The Obama Tragedy
Contributing Factor Numer 1: Cheap money for banks
Yesterday the Fed remphasized the approach of leaving interest rates for the banks at zero for the forseable future. It is well known that this is to allow banks to play games in an attempt to rebuild their balance sheets. Their balance sheets would probably be negative if they put realistic marked to market values on their total loan portfolios. This is the part of the under-the-table stimulus program that just keeps on giving, capital siphoned off the economy to fill the great hole of loans on air bubbles.
Contributing Factor Number 2: No meaningful job creation
Private companies are the big contributors to job creation. I don’t know about you, but when I drive around I see stores and offices for rent everywhere. These are not the offices and stores of “Big” corporations, they have the capital and expertise to drain market share from a shrinking economy. Bottom line, the big corporations are doing well and the stock market thinks the recession is over. Wrong.
Contributing Factor number 3: Lobbyists are successfully diluting the change that is needed.
While Health Care and Financial Reform are going to happen, they leave out some big components that would really go to solve the problems on health care costs and financial regulation.
Contributing Factor Number 4: The country believes that things are going to get better without making major change.
The continuing impasse in congress and lack of strong bi-partisan support for the major economic initiative of Green Energy means that we are going to stagnate and slowly role off the cliff. In a couple of years the deficit created by half baked measures will overtake us before solid grassroots economic activity can take over.
And the Tragedy is, Obama is winning the little victories while the barn is burning.