:41 AM

[henarl:]

As brmwia states, credit cards are a plus IF you have the discipline to ALWAYS pay in full every month and not subject yourself to the usurious interest rates that keep credit card companies in business. Not only are they handier than carrying around a bunch of cash, but they provide a good record of your expenditures. There is a potential problem of possible identity theft tho.

2008 Nov 09 01:37 PM

[Zurina:]

Jeff,
You are another one of many who uses the same article to 'prove' that wall street under D-government will perform better. I surely hope so as I want my investment to recover. But with the uneven number of years under D and R government, it's hardly can be used as a predictive tool. May be with more data and goodness of fit for the regression line, it may eventually become more useful. Until then, it is laughable that it is of any meaning at all.

Unlimited increased spending is the blessing or blight?? Looks like had been the root of evil, more than the greed of the Wall Street. If I don't spend the unnecessary, Wall street or anybody can't take my money from me. You can try, but you won't get a cent form me as long as I have some living cells in my brain.

2008 Nov 09 03:28 PM

[famos:]

Hi Jeff Pierce,

I just finished reading your article and the comments. First, let me identify myself somewhat, i.e. I to, am an American that lived in Canada, i.e. as a "landed immigrant" in 1968. Landed Immigrant because dual citizenship had been discontinued and I was not about to give up my American citizenship. One of my better decisions.

We lived and worked approximately 500 miles north of the U.S./Canadian boundary line. Living that far north thru the Canadian winters, most Canuk's wrongly assumed we were Canadians, not Yank immigrants. Over time, close relationships developed which produced candid conversations and the "bad public image" that you refer to, was more a result of envy, than anything. An interesting remark made by a number of Canadians, "only the failures live this far north, if we had enough money we'd live further south. Sometimes this remark include the USA and often the most critical Canadians were the one's that had been refused American citizenship.

Most of the world lives in a love/hate dilemma, i.e. they hate us because we have so much and they'd love to live in the U.S. if they could. I won't argue the preceding point because I've lived and worked in enough area's of the world to know it to be true.

The U.S. problem is a timeless. The "have-nots" want what the "have's" have and if they can't convince the "have's" to give it to them, the "have-not's" will try to take it, any way they can, which include, but not limited to, beg, steal, intimidate, tax or even kill. Proven through history.

What brought this to a head in this country, was entitlements, ignorance, stupid lending and borrowing practices, poor values, etc.
Can it be rectified - that's a story for next time.

Famos, for the last word

2008 Nov 09 04:05 PM

[MarvinMBA:]

Obama's main goal will be to keep everyone in housing and food...from that beginning we will be able to regroup and start anew. Unfortunately, the America as we know it will no longer exist...we will be going back to the 50 and 60 where you had to pay for what you want....is this so bad?

2008 Nov 09 07:32 PM

[bowman711:]

I suggest taking out inflation and then compare the Rupublican and Democrat administrations. 2% growth with no inflation is better than 10% with 12% inflation. The linked article, since it doesn't quantify inflation during the different administrations is, therefore, useless.

2008 Nov 09 07:42 PM

[CLH:]

What garbage from the USSR from the north.

2008 Nov 09 09:35 PM

[tonny adamms:]

This is not an Obama-alone affair,infact its the Democrats that are going to do the Fixing this time around.After the eight years of Bush Adventurism you could not afford to add another Four Years of the same recipes from the Republicans!Every American should have faith in Obama that he can do it,the rest will come.America can do it.HOPE is the buzzword!

2008 Nov 10 04:18 AM

[jkmac:]

Tonny, are you kidding ? Pelosi, Reed, Dood, Frank, - - - that's a laugh.
you need to get your facts straight. The main reason, we're in this economic mess in the first place lies primarily with the two huge democratic created programs Fannie Mae & Freddie Mac. Look at a recent Quote by the President, just as the melt down started.

" Democrates have been resisting any efforts by Republicans in congress, or by me ... to put in some standards and tighten up on Fanny Mae & Freddy Mac"

The quote was NOT made by President Bush but by
PRESIDENT CLINTON speaking in Sept.this year.

It was HIS administration's relentless focus on spreading the wealth that led to looser lending standards and regulatory pressure on banks to make mortgage loans to shaky borrowers.

This is the PRIMARY reason the world economy is in a free fall. Other factors are there but without the impact of these failed democratic programs, that spread as a economic cancer, the world would be a better place.

But then let's consider, without the economy failing Obama would have had to switch to something else. First it was the war, , , then that turned
towards success, now let's see well " it's Oil & energy we need to CHANGE that, well then that started to taper off, & no one talks about immigration any more, a HUGE problem in country which Obama won't touch. - -
Then the economy, well that's what got him elected, certainly not his qualifications, or his long track record of accomplishment. It was that along with the almost laughable media bias, and the fact that he ran against a relatively weak opponent that he's where he is.
Don't get me wrong, , I will always hope the best for this country and it's people. This economy will turn around eventually no matter who is in office, it's not the executive branch that has control over that. It's much bigger than that, it's a global matter that will really be decided by people more so than Goverment. That is unless of course your man in charge does what most likely he will do & that's slow the process down.

2008 Nov 10 10:35 AM