DAVIDOWITZ: U.S. ECONOMY IS A “COMPLETE DISASTER”
2 July 2010 by Staff
18 Comments
Harsh words here from Howard Davidowitz. In yesterday’s interview with Tech Ticker Davidowitz said the U.S. economy was a “complete disaster”, “Wall Street is a giant ponzi scheme”, “We’re guaranteed a double dip in housing”, and Obama is the “worst President in my lifetime”. Ouch. View the 4 part interview below:
Part 1: The U.S. economy is a total disaster
Part 2: Wall Street is a giant ponzi scheme
Part 3: Obama is the worst President of his lifetime
Part 4: Let bad banks fail!
Source: Yahoo Tech Ticker
TPC:
Regarding this harsh rhetoric, how reasonable do you think this is?
BB
I don’t understand why people come down so hard on President Obama: he inherited two wars and an economy in shambles, the opposition does the opposite of whatever he wants just to score political points, and he hasn’t even been in office for two years (!).
His economic policy has been atrocious. Unfortunately (and I said this at the time he was elected) I don’t think anyone else would be doing much better. McCain was an economic nitwit. People want jobs. People want to be able to pay for their kids and their families. People want a robust economy (which is an extension of jobs). It’s not happening. If he had let the banks fail and let the system clear a bit more I think we’d be worse off now, but troughing as opposed to retrenching. Come 2012 he’d have been a hero. Instead, he will go down as the lamest of lame ducks.
Unfortunately, I don’t know if you can entirely blame him. He is not an economist. He is not an expert on the markets and he is relying on men who he thought were experts, but are really the cause. Of course, they’re only just now starting to be exposed as such, but Obama will have to take the blame. He put them in charge and he took their advice so ultimately the buck stops with him.
“Come 2012 he’d have been a hero. Instead, he will go down as the lamest of lame ducks.”
Do you really believe that if Obama had done nothing and let the market clear out, the economy would have been revived in just 4 years? I doubt it. There is no real time table for these things.
Unfortunately, Obama does have a set time table: 4 years. All Presidents are given 4-8 years in office. That is the problem here. Obama does not want to go down as the first black President AND as the guy in office during a great depression. (Which we might still be headed towards)
Honestly, it would’ve been the same either way. People blame him now for bailing out banks and the same people would’ve have blamed him for not doing anything had he chose not to. It’s really a lose-lose situation.
Obama’s plan nearly worked: the market was up 80% since its lows and consumer confidence shot back up. I think the biggest problem to the v-shaped recovery has been the euro. Everything seemed to be working until Greece blew itself up and then the viability of the whole European economy came into question.
I am a proponent of spending during times of crisis and saving during times of prosperity. However, the world economies seem to have done the opposite. Obama is not the reason for this economy. He took a part in it but I don’t blame him for wanting to do something. Yes, Obama is not an economist; however, economists are not politicians either. It is much more complex than just being able to do this or that. In economics, you look at the value of your option compared to the next best option: President McCain and VP Sarah Palin. Which, in this case, means that it could’ve been worse.
I am biased towards my beliefs obviously, but I do sincerely believe that we’d be troughing by now. Could the economy begin to rebound between now and when the voters enter the polls in 2012? I don’t see why not.
“I don’t understand why people come down so hard on President Obama:…”
One word: Obamacare.
It shouldn’t have been allowed to go through. The nation told him so with the election of Scott Brown. In the immediate aftermath of Brown’s election even Barney Frank said, “Healthcare is now dead; elections must be respected.”
Three days later Obama made the decision not to respect the citizens of the United States and proceeded to use completely improper budget mechanisms and reconciliation to jam Obamacare down the country’s throat. That act stripped him bare for the world to see. He is a socialist to the core, somehow in charge of the greatest capitalist democracy ever.
If he had been truly honest with the American people on the campaign trail, and told people he was going to spend the first 500 days of his Presidency jamming through an unwanted, and absurdly expensive, national healthcare plan, he never would have been elected. Heck, he wouldn’t even have been the Democrat’s nominee.
I voted for O’bama, so don’t think I am a tea party person. I agree that that O’bama is a fraud and will say anything to sound good. But, I have been reading TPC and billyblog and I know O’bama’s spending isn’t the problem. I have nothing against Mr. Davodidowittz, but he just doesn’t seem to understand MMT. I also want to thank TPC and Bill Mitchell for helping me understand a lot about currency and the modern monetary system. Also, I will never vote again unless there is a real candidate.
Obama has a visceral animosity towards anyone making a decent living without government assistance, it has become clear since the election.
This realization by the American people is probably the signal factor causing the current bout of economic anxiety, as noted very recently by Jeff Imelt, and I don’t think I’m taking any license here.
We gave Obama a pass on his association with the rabid racist Reverend Wright, thinking it must have been just a youthful indiscretion, but no, come to find out, he is just a smoother-talking practioner of essentially similar views.
