Cross-posted from Credit Writedowns
Economic Cycle Research Institute co-founder Lakshman Achuthan was on Tech Ticker yesterday discussing the outlook for the economy. Business Insider does a good write-up of his commentary, highlighting the fact that the ECRI has yet to signal a double dip. However, I wanted to add a few comments as well. ECRI’s underlying message is this: we are in a decade-long post-credit crisis struggle which will mean high unemployment even if policy makers focused on jobs (which they have not, I would add).
I agree with this forecast. When I began Credit Writedowns in March 2008, I wrote:
I am cautious about the long-term outlook for the global economy and the U.S. economy in particular. The likely outcome for the next decade is one of sub-par global growth with short business cycles punctuated by fits of recession.
Achuthan explains that this too is the root cause of why he thinks the jobs picture is going to difficult for the US. In essence, Achuthan is saying he expects a series of what I have been calling Shiller Double Dip Recessions. This dovetails with my view of an austerity-induced initial dip followed by the recession-punctuated lost decade thereafter.
Achuthan also explains well that in the short-term the jobs picture has already been set by previous policy decisions. He expects the monthly jobs numbers to continue to be weaker than earlier in the year. If we get a double dip recession, “by definition, the unemployment will be spiking” he says.
Separately, Dean Baker argued yesterday that the President needed to have focused on jobs in a laser-like fashion much, much earlier in his presidency. I would agree with that.
Obama’s failure to understand where we are in the economic cycle and the relationship to historical precedent has been catastrophic to the conduct of economic policy and critical in his missteps. There is more to Obama’s misfortune than a bad economy.
I would add that anything the US President and Congress do now will only be relevant in the medium-term as the election of 2012 nears. I have repeatedly indicated Republicans will be unlikely to support these current job initiatives. Instead they will focus on trimming government expenditure.
The key here is that it does no good for the Republicans politically to compromise with President Obama. His policies are rightfully seen as failed. The right thing to do politically (but not morally) is to try and strike as much contrast to the President as you can, especially if it makes him look more failed. So that means favouring gridlock and pushing deficit reduction, looking for spending cuts and so on – even if it leads to a government shutdown stare-down as it did under Clinton. Is this the right thing to do? I don’t think so, if only because it reduces the number of potential positive economic outcomes. But I am speaking now more from a forecasting perspective than one of advocacy.
–A few comments about Tuesday’s election’s impact on the economy, Nov 2010
If you listen to the Republican voices in Congress and the Republican contenders for US President, this is what you will hear – and will continue to hear. I believe this will mean recession – and recessions cause tax receipts to plunge and outlays to increase, making the deficit larger. Does focusing on deficit reduction reduce deficits? No, an expansionary fiscal contraction will prove illusive. Focusing on deficit reduction will increase the deficit.
This is looking more like Hoover every day. So, the President will have to hang his re-election hat on being able to claim that he prevented an even worse economic environment, hoping the economy doesn’t double dip.
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Baker also writes:
We have “a trade policy that is explicitly designed to put manufacturing workers in direct competition with low-paid workers in Mexico, China and other developing countries.
The downward pressure on their wages is amplified by the high dollar policy put in place by Robert Rubin during the Clinton administration.”
Can we please put the “lower wages in China (or wherever) mantra to bed ?
This is a red herring.
While hourly wage rates can be and often are lower, the cost of labor per production measurement is the crucial measurment.
If lower hourly rates were the deciding factor in/for profitable manufacturing there would be a rush to low wage states such as Miss. or South Dakota.
However we see foriegn manufacturers locate in places like Nashville (Nissan), Ohio (Honda), or Spartanburg (BMW).
US firms are shifting operations overseas to avoid US taxes not wage rates.
Let me guess – you have a glass of wine (immigrant labor) next to your Mac (slave labor) ?
