Roubini, Summers and Obama: Duh
by ilene - February 1st, 2010 5:20 pm
Roubini, Summers and Obama: Duh
Courtesy of Karl Denninger at The Market Ticker
Out of Davos come two opinions that Bloomberg (and others) have spun as arguing for "continuing stimulus efforts":
“The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor,” Roubini said in a Jan. 30 Bloomberg Television interview following a U.S. Commerce Department report that showed economic expansion of 5.7 percent in the fourth quarter. “I think we are in trouble.”
Roubini said more than half of the growth was related to a replenishing of depleted inventories and that consumption was reliant on monetary and fiscal stimulus. As these forces ebb, the rate will slow to 1.5 percent in the second half of 2010.
No really? We’ve embedded $500 billion in annual transfer payments of various forms over the last 18 months. That’s about 3% of GDP, or more than the "advance" GDP number says that personal consumption expanded (2.2%)
In other words, but for the additions to transfer payments over what was present before we went into this mess consumption would be printing a solid negative number – still.
Summers said that the "statistical recovery" won’t mask "a human recession."
Human recession Larry? Is that like the "mental recession" that John McCain’s favored economic wonk proclaimed during the campaign?
Never mind our "good friend" President Obama, who is proposing a $3.8 trillion budget today. In a break with the usual "optimistic" view compared to the CBO, he’s predicting that the deficit this year will total $1.8 trillion, or almost 50% of the total federal spending – and that’s with more than $800 billion in higher taxes (which have a near-zero chance of actually passing Congress in an election year!)
The President claims to be enacting a "spending freeze" and claims that it is "everything but security and defense." In typical Washington form this is a lie – education and R&D (everywhere) are getting a 6% increase. This, while inflation is currently running at a statistical zero, and on the back of the last year’s budget which amounted to a "ratchet up" game played with the voters.
This is the same game, by the way, that was played with the states and their so-called "Federal Help"…