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Thursday, Oct. 4, 2012 | 2 a.m.
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With Election Day fast approaching, it’s clear that the president has the winning hand for two reasons. First, the Democratic Party has an outstanding ability to parse the electorate into small groups, then to appeal to those microconstituencies. And second, because of the incumbent’s best friend, chairman of the Federal Reserve, Ben Bernanke.
Here’s where the Fed comes in. Traditionally, lending depends on savings. The saver deposits into the lending institution, which lends that money to a borrower and takes the spread as a profit. Currently, the Fed is making money available to lenders at a minuscule interest rate and savers are driven to speculative investments such as the stock market.
The Fed funding makes cheap loans available to banks and government. Auto and home loans are now around 3 percent, student loans a similar amount, and the flood of easy money has moved the stock market to near-record heights. Taxes are low because the government has borrowed instead of taxing enough to cover its spending.
Since voters personally feel good from low taxes, high IRA balances and cheap auto, student and home loans, how could the Fed not make the difference?
QE-3 is nothing more than trickle-down economics on a massive scale. (Or as Romney said in the debate, trickle-down government.)
Fed Chairman Ben Bernanke has added so much liquidity into the financial system, mostly by printing money, many experts believe the result will be hyper/super inflation. Prices are already rising. Hence too the stock market bubble. The US doesn't have a liquidity problem. Americans have a confidence problem. Consumer spending, which makes up two-thirds of the GDP [gross domestic product] is flat and languishing for the past 5 years. Americans are sitting on the sidelines due to the undertainty of their economic future for taxes, jobs, and entitlements. They spectate rather than participate. Rather than making things better, the Administration's keynesian economic policies, trickle down government, have made matters worse.
CarmineD
The Fed is having to use extraordinary means to fight unemployment because the Republican House of Representatives has refused to act to create jobs. Over a year ago, the President sent a bill (not a proposal for legislation, but the actual legislation) to Congress called the American Jobs Act. The House refused to even hold a hearing on the bill and Republicans in the Senate blocked consideration despite:
--Moody's Analytics estimated the American Jobs Act would create 1.9 million jobs and add two percent to gross domestic product.
--The Economic Policy Institute estimated it would create 2.6 million jobs and protect an additional 1.6 million existing jobs.
--Macroeconomic Advisers predicted it would create 2.1 million jobs and boost GDP by 1.5 percent.
--Goldman Sachs estimated it would add 1.5 percent to GDP.
Republicans are more interested in creating power for themselves than jobs for American workers.
Keystone Pipeline XL, Mr. Weber. Thousands of union, good paying, permanent jobs. President Obama caved to his Hollywood green energy supporters at the expense of more jobs and the middle class.
CarmineD
It's sad to have to say it, but both Carmine and Jim Weber are correct.
R's should have taken up and debated the jobs legislation President Obama sent to Congress. All legislation deserves a fair hearing and then an up or down vote. To do otherwise is to not do your job.
President Obama should have approved the Keystone pipeline despite opposition to it by the environmentalists and others. The oil is going to be sold and used by someone and building that pipeline would have created at least some badly needed jobs.
These are both examples of why we continue to 'run in place' instead of move our economy forward.
Michael
I find it interesting that Mitt Romney & his followers are now suddenly concerned about America's middle class....
Hmmmmm....must be an election year?
"trickle down government"........now that's funny!
The economy is slowly getting better but its not improving as fast as most people would like to see..
The Bush tax cuts passed in 2002-2003 have NOT resulted in creating new jobs. In other words, "trickle down economics" does not work....
The GOP isn't interested in job creation.....not as long as Obama is in the White House.
Putting Mitt Romney in the White House would, in essence, be a case of bringing back the failed policies of George W Bush...
Isn't it amazing....how a "bad penny" (George W Bush) refuses to go away?
Apparently Jim Weber has already forgotten that even Democrats in Congress opposed the American Jobs Act. At a cost of over 447 billion dollars, which comes out to over $200,000 cost per job created the President found little support for his bill even within his own party.
Jim blames the "Republican House of Representatives" for failing to act on the bill, and blames "Republicans in the Senate blocked consideration" but forgets who actually blocked the initial vote on the bill in the Senate.....Senate Majority Leader Harry Reid.
Sorry, but it was a bad bill from the start and couldn't even garner partisan support from Obama's own party, much less bi-partisan.
Quotes from Democrats in Congress about the bill:
"The ugly part of that act is $450 billion of spending, after we've spent, spent, spent." - Joe Manchin
"Half of it is tax cuts, and quite frankly tax cuts don't work." - Peter DeFazio
Near-zero interest rates are further destroying our economy and precluding any change of recovery. We must reward savings and paying bills on time, not rewarding those who don't pay their bills, don't save, demand others pay for them to live. If it makes no sense to save since there is no return, people are investing in physical assets and overseas. That's not gonna help our fiscal and monetary problems.
El Lobo,
You and many others on both sides need to realize that this 'tax cuts don't work' and 'government stimulus doesn't work' mantra that each camp spouts just ignores all the other factors at work in this complex economy.
