June 27, 2010

At G-20 Summit Talks, Obama Lacks Strong Hand on Stimulus - NYTimes.com

At G-20 Summit Talks, Obama Lacks Strong Hand on Stimulus - NYTimes.com

The upshot of this G-20 meeting seems to be disagreement by the participants on the issue of stimulus spending vs. deficit reduction.

All seem to agree that economic growth is the goal in order for countries to prosper, but their dilemma is process and timing.

I'm persuaded that underlying all of the talk is a very real crisis of confidence by the people on 'Main Street.' They are deeply affected by the Great Recession and the lingering fear that it could even be a double dip recession.

Meanwhile, sovereign debt continues to pile up and deficits must be reduced to protect the integrity of many countries' bond ratings.

In the U.S. the mighty promises of TeamObama that the $787 billion stimulus spending would create or save 3.6 million U.S. jobs is a distant, unrealized projection. Below from the WSJ in February 2009:
"...Overall, the stimulus plan would create or save about 3.6 million jobs by the end of 2010, according to projections last month by Christina Romer and Jared Bernstein, economists in the Obama administration, based on early versions of the plan. They say a stimulus bill would mean an unemployment rate of 7% in 2010, versus 8.8% otherwise. The estimate doesn't detail how many jobs are saved, as opposed to created..."

The original stimulus jobs saved/created projection is here. These days we hear next to nothing on the present status of jobs created/saved despite the lofty pronouncements about tracking and transparency. TeamObama's stimulus spending has not fulfilled it's promise

I'm disappointed that the media has allowed this failure to fade into the background. A WSJ editorial on Friday concludes:

"What the world has now reached instead is a Keynesian dead end. We are told to let Congress continue to spend and borrow until the precise moment when Mr. Summers and Mark Zandi and the other architects of our current policy say it is time to raise taxes to reduce the huge deficits and debt that their spending has produced. Meanwhile, individuals and businesses are supposed to be unaffected by the prospect of future tax increases, higher interest rates, and more government control over nearly every area of the economy. Even the CEOs of the Business Roundtable now see the damage this is doing.

A better economic policy will have to await a new Congress, which we hope at a minimum can prevent punishing tax increases. But for now the good news is that voters and markets are telling politicians to stop doing what hasn't worked."


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