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Obama's Economic Challenge Underestimated

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Anecdotally, my perception is that about 80% of the country wants the Obama Presidency to be a success. On the other side of things, you have about 18% of the far right who want him and the country under him to fail, and you can read all about the things those folks have to say at the website Free Republic, www.freerepublic.com. You also have about 2% of the country who are the extreme elements of the progressive left who have spent the last eight years trying to convince people that the Republican and Democratic Parties are the same and thus those people also have an investment in the failure of an Obama Presidency. You can read about what those people have to say among the comments of more pragmatic progressives at many progressive news agencies like www.OpEdNews.com .


Obama Thinking about the Economy

What is almost universal is the lack of understanding of how bad this economic downturn is likely to get and what impact that will have on Obama's first term and whether that first term is seen as a success or failure.

Taking first the current unemployment rate of 6.5% (1), we are at the highest unemployment rate in fourteen years. Goldman Sachs and many other respected analysts have predicted an unemployment rate of 8.5% sometime next year. The last two months, the rate of job losses has been accelerating at an alarming rate. We have lost half a million jobs in the last two months alone and over 1.2 million jobs have been lost so far this year. I wrote in April that I believe we would see unemployment at near 15% by the end of next year and I think the combination of accelerating job losses and GDP shrinkage points to a higher unemployment rate than what firms like Goldman Sachs are predicting.

To my point, the accelerated job losses and GDP shrinkage are coming as we are two weeks away from the start of the holiday shopping season that accounts for an overwhelming amount of the US Retail markets' receipts. The horrific holiday shopping season that I think we are going to have is going to open the job loss spigots even wider. The writing is already on the wall, retail sales had a 1.2% decline in September and this Friday, November 14th, the retail sales figures for October will be released and most analysts expect a further 1.4% decline in sales. Besides retail sales, there are a myriad of bad economic reports. The Yahoo Finance Top News stories for yesterday had as much bad news as one normally sees in a month. Those titles include:

Fed's bailout for AIG swells to more than $150B

Circuit City files for bankruptcy protection

Deutsche Post to cut 9,500 jobs in US

Fannie posts $29B 3Q loss, $100B (bailout) may not be enough

GM shares hit 60-year low on worries of collapse

Starbucks 4Q profit drops 97 pct on closure costs

Tribune Co. swings to $121.6 million loss in 3Q

This doesn't seem like your run of the mill recession to me, it looks like the beginnings of a complete collapse. Two months from now when Obama takes office, how much worse off will we be? Obama and his team should have two plans, one for what they would do if the economy takes the course that many analysts predict where you have a moderate to severe recession, and another contingency plan for what they would do if the economy becomes much worse than that. It may need to include emergency plans to put a lot of people around the country back to work in infrastructure and/or public works.

Even if we have a recession with 'only' 8.5% unemployment, that would represent the worst unemployment rate in 25 years, since 1983 (2). There are many Americans in the workforce today who were not old enough to appreciate how bad things were in the recession/stagflation of the late 70's and early 80's. When unemployment gets that bad, it becomes the defining issue of the current Presidential term. No one cares if other pet projects are not undertaken and the expectation is for the administration to 'fix it' at all costs.

President-elect Obama has already taken important steps toward addressing our economic crisis. He has assembled an economic team the likes of which has probably never been seen before in America or anywhere else. His team members include Paul Volcker, who was the architect of the recovery for the late 70's early 80's recession/stagflation, the wealthiest and most successful venture capitalist in history and chairman of Berkshire Hathaway, Warren Buffet, Google chairman Eric Schmidt, a professor at the University of Chicago Graduate School of Business Austan Goolsbee, former head of the Hamilton Project, Jason Furman, former commissioner of the Securities and Exchange Commission Roel Campos, former commerce secretary William Daley, Roger Ferguson, former vice chairman of the Federal Reserve board of governors, Anne Mulcahy the chairman and CEO of Xerox Corp as well as many others including Robert Reich and Robert Rubin (3,4).

The above group of assembled economic giants could be called a "Dream Team'. It will fall to them, under President Obama's leadership, to craft a way out of the economic death spiral in which we find ourselves. One of their challenges will be to grow the economy and of course put people back to work in an environment where there are energy and food shortages. We're seeing decreases in the price of oil and gas because the market is betting that the recession will cause a drop in demand. If, however, a recovery begins to take shape in the next 12-18 months and demand begins to increase again, if we have not addressed issues with the supplies of food and energy, you will see a rapid increase in inflation that may kill any recovery before it has the chance to really get going.