The period between 2000 and 2008 contained many, many events that affected how well the 2001 and 2003 tax cuts would work regarding the creation of jobs.
The period after the 2009 stimulus likewise contained many, many events that affected how well the stimulus would work regarding the creation of jobs.
There is evidence out there that would 'suggest' but not prove that tax cuts or stimulus is not THE recipe for stimulating job growth.
Michael
Michael said:
"The period between 2000 and 2008 contained many, many events that affected how well the 2001 and 2003 tax cuts would work regarding the creation of jobs."
OK! I'm all ears! Explain what happened (those many events...) & how those events prohibited the tax cuts from creating jobs!
I think you're talking just to be talking.....but what's new?
Ed ......
The Fed move created interest rate stability to
the year 2015.
This is what we need for the confidence problem
that Carmine keeps crying about.
The Obama economy is getting us out of the worst
republican mess in our lifetime.
30 solid months of job growth and still growing.
AND romney is still trying to sell the same old
republican trickle-down, voodoo economics that
created this mess in the first place.
Americans won't buy that republican snake oil
again.
We were already down that dirty republican road.
WE'RE NOT GOING BACK!!!
El_Lobo......
YES, George Bush came back in the form of
Willard Romney.
Americans won't be fooled again.
Romney is the biggest flip-flopper of all time
and the worst snake oil salesman of all time.
Carmine- No, the Keystone wouldn't have created thousands of permanent jobs. Clearly you are reading the transcanada commissioned study. It would have created far less than that. Less than 1000 permanent jobs. In addition NONE of that oil would actually lower the US costs. Keep spinnin'
To the writer: The fact that you believe that the Fed chairman is somehow on the side of dems shows how little you know about the position of Fed chairman. First he was hired by bush and confirmed by a republican congress. Second, the fed is autonomous, it bases it's decisions off of the economy. Does that mean that sometimes it can be perceived as political? Sure, economics is inherently political. However it has a job to do as set by the congress and it uses all tools available to do its job, even if it is to compensate for the lack of work being done by congress in regards to fiscal policy.
Now with all that said, i think a more important issue that needs to be discussed is why so much financial power is placed into such a small, unaccountable, groups hand's?
The real issue facing all of us is the fact that this left right paradigm is a diversion. This country is not run by socialists or neo-cons, its run by an oligarchy. Plain and simple. Has been for many years.
Barrick Gold also creates permanent jobs, but in Canada. The Keystone pipeline will create permanent jobs for TransCanada. This is Canadian Oil and Canadian prosperity.
"This is what we need for the confidence problem
that Carmine keeps crying about.
The Obama economy is getting us out of the worst
republican mess in our lifetime.
30 solid months of job growth and still growing."
Teamster:
Wishful thinking. The slowest and flattest economic recovery in the USA on record.
Like I said, you're shell shocked from the results of the Governator's shellacking of President Obama.
CarmineD
"Carmine- No, the Keystone wouldn't have created thousands of permanent jobs. Clearly you are reading the transcanada commissioned study. It would have created far less than that. Less than 1000 permanent jobs. In addition NONE of that oil would actually lower the US costs. Keep spinnin'"
Let's say for talking purposes you're right. Less than 1000 jobs. That's better than zero. And the sales of the oil adds to the US GDP. Growth was 1.3 percent for the end of the last quarter. Lowest in years.Beggars can't be choosers.
CarmineD
Ahh...
The ol' 'Keystone' cannard... the biggest ruse about 'job creation' in the history of Mankind.
The Oil industry is a VERY creative 'opinion manipulator.'
Of course, it's not all that difficult, is it?
Ed, you want odds that today's "better" job report will be revised / corrected to above 8%??? Talk about manipulation of the numbers and manipulation of the media.
Carmine if people can't see that building the Keystone pipeline will not only create jobs but improve the GDP whats the use in trying to explain? You'll get more response from a brick wall. Can't argue facts with people that haven't had to meet payroll.
Oh the people that believe in conspiracies. The Fed has very little to do with savers, they are the clearing house and source for banks to borrow overnight. The Fed Rate has been beneficial in keeping our government's funding cost of our deficit low. Barnacke has been trying to assist in turning around the effects of the great recession, not trying to help his "best friend". History did not begin at the start of the Obama Presidency. The causes of the resession were before that, and have still not been completely fixed because Congress has been ineffective. It would be nice if both Parties would be honest and work for what is best for the country. Instead of working to find fault and blame each other for political gain. It would be even nicer if the Republicans would have not had their #1 goal be making the President a one termer.
Carmine.....
7.8% UNEMPLOYMENT!!!!!!!!
WOW!!!!!!
PRESIDENT OBAMA is fixing the bush/republican
CRASH!!!!!
YES, Democratic policy is working.
You republicans need to stop crying.
It makes you look stupid.
Now republicans need to start working with our
great president for even better growth.
FOUR MORE YEARS FOR PRESIDENT OBAMA!!!
Jobs report fails to calculate in the 2 million or so new work permits issued in VIOLATION OF FEDERAL LAW. So that puts the unemployment rate closer to 9.7%--based on about 100 million in the workforce.