Liberty Ohio is not Bethesda, MD, btw
Show me. Everything I have read over the past decade indicates that the cause for the outsourcing of manufacturing jobs is wages and environmental regulations, not corporate taxes. Are you referring to employers share of FICA and Medicare?
The actual costs of components of production costs varies according to tne manufacturing process.
So for example. aluminium manufacturing in which the major cost is electrical power is generally located near low cost electrical power sources. Labor costs for this process are a small portion of the total cost of manufacturing.
Generally speaking manufacturing costs can be (and should be) shown in a pie chart. This is a relatively easy exercise which provides a simple graphic representation of the cost of manufacture.
And again using this represention, labor is often shown to be a minor portion of the cost.
Sleeper,
I bang the wage drum also. You are actually correct it is a red herring, but for a different reason than you may be implying.
Having worked in industry, what is frustrating is to beat you head against the desk or computer screen designing an assembly line or refining a process, only to see minuscule efficiency gains (whether on paper or in practice) to lower labor costs, when you know labor costs are such a small portion of product cost to begin with.
It is a red herring – FOR THE CORPORATION, in many instances, why, because it’s low hanging fruit. It is much easier to squeeze wages via implied threats in this environment and in the last decade.
Manufacturers have already squeezed many of their suppliers, if they are larger corporations, with leverage via volume purchasing and supplier consolidation. However, there is less leverage with med, and small companies, with diversified product lines. Wages get squeezed, 1) because they can. 2) it is one of the only things they have control over – again, low hanging fruit.
Now, if we were to talk input costs (x-labor, OEM and SUPPLIER side) that is different story. Steel, oil, PM’s and shipping are what KILL profit margins.
I saw an entire product line shutdown back while we were backordered (bread and butter product for the company) and customers were screaming for their orders, all because, shipping, steel, platinum and palladium costs exploded. When the cost of a cat-converter on a small engine more than doubles (and you have no pricing power to pass on to your customer) your profit margin has just been blown out. Thus – sustained higher input costs eventually lead to management reaching for low hanging fruit [wages]. Ergo, what they have more direct control over.
And, as an aside, to the Gold bugs – if you think your gold is so scarce and precious, I will have you know the process of using gold in catalytic converters is a reality, and the process now exists to use gold in trace amounts to replace palladium and/or palladium in the process.
gs_
Dear gs;
Too true about low hanging fruit. In construction, the materials cost inflation is the most often complained about part of many jobs. However, as you stated, who among us can squeeze the raw materials suppliers? I suggest the government should, but lacks the will to do so. Hence, the ‘low hanging fruit’ among us gets the ‘squeeze.’
As for the catalytic converter information, who’d a thunk it? Just another nail in the coffin of the internal combustion engine. Add these cost multipliers to the stagnant or regressive wages for most of the population and you get a huge fall off in car and truck sales in the near future. Just look at the life expectancy of the average automobile from about 1932 to 1950 for a taste of things to come. If I were a gambling man, I’d take a position in Chilton Publishing and Haynes Publishing, who produce do it yourself auto repair manuals. Expect small but steady profit streams for the next ten to fifteen years. Cheers!
Communism was a red herring.
And so if we don’t cut the deficit, does that mean we have to print more money and swallow more bailouts?
Door number 3 please Vanna.
Washington has taken my money and now they want my time, too. No sale.
For poor rural white folk, it seems all they have is FAUX telling them that the “deficit must be cut.” These folks then have a Representative or Senator that is equally obligated to Banksters. So you have angry poor folk getting drawn around the bend by fascist media, and then the bought and paid for stooge puts the interests of the big banks ahead of any of their angst, confusion, concerns, Christian based self deprecation and hatred of foreigners. Viola, kleptocracy!
Crude but effective. It’s like with holding water from people who are dying of thirst. If you’re unemployed it can be that bad. But we are surrounded by idiots like Ryan, Cantor, democrats like Mark Warner and Max Baucus.
