Obama's Economic Dream Team?

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By Stephen Lendman (about the author) Page 1 of 5 page(s)

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Obama's Economic "Dream Team"? - by Stephen Lendman

Dream on if you believe it, and something must be up if Karl Rove says it. In a November 28 Wall Street Journal op-ed, he called it "a first-rate economic team" while at the same time objecting to possible (not yet announced) stimulus package elements not entirely to be the kinds "conservatives" prefer like tax cuts for the rich. He nonetheless called Obama's team "reassuring" and hopes it will leave a "market-oriented imprint."

Not to worry, as that's what it's there for - the privileged elite and not the other 90% or more who at best will be very stingerly aided, and as economist Michael Hudson points out to let them repay their bank debts.

On November 24, Obama made his long-awaited announcement - his economic team to lead the nation out of its worst ever economic crisis, a task perhaps more than even Houdini could handle according to economist and author F. William Engdahl.

Nonetheless and with fanfare, the major media highlighted them with commentaries ranging from cautious to enthusiastic. The Wall Street Journal for example as follows:

"The advisors Mr. Obama named on Monday hail from the centrist part of the Democratic Party. During the Clinton years they played an important role in turning a budget deficit into a surplus. Now they argue the worsening economy requires steep deficit spending."

The New York Times stressed the ailing economy, prospective measures to help jump-start it, and efforts to "inject confidence into the trembling financial markets" that for the moment at least were reassured, or so it seemed.

Not for long according to Merrill Lynch economist David Rosenberg in a recent commentary. In January, he was the first Wall Street economist to predict recession, called it an "epic event," and said it will be long and painful as a result of at least three major shocks - credit, housing and oil.

He now sees the S & P 500 bottoming at around 660 or a 61.8% reversal from its high. Others see it even lower given a policy response "to get people to (spend more,) add to their debt burdens," and exacerbate the very problem that created the crisis. Rosenberg says it's "like giving an alcoholic another drink for his cure. We have a situation where Congress (and the Obama administration) want more credit created, even though it was excess (debt and) leverage that got us into this mess." In other words, the cure may be worse than the disease if the Obama team continues the same failed Bush administration policies, and it looks like they will.

In earlier comments, Rosenberg offered a different prescription in saying for the US economy to expand, savings must rise to the pre-bubble 8% level, housing stocks must come way down, and the household interest coverage ratio must fall to 10.5%. The future he sees is "frugality" with households having to make very different sorts of spending decisions than the kinds they've been used to for years. Those days are over.

So is world stability according to UK Telegraph writer Ambrose Evans-Pritchard in his latest November 30 commentary. He sees the "political bubble bursting (with) spreads on geo-strategic risk now widening as dramatically as the spreads on financial risk at the onset of the credit crunch."

From Mumbai to worker unrest in China to Eastern Europe and Russia at a time when it's "too early in this crisis to conclude whether Europe's monetary union is a source of stability, or is itself a doomsday machine" given the growing rift between "North and South" countries and Germany's reluctance "to unpin the system with a fiscal blitz."

He compares today to the 1930s. After the crash, stocks rallied sharply for months as though the worst was over. It was just beginning but who could know at the time. "The crisis came in pulses, each followed by months of normality - like today. The global system did not snap until September 1931," after which one event led to another and they were all bad, both political and economic. Who knows what's ahead today at a time debt excesses are far greater than then, and this is what Obama's team will confront.

According to Paul Krugman on December 1:

-- today's economic indicators are worse than at any point during Japan's 1990s contraction;

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I am a 72 year old, retired, progressive small businessman concerned about all the major national and world issues, committed to speak out and write about them.

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