European nations, flirting with recession, can’t agree on how to climb out from under their pile of debt. The U.S. is careening toward a budget fight that threatens to shut down the government. China’s mammoth economy may be downshifting.
Getty ImagesEconomic fragility world-wide is causing investors to retreat from stocks. Traders signal offers on S&P 500 stock-index options in Chicago on Friday.
And across the financial markets, a sea change is taking place. Investors are abandoning the time-tested “stocks for the long run” optimism that dominated since the late 1980s. Instead, there is a widening belief that the mess left behind by the housing bubble and financial crisis will be a morass to contend with for years.
In a historic retreat, investors world-wide during the three months through August pulled some $92 billion out of stock funds in the developed markets, according to data provider EPFR Global—an exodus that more than reversed the total amount of money investors had put into those funds since stocks bottomed in 2009. The withdrawals matched the worst three-month period during the depths of the financial crisis.
That reversal showed no sign of abating in September. In the first three weeks another $25 billion was withdrawn from developed-market stock funds. Last week the Dow Jones Industrial Average suffered its worst one-week decline since October 2008. It is down 16% from its late-April peak. Investors are also showing less optimism toward emerging-market countries. (more…)
I’m a sap, a specific kind of sap. I’m an Obama Sap.
When the president said the unemployed can’t wait 14 more months for help and we had to do something right away, I believed him. When administration officials called around saying that the possibility of a double-dip recession was horrifyingly real and that it would be irresponsible not to come up with a package that could pass right away, I believed them.
I liked Obama’s payroll tax cut ideas and urged Republicans to play along. But of course I’m a sap. When the president unveiled the second half of his stimulus it became clear that this package has nothing to do with helping people right away or averting a double dip. This is a campaign marker, not a jobs bill.
It recycles ideas that couldn’t get passed even when Democrats controlled Congress. In his remarks Monday the president didn’t try to win Republicans to even some parts of his measures. He repeated the populist cries that fire up liberals but are designed to enrage moderates and conservatives.
He claimed we can afford future Medicare costs if we raise taxes on the rich. He repeated the old half-truth about millionaires not paying as much in taxes as their secretaries. (In reality, the top 10 percent of earners pay nearly 70 percent of all income taxes, according to the IRS. People in the richest 1 percent pay 31 percent of their income to the federal government while the average worker pays less than 14 percent, according to the Congressional Budget Office.)
This wasn’t a speech to get something done. This was the sort of speech that sounded better when Ted Kennedy was delivering it. The result is that we will get neither short-term stimulus nor long-term debt reduction anytime soon, and I’m a sap for thinking it was possible.
Yes, I’m a sap. I believed Obama when he said he wanted to move beyond the stale ideological debates that have paralyzed this country. I always believe that Obama is on the verge of breaking out of the conventional categories and embracing one of the many bipartisan reform packages that are floating around. (more…)
President Obama’s jobs speech to Congress, writes Ross Douthat, outlined what should have been the original economic blueprint: a short-term stimulus highlighted by a payroll tax cut, a medium-term push to overhaul the tax code and a plan for long-term entitlement reform.
A week after President Barack Obama took the oath of office, Alice Rivlin, budget chief to President Clinton, testified before a Congress that was about to consider sweeping stimulus legislation. In her remarks, Rivlin voiced her support for a swift and substantial federal intervention to prop up the sagging economy. But she offered lawmakers three warnings as well.
The first warning was about the design of the stimulus. The ideal anti-recession package, Rivlin told Congress, would include aid to state governments, extended unemployment benefits, money for genuinely “shovel ready” projects and a payroll tax holiday. But she urged Congress to resist the temptation to combine these kinds of short-term recession-fighting measures with a larger and more costly investment in energy, education and infrastructure. Trying to rush a long-term spending package through in an atmosphere of crisis, she cautioned, would only guarantee that its contents would be poorly designed, and much of its spending wasted. (more…)
Barack Obama has had his turn at fixing the American economy. Millions of unemployed Americans can judge by their own experiences what he has done and failed to do.
For my part, I believe America can do better. I have spent most of my career in the private sector starting new businesses and turning around ailing ones. Unlike career politicians who’ve never met a payroll, I know why jobs come and go.
Tomorrow, I will introduce a plan consisting of 59 specific proposals — including 10 concrete actions I will take on my first day in office — to turn around America’s economy. Each proposal is rooted in the conservative premise that government itself cannot create jobs. At best, government can provide a framework in which economic growth can occur. All too often, however, government gets in the way. The past three years of unparalleled government expansion have retaught that lesson all too well.
Only the individual initiative of entrepreneurs, workers, investors and inventors enables companies, and our economy as a whole, to flourish. We must once again unleash the tremendous economic potential of the American people. The contrast between what the Obama administration has done and what I would do as president could not be starker.
First, President Obama has raised or threatened to raise taxes on both individuals and businesses. I would press hard in the opposite direction. Marginal income tax rates and tax rates on savings and investment must be kept low. Further, taxes on interest, dividends and capital gains for middle-income taxpayers should be eliminated. Our corporate tax rate is among the world’s highest. It leaves U.S. firms at a competitive disadvantage and induces them to park their profits abroad, benefiting the rest of the world at our expense. I will fix these problems with permanent solutions. Ultimately, I will press for a total overhaul of our overly complex and inefficient system of taxation.(more…)
I’m the President of the United States and when people aren’t happy with what’s happening in Washington…I’m gonna be impacted just like Congress is. And you know I completely understand that, we expected that.
But when you look at how people feel about my approach to deficit reduction or when you look at how people feel about my belief that we’ve gotta continue to invest in education or medical research or making sure that we’re rebuilding our roads and our bridges and our seaports and our airports, when you look at how people feel about the agenda to rebuild America so that it’s competitive in the 21st century that I’ve been promoting over the last couple of years, it turns out that people are supportive of that.
What they’re frustrated right now is they want me to be able to wrangle Congress and get them moving. And you know, we’ve got this thing, separation of powers, and we don’t have a parliamentary system. And it means that there are times where Congress is gonna do things despite what I saw as opposed to because I think this is the right direction for the country.
This is a theme that the president has been pushing since his 2004 convention speech. We’ve heard it time and again: There are forces out there (usually unnamed) who seek to divide us for their narrow agendas, but Barack Obama himself is the one man who rises above all this, who understands the true public interest and works tirelessly to realize it.
This message is why Obama attracted so many intellectuals, including some on the right, in the 2008 campaign. Rarely do we hear a politician capture so succinctly the challenge of republican government–how to translate the personal interests of 312 million Americans into the public good? Candidate Obama claimed he could do that, and nearly 53 percent of the electorate in 2008 believed him.
But President Obama behaved very differently in 2009 and 2010. Consider: (more…)