Yeah! Thank goodness for those brilliant, sophisticated, savvy metropolitan and suburban dwellers who are get all of their information from CNN and MSNBC. Imagine what shape this country would be in without them.
And we all know that all of the wars and violence in the world is perpetuated by those darned Catholic, Methodists and Baptist attending prayer services each week. Those folks are just so violent and judgmental.
Let’s form a new political party and make a law. Only atheistic, big city citizens can run for office. We will run on a platform of inclusiveness for all Americans, except Christians and rural folks who listen to Fox News.
Might help a little. Couldn’t be much worse.
Dear John;
Sorry to hear about your recent sarcasm operation. I’ve suffered from it myself for many years. What I want to know is, how many so called Christian politicians, (who I’ll be the first to admit fail almost every test a real Christian would have to pass to get into Heaven,) called for throwing the moneychangers out of the temple when they had the chance, (as in just after the 2008 financial debacle?) Smooth lipped hypocrites is the best term I read in the Bible to describe those folks. Let’s not associate ourselves with them. We do indeed have far too many pseudo Liberals in society right now to worry about. Let’s just call the lot of them some unspeakable name and try our best to shake our world from out of their grip.
Keep the Faith baby!
I thank you for your concern ambrit. I am not a Sunday school attending traditional Christian. But I have read the Sermon on the Mount so I would be a bald-faced liar if I told you I was a righteous person. And I have also read about the temptations of Christ and clearly see that he directed us to turn away from a life of pursuing wealth and power if it means compromising our spiritual well-being. So I understand your reference to money changers.
But just like alcohol and drugs or lust can cloud our thinking and kill us spiritually, so too does greed and love of power. It’s a sickness. But as Christ continually admonished his disciples, “first get the log out of your own eye…”, and to me he was warning me to take care, less I fall into the trap of hypocrisy myself.
I don’t think that it means we shouldn’t distinguish between good and evil, nor remain silent witnesses when we plainly see how Wall Street greed and our elected leaders self-serving behavior is destroying our society. Clearly we have a duty to speak out. But let’s face it, it would be a different world if Christians and other people always practiced the “golden rule”. Fact is we don’t, not consistently anyway.
But I get so tired of these misguided juvenile rantings, laying all of the ills of our country on traditional Christians. Consider my 90 year old Christian Mother. She reads her Bible everyday, voted for President Obama and loves Michelle, is a sucker for sending money she can’t afford to charities, and prays daily for various groups of people suffering throughout world. She lived through the great depression, lost family to war, has known poverty and hunger and has humbled herself serving others. To continually make sweeping generalizations about all rural Christian folks being stupid rubes, responsible for all the ills of modern society, is, well, stupid and I’m calling it out for once.
I will admit to engaging in hypocrisy from time to time in my own life, but would like some of these Christian bashing juvenile atheists and pseudo-intellectuals to consider their own thinking and behavior from time to time. It might well be they would find a little selfishness and hypocrisy in there as well. We are after all, only human.
I am an atheist, not a juvenile, and I also contribute to charities, including some religious charities, only because they do a good charitable work.
Just as you do not want others to pigeonhole Christians, you should not pigeonhole atheists.
Dear John;
Mea culpa on the fall from grace meme John. I do get your opposition to the ‘divide and rule’ process. We’re all but “Human, fallable and frail,” as the poets say. Glad to have you with us. Keep up the good work.
Vanna turned the vowels, not the doors.
The Federal budget deficit is spending greater than tax revenues. The difference can be decreased by lowering spending or raising tax revenues.
It’s pointless to raise taxes on the middle class or the poor, since their incomes are drifting ever downwards, so that leaves the rich, who are even now getting richer.
Cutting spending will lower the multiplier effect of money circulating in the economy. Taxing the rich will deprive them of a few trips on their private jets, maybe take a little speculative money out of the financial markets. Hardly feel it.
Will you believe me, even if I don’t yell, “I’m born again!”?
It was corporations that took your self-respect. Snarling about the government is a very poor substitute.
