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CNBC: Dr. Morici: Time Is Running Out for President Obama; Rober Reich: Why We're Falling Into a Double-Dip Recession


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Morici: Time Is Running Out for President Obama

Published: Monday, 7 Jun 2010 | 9:37 AM ET

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By: Peter Morici, Smith School of Business, University of Maryland

Dr. Peter Morici


Robert H. Smith

School of Business

Either Barak Obama fixes what’s broken in the economy, or he will be remembered for spending his entire first term blaming George Bush.

Last week’s jobs report was terrible for the eleventh month of a recovery. With nearly $800 billion in stimulus spending at its point of maximum impact, federal employment—net of temporary census jobs—was up a mere one thousand in May.

Private sector employment was up an insignificant 41 thousand, only one fourth the pace of the prior two months. Retailers are again cutting employment, as consumers turned pessimistic, flee the malls. Making worse a stock market panicked by European debt woes, the President claims his policies are working.

After all, health care reform and the prospects of much higher taxes and more regulations are causing U.S. businesses to rush out and hire everyone they can before all the able bodied are gone.

The economy is skating precariously on the edge of a second dip—this time into a depression—and the President should radically alter policies to ensure that doesn’t happen.

The private sector provides good examples. The Motor City is motoring again. U.S. automakers are gaining market share over import rivals, because Ford [F 11.26 -0.24 (-2.09%) ] has convinced car buyers Americans can still make quality vehicles—without a government bailout or blaming prior management for a heavy debt burden.

Now Americans are finally willing to test drive, not just Fords, but GM and Chrysler products too. Amazing what focus on the customer can do!

Now is the time to apply that thinking to Washington. The recovery is faltering because U.S. businesses lack customers to justify new employees and the capital to expand, and they want help on both scores.

Demand for U.S. products is growing a faint two percent a year because of a gapping trade deficit—purchases of oil and from China are sending too many dollars abroad that don’t return to buy U.S. exports.

Businesses don’t have the capital they need, because the TARP did not fix the balance sheets of the 8000 regional banks, which finance most small and medium sized businesses. Instead, it was used by the Bush and Obama Administrations to finance more trading and big bonuses at Wall Street banks.

Rather than denying the lousy jobs report, President Obama should use it to justify tackling the trade deficit and shortage of capital with the same energy he condemns his Republican predecessor, whose policies he continues with fruitless talks with China and soft financial reforms.....

Author: Dr. Morici

Source: CNBC

Full Article Click Here:


Robert Reich

Former Secretary of Labor, Professor at Berkeley

Posted: June 4, 2010 10:17 AM

Why We're Falling Into a Double-Dip Recession

We're falling into a double-dip recession.

The Labor Department reports this morning that the private sector added a measly 41,000 net new jobs in May. But at least 100,000 new jobs are needed every month just to keep up with population growth.

In other words, the labor market continues to deteriorate.

The average length of unemployment continues to rise -- now up to 34.4 weeks (up from 33 weeks in April). That's another record.

More Americans are too discouraged to look for a job than last year at this time (1.1 million in May, an increase of 291,000 from a year earlier).

Of the small number of jobs created by the private sector in May, many came from temporary help services.

Which is one reason why the median wage continues to drop.

Why are we having such a hard time getting free of the Great Recession? Because consumers, who constitute 70 percent of the economy, don't have the dough. They can't any longer treat their homes as ATMs, as they did before the Great Recession.

Businesses won't rehire if there's not enough demand for their goods and services.

The only reason the economy isn't in a double-dip recession already is because of three temporary boosts: the federal stimulus (of which 75 percent has been spent), near-zero interest rates (which can't continue much longer without igniting speculative bubbles), and replacements (consumers have had to replace worn-out cars and appliances, and businesses had to replace worn-down inventories). Oh, and, yes, all those Census workers (who will be out on their ears in a month or so).

But all these boosts will end soon. Then we're in the dip.

Retail sales are already down.

So what's the answer? In the short term, more stimulus -- especially extended unemployment benefits and aid to state and local governments that are whacking schools and social services because they can't run deficits.

But the deficit crazies in the Senate, who can't seem to differentiate between short-term stimulus (necessary) and long-term debt (bad) last week shot it down.

In the longer term, we need a new New Deal that will bolster America's floundering middle class. Expand the Earned Income Tax Credit and extend it up through the middle class. Finance that extension through higher marginal income taxes on the wealthy, who have never had it so good.

This post originally appeared at RobertReich.org

Source: Rober Reich

Full Article Click Here:



I still think the government needs to directly hire people like they have in previous bad economic times, because it is looking more and more like a depression (no more recession talk, it's a depression if you are in a double dip a recession). I also, agree with Reich, if people don't have the money to spend our economy will be slow for a long time.

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Uhm he's already spent his entire first term blaming bush. Its almost like he's a broken record.

BTW, I think the best thing the government can do is NOTHING! just leave things alone and stop screwing with stuff.

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