Like many in the financial community, I initially was an Obama supporter, seeing him as an inspirational and unifying figure who could lead our country into a new era, past the legacy of guilt and racial recriminations, to solve all the peoples’ problems by working together as one.
Instead we have what I believe is probably the most divisive president in history. Every other day it seems he is going after a new sector of the productive economy, with the goal of extorting whatever he can for the benefit of his chosen few.
This mean-spirited class politics may play well to some, but only serves to undermine the confidence of those from whom Obama would like to extract the maximum tax. It is a counterproductive exercise, which he might recognize if it were not for his utter lack of business acumen- which is probably not surprising, given that we elected a “community organizer” to lead our (capitalist) country.
TPC,
Man are you going brain dead on me. Have you not bothered to read Obama’s autobiography. The man told you point blank that his childhood mentor Frank was a communist. His father and mother had extreme socialist leanings. His half brother in Kenya is the head of the Communist Party in Kenya. Duh, is there now any doubt as to why he nationalizes our auto companies, our healthcare, banking and he is now decimating the oil industry. If you compare his results to those achieved by Hugo Chavez, I would say that he is actually a little further along than Chavez is in Venezuela. Tell me how that hope and change is working for the average working person in America now? This man is not stupid, he is doing to America exacxtly what he wants to do. I just happen to disagree with anyone that wants to destroy the American economy.
Thanks much billw for adding some perspective that I wasn’t aware of- given the background you provided, Obama’s demeanor and actions since taking office are not at all surprising.
Contrary to TPC’s forgiving assertion that Obama “is not an expert on the markets,” I believe that he is very cognizant of the markets, and would like to undermine them at every turn, being too much of a radical socialist to recognize that as financial markets go, so goes the economy.
You can’t “keep your boot on the neck of the capitalists,” to paraphrase, without having the same effect on the economy overall.
Even a “pragmatic” capitalist should recognize, and give weight to, this truth.
TPC,
While unemployment is still too high, the market has gone up more than 50% since its march 2009 lows and people are more stable financially than they were this time last year. Honestly, are people expecting too much from Obama? While he hasn’t been perfect I would hardly call his performance atrocious. GM and FORD are reasonably stable again and the US still has some manufacturing jobs, the balance sheet of the banks are better and unemployment is no longer in a free fall. Obama’s job now is to encourage corporations to invest but a global slowdown will make corporations reluctant to invest. I think a lot of people underestimate the seriousness of the recession and it seems surprising that experienced economists just expect the economy to roar back to life a little more than a year after it looked like the world was going to collapse. People have to get real.
I only began reading your website recently. What were the policies that you recommended that he undertake and what is the evidence that those policies would have worked?
Richard
I advocated a Swedish response as opposed to a Japanese response. The evidence clearly shows that the Swedes rebounded quickly while the Japanses muddle through. The difference is the Japanese allowed moral hazard to destroy psychology while also allowing the losers to lose. We’ve done the same thing here and its destroyed psychology. The Swedes, on the other hand, were open, honest, transparent and forced the market to work its natural course (with an expedited govt hand of course). We’ve attempted to implement capitalism without losers. It doesn’t work.
And make no mistake, the recovery of the last 18 months has been almost entirely engineered by stimulus. There has been little to show for it on Main Street.
Obama could have been a hero. He could have been the guy that sunk Wall Street and saved Main Street. He could have been the guy who took down Goldman Sachs. The guy who looks out for the little guy (via strict regulation and no bank bailouts). Instead, he looks like another apologist for Wall Street.
The problem is not Obamacare, which barely exists and most of it hasn’t even started. This economy tanked at the end of Bush’s presidency! Unfortunately, Congress and then Obama listened to the exact guys who created the mess and who, of course, wanted themselves bailed out. The rest of us are not getting any such help–and temporary census jobs ain’t going to cut it.
The blame lies with Congress and Reagan–for the last thirty plus years, Congress has given tax breaks to corporations that leave the country, that bring in foreign techies, that outsource jobs, that move their headquarters to foreign locations–and on and on. They give tax breaks to the rich but can find plenty of ways to tax the rest of us.
The real problem is that Congress has been bought by the corporations, and the corporations only care about the bottom line. They don’t care if you have no job, lose your home, go hungry, can’t pay the doctor, can’t send your kids to college. Things will just keep getting worse until the sheeple finally rise up…because I don’t expect any politician to give a damn and do the right thing.