How do you keep them separated? Faith?
Cut spending for the Pentagone. The Lockheeds, the Raytheons, the GDs. the CACIs, the black budgeted outa-sight-outa-mind goons – all those bagger-unmentionable megacorps that line up for their socialist gravy. If the DOD would simply take care of their own veterans by cutting the no-bid ponzi Gubbmint ATM infrastructure, they’d regain a smidgen of credibility.
Multiplier effect – wouldn’t that be a good thing?
inflation is better than deflation at this point. inflation is actually good because it makes banks more willing to lend, and it boosts exports. as opposed to deflation, which willl result if we practice austerity in government now. Deflation is one of the worst things that could happen right now.
Well, inflation is theft. It has been with a minor interuption in the 30ies used by the government since the inception of the FED. It punishes the person that lives within his means and saves. It allows speculators and leveraged people/institutions to profit.
I am not sure whether inflation is such a great thing for the average guy.
Inflation is theft… but why is that? The simple and accurate explanation?
If you wish to eliminate all debt in the US, there would be no dollars left. What would be left is the interest that has to be paid in dollars. However, with all the dollars no longer existing…
The Federal Reserve is inflationary. Because of the interest.
Read Modern Money Mechanics, curiously enough, no longer printed because of the damning information contained therein. If most Americans knew what a scam the dollar was, there would be revolt… yesterday.
Inflation only punishes people who stuff money under a mattress; without inflation, why bother investing at all? In a deflationary environment the rich get a double-bonus: falling prices *and* an increase in the value of their hoarded dollars, all risk-free! Why, it’s almost as if that is the entire plan of action – stiff investors with the losses and use the bonus money to snap up public and private assets for pennies.
Granted, inflation needs to be low but funding a new bridge or school is a much better use of money then mattress stuffing.
Door number 3 –
Kill the zombie TBTF banks, kill the zombie investment banks, reinstate financial laws.
Bondholders take huge haircut. Derivatives market is left to fail or succeed without government support (See you all on court – suckers!.)
Start throwing the MOTU behind all the corruption in jail.
The economy cannot recover until the people that flooded with world in zombie debt are removed from power.
The first thing Obama should do is reform health care.
No, the first thing Obama should do is flee the country and leave a resignation note on his desk.
Dear Crazy Horse;
Alas, it looks like the Prez won’t do the “honourable thing” and leave Biden with the mess to clean up. Conventional wisdom says that this is the time when the end game for the POTUS should begin. He isn’t going to win in 2012, if History is any guide. So, to try to avoid a Reactionary win in 2012, he must allow himself to be successfully ‘primaryed’, and then step back into deserved obscurity. Our other likely scenario is for a three way race to develop, and when the Reactionary candidate wins, for a disloyal opposition to form in the Congress. Then let the games begin!
It being now illegal to buy slaves, the loophole is to rent them, amortizing the payment over the life of the victim, at a rate equivalent to the present vale of a purchase.
You forgot about the Dead Peasants insurance which pays out to the corporate ‘lease holder’ when the ‘leased person’ expires.
My Dear Seth;
You have obviously been reading Gogols’ treatise “Dead Souls.” The proper analogy to all this isn’t slavery, but Serfdom.
Clearly the S&P and Dow don’t care a lick about the economic situation in the US – and this includes the unemployment rate. Investors believe the Fed will keep printing to keep things rolling, and US companies will simply sell more offshore to make up for the lack of domestic demand. GS expects to see the S&P make something like $102 this year.. its nothing but roses and happy times – so who cares if there are 46 million Americans on food stamps.. all we need to do to fix the US is get people buying stocks.
/frustrated rant
If you’re unemployed, food stamps will help feed you, community food banks are also being “cut”.