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http://www.ibtimes.com/blog/steven-leser_103/bio/

A political blogger for the International Business Times, Steve Leser is a hot national political pundit. He has appeared on MSNBC's Coundown with Keith Olbermann, Comedy Central's Daily Show with Jon Stewart and Russia Today's (RT) Crosstalk with (more...)
 

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Well said Steven.  GDP, Unemployment are no l... by kato krause on Tuesday, Nov 11, 2008 at 8:16:48 AM
to cancel tax cuts....Instead, there will be money... by steve scheetz on Tuesday, Nov 11, 2008 at 9:31:09 AM
the planned recovery efforts. Other stuff will pro... by Steven Leser on Tuesday, Nov 11, 2008 at 9:43:42 AM
you obviously have not listened. Ciao, CZ ... by steve scheetz on Tuesday, Nov 11, 2008 at 9:59:59 AM
Nice try though.... by Steven Leser on Tuesday, Nov 11, 2008 at 10:28:06 AM
you are so completely delusional!We have been scre... by steve scheetz on Tuesday, Nov 11, 2008 at 11:52:27 AM
Trying to "stop the bailout" is not the ... by Steven Leser on Tuesday, Nov 11, 2008 at 12:23:02 PM
These are the same gang of crooks that got us into... by Mr M on Tuesday, Nov 11, 2008 at 9:33:58 PM
were talking about? Talk about hijacking a discuss... by Steven Leser on Tuesday, Nov 11, 2008 at 9:36:48 PM
Read your post! You said, "...  the... by Mr M on Tuesday, Nov 11, 2008 at 10:25:47 PM
additional comments.... by Steven Leser on Friday, Nov 14, 2008 at 11:47:27 PM
impossible constraints on any attempt to fix the&n... by Richard Mynick on Tuesday, Nov 11, 2008 at 11:13:45 AM
I will bet that we see an across the board spendin... by Steven Leser on Tuesday, Nov 11, 2008 at 11:37:36 AM
a 90,000 increase in troop levels. Thsi does not i... by Jack Harrington on Tuesday, Nov 11, 2008 at 12:12:08 PM
Everything that was said is out the window an... by Steven Leser on Tuesday, Nov 11, 2008 at 12:17:29 PM
and say others don't get it. Most of us on her... by Jack Harrington on Tuesday, Nov 11, 2008 at 4:28:15 PM
... there is nothing different about anything you ... by Steven Leser on Tuesday, Nov 11, 2008 at 6:20:29 PM
You true believers always feel you are already the... by Jack Harrington on Tuesday, Nov 11, 2008 at 9:07:11 PM
on what I have said to you previously... by Steven Leser on Tuesday, Nov 11, 2008 at 10:00:20 PM
... and you got this from ...? Which one of Obama&... by Mr M on Tuesday, Nov 11, 2008 at 10:37:16 PM
a symptom of what is wrong with the branch of prog... by Steven Leser on Tuesday, Nov 11, 2008 at 11:44:51 AM
predisposition of the members of the economic team... by Jack Harrington on Tuesday, Nov 11, 2008 at 12:16:59 PM
... stop with your mantra for five seconds to try ... by Steven Leser on Tuesday, Nov 11, 2008 at 12:19:33 PM
Got it yet? ... by Jack Harrington on Tuesday, Nov 11, 2008 at 4:27:05 PM
there is nothing to get or be behind. You are spou... by Steven Leser on Tuesday, Nov 11, 2008 at 6:22:00 PM
First of all, Nader gets it and you don't.Seco... by Jack Harrington on Tuesday, Nov 11, 2008 at 9:13:19 PM
I am happy to stand on what I have said to you pre... by Steven Leser on Tuesday, Nov 11, 2008 at 9:59:30 PM
guess you will remain wrong then.... by Jack Harrington on Tuesday, Nov 11, 2008 at 10:18:31 PM
Steve,  I've taken the liberty in our dem... by Alan MacDonald on Tuesday, Nov 11, 2008 at 11:54:42 PM
Steve,  I've taken the liberty in our dem... by Alan MacDonald on Tuesday, Nov 11, 2008 at 11:59:12 PM
I agree with your contention that most folks don't... by B York on Tuesday, Nov 11, 2008 at 1:00:25 PM
relevant history on the subject and what Obama'... by Steven Leser on Tuesday, Nov 11, 2008 at 3:06:06 PM
"Four years from now, no one is going to be measur... by Munich on Tuesday, Nov 11, 2008 at 1:10:29 PM
