Sunday, November 22, 2009

Obama Warns of Double Dip Recession

This week, President Obama made his way throughout eastern Asia. On Wednesday, he issued a warning:
the US economy could head into a “double-dip recession” unless urgent steps were taken to rein in mounting public debt.

It is important though to recognise if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the US economy in a double-dip recession.
Is he repenting of his administration's recent economic sins? Or is he posturing for more bad news in the coming months and years?

He has spent like few administration prior, from Troubled Asset Relief Program (TARP) and American Recovery and Reinvestment Act to Cash for Clunkers and publicly-traded company takeovers. And now he is saying we need to rein in public debt.

He is encouraging a Democratic congress to pass a complete take-over of the nation's health care system and medical insurance industries, creating a entitlement program that will dwarf Social Security. How does this reconcile with his "double-dip" warning?

Housing does not look like it will rebound anytime soon. Consumer spending will remain stagnant for a long time. The stock market is looking more and more like a useless place to put money. Unemployment will remain at least at ten percent for a couple of years, probably raising to 11-13 percent because his administration's fiscal policies are destructive and discouraging to business investments and growth plans. His monetary policies are detrimental to the dollar, as it continue to buy less and less. The only saving grace for the average person, but not for some industries, is the stable price of energy. Could you image what it would be like if oil drifted back up to $4-5/gallon?

If Obama is warning about a double-dip recession, he is really showing his hand and is fearful of the future. If it were not so, he would be telling us how the government programs are bringing us out of this recession. We are dutifully warned. His policies will ensure this recession will get worse before it will get better.

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