Democrats attacked food stamps, turned around and called it a legislative achievement, last August. The only think the Oligarchy isn’t doing is shooting people in the street. (Locking them up, foreclosing on them, stealing their jobs, stealing their retirement, stealing health – these things aside)
Perhaps it’s too late for Obama, however, I disagree with the outlook, which will be potentially much more severe than a spike in unemployment.
Obama’s solution for unemployment was to extend benefits. Exactly the wrong solution. So, this time around, the correction will be twice as bad, to the point of civil unrest.
The perfect storm begins to materialize when one factors in the inevitable resumption of QE and the corresponding spike in inflation. So, between the Bush Administration’s TARP, and the Obama administrations Recovery Act, fiscal responsibility has vanished from DC, not to be seen again until things get so bad that the only two choices are either a police state or the elimination of most federal government functions.
Perhaps a recession will hold down inflation, but not enough to mitigate unemployment.
Austerity is exactly the wrong solution unless corporations are forced to pay their fair share of the tax burden. Until then, I can’t remember, does the water turn clockwise, or counter clockwise when the commode is flushed? Because that’s exactly the direction the US economy is headed, until wealth disparity is addressed, and the confidence of the American people in their federal government is restored.
“does the water turn clockwise, or counter clockwise when the commode is flushed?”
It depends on whether you’re north or south of the equator. Honestly, I don’t know which it is in the USA.
If it helps, the last flush turned to the left, the next flush will turn to the right.
Fellers;
I being a plumber who reads too much am here to tell you that the left right controversy is a classic myth. The direction of flush in the average commode is designed into it at the factory. The forces acting on the water, and the small volume of water involved make the natural forces involved next to negligible. Alas, another much loved myth down the drain!
/gurgles with surprise…
Extending benefits might well have been a viable solution if done on a large, large scale.
Instead, it was done on a small scale and all the extensions have expired and now benefits are being cut. So, I have to call “extending benefits” another solution which wasn’t even tried.
Jamie & Lloyd: Load Up the Teleprompter for Barry’s Next Speech
Obama Bin Lyin’ is the best corporate tool and Wall Street puppet but the worst president of the 21st century…
George W. Bush… give the new guy your Dunce Cap…
Well here’s to the GOP snatching defeat from the jaws of victory—-they’d crush Obama in November if only Eisenhower Republicanism wasn’t labeled “liberal” by today’s GOP.
Bush and Obama have proven, conclusively, that voting for the lesser evil has, in fact, been a greater waste than voting for a third party or independent.
2012 might be a wild election, given the Purple Team has
lost all governing authority and has no credibility.
Dear KnotRP;
The Purple Team?!?? Are you suggesting we’re living through our own version of the Mauve Decade? Mon Dieu, Incroyable! Or, as Spike Milligan was wont to say; “Ferme le port!” Sorry Spike, but the chevals have already got loose.
LOL
Who needs a job? Isn’t money the true need? And can’t money be created from thin-air? And hasn’t the government backed counterfeiting cartel, the banking system, cheated everyone? And if household debt was eliminated wouldn’t spending and jobs come back?
You’re right about one thing. We need to purge the bad debts. Stupid lenders need to take their lumps. We do not need more monetary inflation, whatever the source.
We do not need more monetary inflation, whatever the source. eric anderson
The entire population could be bailed out without increasing the size of the money supply. Here’s how:
1) Forbid any further “credit” creation pending fundamental reform. This would be massively deflationary by itself as existing credit was paid off with no new credit to replace it.
2) Send monthly and equal bailout checks to every adult citizen, including savers, equal in total to the amount of credit paid off the previous month. Continue till all private debt was paid off.
The above would fix everyone, including the banks in nominal terms without a serious risk of price inflation. It would also reduce relative wealth disparity since the bailout checks would do little for the rich but a great deal for the poor.
F. Beard said:
“Continue till all private debt was paid off.”
No. Don’t need to stop the checks until inflation is observed!
Mansoor
Don’t need to stop the checks until inflation is observed! mansoor h. khan
I had not thought of that. Why not? The Bible commands from 20 to 700% restitution for theft.