...... by Steven Leser on Tuesday, Nov 11, 2008 at 2:54:21 PM
See my OpEd yesterday suggesting a Human Investmen... by Mark Goldes on Tuesday, Nov 11, 2008 at 2:48:09 PM
I don't think the severity of the present econ... by Jim Eldon on Tuesday, Nov 11, 2008 at 4:11:12 PM
... we are much more behind the eightball than a f... by Steven Leser on Tuesday, Nov 11, 2008 at 6:26:01 PM
 "we are much more behind the eightball ... by Jim Eldon on Tuesday, Nov 11, 2008 at 7:40:51 PM
while the debt incurred through borrowing from fro... by richard on Tuesday, Nov 11, 2008 at 8:33:17 PM
regarding the Fed doesnt work on me.... by Steven Leser on Tuesday, Nov 11, 2008 at 8:56:45 PM
If you know what is happening then explain it. Don... by richard on Tuesday, Nov 11, 2008 at 9:16:32 PM
months. Feel free to read them. I am not going to ... by Steven Leser on Tuesday, Nov 11, 2008 at 9:39:19 PM
I just scrolled though three pages of your article... by reasonableperson on Tuesday, Nov 11, 2008 at 10:59:19 PM
Steve - Your replies are difficult to interpret. W... by Jim Eldon on Tuesday, Nov 11, 2008 at 11:26:56 PM
Jim, you are absolutely right --- there are plenty... by Alan MacDonald on Tuesday, Nov 11, 2008 at 9:29:52 PM
NeoProgressives like you regurgitate these ridicul... by Steven Leser on Tuesday, Nov 11, 2008 at 9:45:49 PM
Steve, a most interesting thing I have noticed t... by Alan MacDonald on Tuesday, Nov 11, 2008 at 10:50:57 PM
they are neoaware that he hasn't taken neooffi... by Steven Leser on Wednesday, Nov 12, 2008 at 9:20:27 AM
I think the idea that "2% of the country who ... by Kevin Gosztola on Tuesday, Nov 11, 2008 at 7:18:03 PM
if I didnt, I wouldnt have written it. Every cabin... by Steven Leser on Tuesday, Nov 11, 2008 at 9:04:50 PM
is invested in the truth. Your are a preempti... by richard on Tuesday, Nov 11, 2008 at 9:19:17 PM
That belongs in the Onion!!!!!... by Steven Leser on Tuesday, Nov 11, 2008 at 9:50:11 PM
... and just where do you fit Steven? Are you one ... by Mr M on Tuesday, Nov 11, 2008 at 10:18:52 PM
As noted by a previous poster, that the two partie... by richard on Tuesday, Nov 11, 2008 at 9:08:19 PM
I had a Eureka moment in the last few days when I ... by Steven Leser on Tuesday, Nov 11, 2008 at 9:51:32 PM
You assume people are cheer-leading failure becaus... by Mr M on Tuesday, Nov 11, 2008 at 10:51:24 PM
Mr. M. The Federal Reserve is refusing to identify... by Munich on Wednesday, Nov 12, 2008 at 12:29:41 AM
Mr. M. The Federal Reserve is refusing to identify... by Munich on Wednesday, Nov 12, 2008 at 12:31:22 AM
I would not say that 2% of the country think the R... by reasonableperson on Tuesday, Nov 11, 2008 at 10:20:54 PM
Do 2%ers drink 2% milk?... by Kevin Gosztola on Tuesday, Nov 11, 2008 at 11:12:48 PM
I buy 2%, two gallons at time.  Cheaper that ... by reasonableperson on Thursday, Nov 13, 2008 at 11:34:57 PM
I wonder who pays Mr. Leser to write this neo prog... by Cinderfella on Wednesday, Nov 12, 2008 at 1:42:38 AM
let me know ASAP. Thanks... by Steven Leser on Wednesday, Nov 12, 2008 at 9:14:02 AM
So, what?I should have voted for McCain? I shouldn... by PeterJ on Wednesday, Nov 12, 2008 at 4:09:20 PM
I do not fault Steven or anyone else for being hop... by reasonableperson on Wednesday, Nov 12, 2008 at 8:10:41 PM
The fact that Mr Leser can continue to have exactl... by Cinderfella on Wednesday, Nov 12, 2008 at 10:36:06 PM
I don’t mean this in a mean-spirited w... by reasonableperson on Thursday, Nov 13, 2008 at 11:27:09 PM
are you willing to learn anything from me? Have yo... by Steven Leser on Friday, Nov 14, 2008 at 11:54:37 PM
"I put him in the same league of bottom dwell... by Tom Murphy on Thursday, Nov 13, 2008 at 9:07:02 AM
Tom, I must apologize … really.  It... by reasonableperson on Thursday, Nov 13, 2008 at 8:19:23 PM