Will Obama be held accountable after Presidents Day?
Posted on 14 February 2010 with no comments from readers
The US financial markets take yet another holiday on Monday for Presidents Day with much of the nation still snowed under anyway. But the political capital of President Barack Obama is beginning to run out, and talk about spending cuts belies the reality of a mounting budget deficit.
The Obama administration acknowledged earlier this month that the budget deficit will swell to a record $1.6 trillion this year, or 10.6 per cent of the economy. The problems of Greece’s public sector are chump change by comparison.
Good intentions
Not that the president is not on the case. His radio address this week referred to the need to ‘continue to go through the budget line by line, looking for ways to save. We have to cut where we can, to afford what we need.’
Indeed, President Obama must be reaching the point where he is no longer considered the new kid on the block, the inheritor of the big issues, but rather the guy actually in charge and the person for whom the buck stops on his desk.
The odds of his pulling off what ArabianMoney always saw as a Mission Impossible seem shorter by the day. Optimists about the alleged US economic recovery are clutching at straws.
We are asked to believe a 0.5 per cent uptick in January retail sales might be a turning point, knowing full well that very bad weather and the Toyota recall disaster mean that February will be another poor month for sales.
Storm clouds grow
At the same time the storm clouds are gathering elsewhere. The Greek debt problem is the tip of the iceberg in the European Union with Spain in far greater financial disorder. Fourth quarter GDP rose by only 0.1 per cent in the 16-nation EU.
December retail sales fell by five per cent in Singapore and Q4 house sales hit an 18-year low in New Zealand, casting doubt on the recovery in the east. Japan is still in a mess. China is cutting back on bank lending.
These matters are out of the hands of the US President. Yet last week he signed off the largest increase in the federal deficit in history, raising it by $1.9 trillion to $14.3 billion. Increasingly the man who signs the checks will be held to account.
US bond market weakens
Last week the US sold a record-breaking $81 billion in notes and bonds and drew lower than expected demand, pushing bond prices down and yields up, despite the distraction in Greece. Bond markets are always the last shoe to drop in major financial crises, and there is no reason to believe this time will be different.
Of course when governments no longer can borrow money at low rates then they actually do have to stop spending and can no longer get away with just talking about it. That said the next move is most likely a stock market correction and bond rally.
Only then will the bond market correct from its hugely overbought position, and where will the cash go then? Precious metals have to be the answer.
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Just watched a Larry King of CNN interview with Michelle Obama and ohh boy, is she ever a politician’s wife. She made Barock look like a total and complete jerk. Maybe Barock she ship her out of the country for the remainder of his term so he can just deal with the facts of issues, and not the speculations. She, Michelle Obama, will guarantee a failure for Barock next election for sure.
RE: the US Treasury’s Failed Auction on 10Feb 2010.
Peter:
You discussed the Treasury’s auction of last week. But as they say, “the devil is in the details”, and this is certainly the case here. This was a failed auction, and a disaster.
For those interested in knowing exactly what happened, and why it was a major financial event that has gone unnoticed (thusfar!), here’s the link.
http://seekingalpha.com/article/188380-the-u-s-land-of-the-free-and-home-of-a-nearly-failed-treasury-auction-of-its-own?source=email
Summary:
- The US government has now entered what is sometimes referred to as “the Debt Spiral”, and there is no way it can continue to escape this.
- How Treasury auctions really work; this is important to understand, in order to comprehend that the auction was truly a failure.
Vladimir Putin, (formerly of the KGB) who actually runs Russia, when asked at a public relations TV show what he thought of the possibility of a USA collapse and break up said, “People who say such things should be careful what they wish for.”
Don’t be shocked if Obama gets re-elected. The right wing of the Republican party is busy trying to maintain ideological purity by doing smart things like attacking Sarah Palin, who many women and men like a lot,(especially the men). If the media keeps picking on her, they might get her nominated, or make her a third political party spoiler that will pull votes away from the Republican nominee. (The US public is enraged by the Wall Street theft of their tax money.) That will put Obama right back in the White House because the American political system is rigged to prevent other parties from winning National offices.
Don’t underestimate Obama. I watched him confront the Republicans on their own turf on live TV a couple of weeks ago. Afterwards some Republicans were overheard asking, “Whose brilliant idea was this?” Obama so outclassed them that Fox News actually had to cut off their live coverage to spare their Republican owners more embarrassment. No other networks did. Later, Fox News actually edited the tape to make it appear that Obama had cut off a question, when in fact, the ‘question’ was a long TV talking point show from a Republican Senator. After he went on for what seemed like forever, Obama said something like, “I know there is a question in there somewhere. Could you get to it?” Fox News only showed the part of Obama’s answer where he chastised the guy for putting on a show, instead of asking a legitimate question. ‘Fair & balanced?’ Dr. Goebbels would be proud.
As to re-election, people had to convince him to run in the first place. I would not be surprised if he decided to call it quits after one term. Being the first black President is a pretty big accomplishment. And he gets about $250,000 a year for the rest of his life. He could make more money giving speeches than being President, a lot more. Finally, you might want to google ‘Obama in the rain’ and look at the pictures of him talking to the crowds in the cold rain. He didn’t have to do that. The guy is tough and determined. Underestimate him at your peril.
Oh, I didn’t vote for him or McCain, because Wall Street owns both the Democrats & Republicans.
@ Bill Simpson:
Interesting commentary.
Yes, the Power Elite control both the democratic and the republican party, and they also control the FED, which, in turn, controls the President and the Administrations actions.
It won’t matter if the Republicans take over the senate and the Congress; the game is rigged, as you stated.
But Obama is smart enough to realize that he shouldn’t be in a job where he is simply a puppet, making decisions that he really doesn’t want to make (more troops for Afgans, military presence in Iraq, insane defense budgets, etc.).
Obama’s policies and actions are swiftly ruining whatever is left of this country. By 2012, our country will be in such terrible shape that Obama would be a total fool to run for re-election.
We are living in interesting & dangerous times.