F. Beard,
“I had not thought of that. Why not? The Bible commands from 20 to 700% restitution for theft.”
F. Beard. Its even more than that. We (humans) are blessed much more than we can imagine. Social Dividend is now possible because of all the accumulated “civilizational” knowledge humans have. Machines (which embody this accumulated knowledge) do most of the physical work now.
Mansoor
Sure, the FED best puts up on sale a printing machine for home use. Voila, all problems are solved.
No one should be allowed to create government money except the government. But the right to create private money should be recognized as a fundamental human right. It once was so recognized in the US.
Will inflation be cost push or demand pull? If corporations push inflation, they will be cutting their throats.
The jobs problem has been a long time coming and jobs are the tip of the iceberg. Corporations began committing suicide 20 or 30 years ago when workers became costs instead of a cultivated knowledge base which includes serious management training. Hiring a middle management MBA or a CEO without detailed knowledge of the sector is problematic. When the social contract was broken between worker and company, workers bolted. They took their knowledge and frequently started new companies (good) they were replaced with job hoppers that moved every two years for a promotion and more pay (bad). They never gained the required experience for the position before they moved up to their level of incompetence where they could make millions of dollars of damaging decisions, only realized after they were long gone. Today, their replacements are ruining 100 million dollar projects.
Since everything is so screwed up, the business consultants are brought in. Their solution is outsource. Get rid of incompetence rather than fix it. This results in The Incredible Shrinking Corporation where excessively paid executive management is a member of a team of Wall Street outsiders and the Board looking for short term solutions to manipulate profits and converting corporate assets into Wall Street unearned income.
This results in corporate suicide and articles saying Marx was right, capitalist greed killed the capitalists. It all started when they short-changed the workers instead of investing in human capital and leading. It can’t be fixed. Large corporations and Wall Street will prevent change.
What a silly story, and told with a equinanimity by a US Chamber of Commerce stooge, no less.
The only three things American corporations are capable of are: exporting junk paper (worthless derivatives), offshoring jobs and importing foreign visa (scab) workers.
As soon as an American innovates anything, it is immediately offshored!
How dare those job hoppers who lacked experience! Unemployed deadbeats deserve it, no homes for them, no jobs either, forget about access to health care, exercise you losers!
Oh hell, just go die, we’ve given you enough corn based obesity, all the liquor you can drink, all the porn you can consume – it will make it easier for us. Send the lawyers, we’ll write the invoice, the problem is the solution!
Bachmann/ Perry in 2012 ’cause Bush/Cheney didn’t do eonough and the peasants are getting uppity.
Sam, don’t drink so much of your own product.
Dear Sam;
(Any relation to ol Yosemite? [Now they’ll be accusing me of anti-Yosemitism!]) Sorry, but shouldn’t that be “cause Cheny/Bush didn’t (un)do enough?”
Obama doesn’t give a rat’s ass about jobs. The Obama stimulus was a joke. $800 billion, 40% of that non-stimulative tax cuts, so $480 billion spread over 2 years or around $240 billion a year in stimulative government spending. What was needed was something like $1-$1.3 trillion a year in stimulative spending for as many years as needed. You can run your own numbers but no matter how you cut it the Obama stimulus was. a. joke.
And that was pretty much the last we saw of Obama on jobs until his re-election campaign began to gear up. But the current stress on jobs is just campaign kabuki. It is meant to make Obama look good and Republicans look bad. There is close to zero interest in the Administration actually to do anything. It’s all atmospherics.