How can anyone possibly think Obama was going to do anything different than he has done? Voting for him was akin to voting for a cheap television evangelist and sending in your Sunday plate offering via pay-pal. Is this all his fault? No. He answers to the same puppet masters Bush did, and Clinton before him, and GHW Bush before him. Obama is just a continuum of the statists, and this will not change until the bulk of voters are taken to the woodshed economically and demand not just promises of hope and change, but action behind those words. We need a citizen president, not a community organizer or a Yale grad sent there due to heavy contributions by a wealthy parent. But here’s the biggest hurdle of all: when half of the registered voters are living off of entitlements and welfare absolutely nothing will change, and they’ll crawl on broken glass to elect the next cheap TV evangelist who promises “all will be well if you vote for me.” We don’t need a good orator at the helm, we need a leader. Those of you who voted for this empty suit are not only getting what you deserved, the rest of us are also getting what you deserved, thank you very much. Vote them all out in November. Send them their pink slips like they’ve sent to millions of Americans. Put those not up for re-election on notice they’re next in line in two years if they don’t start producing. Put those who DO get elected in November on notice that if they don’t pony up to the job, their clock is ticking the day they’re elected. Ditch party lines across the board – ignore any tendency to show loyalty to either side and VOTE THEM ALL OUT! Show them what term limits really mean, folks. This is our last great hope to salvage this country, no matter what your political views are or have been. Liberal, conservative, centrist- we have to stand together on this. This two party system is nothing more than what you see watching WWF on TV. Fake falls, fake fails, fake posturing. It’s all designed to make you think you have some control over your life so you won’t put the heat on them. We’ve been pawned long enough, haven’t we? Will you allow yourself to again get caught up in campaign rhetoric as November nears or will you use your head and listen to your gut this time? If you want real change, do it yourself! When you start seeing campaign ads and speeches, I want you to think of the guy who does the Sham-Wow commercials. Take note- these cardboard politicians are just a step above that guy.
And to Richard: the only reason the market went up was due to liquidity pumped into the system by the Fed. They initiated the largest short squeeze in history based on historically high short interest positions. There was so much heat on the powers that be, and such a deep fear of the peasants rising up, they had to pull a rabbit out of a hat. The market started rallying shortly after Blank-en-stein had his little pow-wow with Obama at the White House one Friday afternoon. Shortly after that, Obama, who publicly admitted before he was elected he knew little about economics, suddenly urged everyone to buy stocks as they were at bargain prices! Next came a post-it note “accidentally” found from Vikrim Pandit that Citi “might” show a profit the next quarter and the short squeeze was on. Don’t be fooled. There is no growth, there has been no growth, only deep cuts and “better than expected” on earnings results from expectations so low a monkey could beat the analysts. Improvement in unemployment does not include discouraged workers or recent college grads who still can’t find a job. Employment is about as stable as a house built on sand at this point. Read the balance sheets of the majors on Yahoo Finance and show me where Cap-ex has increased. The only thing that changed was people “think” they’re more stable, when in fact, they’re worse off than ever before, and you ain’t seen nothin’ yet.
As far as the bank balance sheets being “better than they were before,” do you not remember why that is? There was a little thing called mark to market accounting that went poof… and yet another smoke and mirrors game to make you think their balance sheets are better off than before. Bring that back and watch what happens to those balance sheets. In fact, bring that back soon while the next onslaught of mortgage re-sets hits us, as LIBOR is on the rise again.
Obama’s job is to encourage corporations to invest? Is he going to do that the same way he’s encouraged banks to loan again? Will corporations increase investment with taxes about to take a huge jump in six months? What sane person in banking would increase loans with unemployment at nose bleed levels?
What a mess.
I think the question is whether the swedish solution, that was implemented for a economy that is more than 100 times smaller than the US, would have worked for a large and intricate economy like the US. Given the reaction to the Lehman bankruptcy, how would the reaction to the rest of the banks being nationalized be good for main street let alone wall street? While some may argue that only the large banks would have been nationalized, the prevalent fear around that time could have caused a run on all banks thereby necessitating the nationalization of more than a handful of banks. Was the US equipped to do that?
John Galt, I fail to see how being a community organizer is in any way a bad qualification for a future US president. What exactly do you mean by a citizen president?
Citizen President = someone who has made their way in the real business world, not propped up with grant or lobby money, or a background of nothing but government work. Citizen President = someone who has a clear understanding of both sides of the fence, not just a career in politics. But I digress- good luck finding someone like that who would take the position.
isn’t mitt romney a citizen president? And he definitely wants the job.
This post is simply idiotic. Obama is the worst presidnt in history? Did you pay any attention to his predecessor who got us into two wars, deregulated the financial industry to allow casino-type gambling, cut taxes on the wealthy to the point that we are going bankrupt and becoming a banana republic? Obama is simply inept, and unwilling to stand up to Wall Street or offend his wealthy supporters by making them pay a fair share of their taxes to fund the things that previously made this country a great place to live.
But compared to W, well, you really can’t even compare a crooked torturer, and his absolutely evil VP. One is simply a bad person, and the other is simply a scared child cowering in a corner.