In this light, take Krueger. If Obama was serious about jobs, he would have chosen someone like Robert Reich. Reich is an Establishment liberal and not that strong an economist, but he is strong on jobs. Instead Obama went with Krueger. And the first reaction to him from most people is Huh? He’s not known outside of Washington circles and probably not even known that well in them. Obama didn’t choose him because he’s strong on jobs but rather because he’s a Team Obama player having been Treasury’s chief economist for the first 2 years of the Obama Administration. He is very much not a labor economist in the way Reich is. He doesn’t advocate for jobs, but of his academic work was on time-use studies. In his writings, he has favored a weak safety net to push the unemployed into low paying jobs and corporate friendly tax subsidies for new hires. I don’t want to come across as a backer of Reich. All I am saying is that even within the Establishment there were people, like Reich, whose selection would have made a strong statement about Obama’s commitment to jobs, and he did not choose them, but a guy who signed off on his previous failures.
He would do it except Obama’s real economic advisor, Tim Geithner would veto the appointment cause the markets and Obama’s donors would perceive Reich as a Tax and Spend Socialist.
Hugh you write,
“…within the Establishment there were people, like Reich, whose selection would have made a strong statement about Obama’s commitment to jobs, and he did not choose them, but a guy who signed off on his previous failures.”
As Steely Dan reminds us in their song “Do It Again” (1972), we are doomed to repeat the same mistakes over and over again:
http://www.youtube.com/watch?v=i2Fs5GrUBwI
BTW, Steely Dan is known for having a very high degree of complexity in their sound, but I had no idea that this jazz-rock band is also known for creating some of the best guitar solos in the history of rock. In fact, Jimmy Page, the legendary guitarist of Led Zeppelin, has gone on record as saying that the guitar solo in “Reelin’ In the Years” (1973) is his all-time favorite:
http://www.youtube.com/watch?v=_bwHK1xkgJA
Steely Dan also had a rep for getting the best session musicians to play on their albums. Who played that solo on Reeling I wonder?
Neo-Realist,
I believe his name is Elliott Randall, but I don’t know much about him.
Too late for Obama on jobs? I wish!
Everything is going exactly according to Obama’s plan, He is shipping jobs overseas, importing record numbers of foreigns workers, giving trillions in bailouts to Wall Street, and starving main street of investment capital. Obama WANTS to make the United States into a THIRD-WORLD SWEATSHOP, because he is a whore and that’s what he has been paid to do./
We have little leverage here, but there is one truly constructive thing that we can do. Treat Obama with total contempt. Snort in derision when your deluded liberal friends wonder when he will ever stand up for them. Boo loudly when he drives by in his armored limousine. We have little overt power, but some social power. Let’s not waste it.
Dear Mr Gawne;
Good idea, but have you noticed just how remote the Congress has made itself from ‘ordinary’ Americans this Congressional break? “There is none so blind as he who will not see.” It’s time to assume the worst, economy wise, and prepare for political action when the crunch comes.
As part of his soon to be announced jobs program, President Obama should declare that he will not be a candidate for re-election. This will at least give the Dems a fighting chance in 2012 in the House and Senate. Given that the prospect of an Obama free presidency might by itself ignite a sustained economic recovery, a principled acceptance of a one term presidency might allow Obama to lay claim to having laid the foundation for a sustained economic recovery. He could then live as an honored elder statesman, or even, if he wished, remain a power within the Democratic Party with the option of running for another term later. Additionally, giving up the prospect of re-election would allow Obama to go Swedish on Citi and BofA, which would itself be wildly popular. (He could of course do this even if he were running for re-election but the constraints of campaign fund raising might remove this option from his consideration.)
The way it stands his jobs program is going to be met with a shrug of the shoulders at best and derision at worst. At this point, he just does not have the political credibility to promote this program; and Paul Krugman, Robert Reich, Brad DeLong and the rest of the meritocratic elite cannot provide it for him.
As it stands, come 2013, he will be wasting away in JimmyCarterVille at best. At worst, he will be remembered for being the last President of the Union.
What’s going to happen to the Union?
If President Obama decided to make a U-turn and actually listen to the meritocratic elite, they might be able to provide him with the political credibility he needs.
However, since Obama has given the meritocratic elite the “talk to the hand” treatment for 3 years, we know that won’t happen.