Who drove that bus into the ditch?
Nancy Pelosi, Harry Reid, and President Obama have coalesced around the Progressive Hail Mary for 2010: The economy is terrible because for the past 10 years the Republicans didn’t regulate their fat cat friends on Wall Street and in Big Oil. Republicans drove the economy into a ditch for ten years. It is a Big Lie that is not being effectively countered.
Our core economic problem goes back about 4 years, to November 2006. Then the economy was humming along fine. The liar loans, enabled by the Dems through Fannie and Freddie, were out there, bundled and destined to cause a lot of trouble eventually. Adults could have handled that problem. Everything else was basically OK, though not great. Though the Bush Administration was spent and the Hastert House was spendthrift, the S&P 500 was at 1300 on 3 years of positive growth; the annual deficit was 2% of GDP and decreasing for the previous 3 years, and unemployment was at 4.9%, and had not been above 6% since the last time Democrats controlled the House in 1994. But there was a lot of Bush fatigue on all sides, and of course Mark Foley was successfully gay-baited form the left. That fall Barack Obama, having been elected in 2004, welcomed new Democrat Senate Majority Leader Harry Reid, with Nancy Pelosi preparing to take over as Speaker of the House. After being elected as a Senator from Illinois, lesser mortals might have felt some responsibility to help “steer the bus”, work on the economy, but such mundane tasks were not for our Senator Obama. He chose to leave us and his Senatorial responsibilities “on the bus” and took off in his campaign Prius.
So Pelosi, Reid, and Obama (when other demands are not more pressing) take control of the government spending machine, with unemployment at 5.0% and the deficit at 2% of GPD. Over the next 4 years of Democrat Congressional rule, the budget deficit soars to more than 10% of GDP and unemployment goes above 10%. People may like to think that all rich people are kind of clueless, bumbling, lucky people, and some of them are. But there are many more very smart people out there with lots of money, and they know elections have consequences. World markets started to take a deeper look at their US exposure and were not liking what they were seeing. The first real trouble showed up in the bundled mortgage/CDS markets – it was the weakest link.
By Fall 2007 it is pretty abundantly clear that Dems would win big in 2008, with a fat majority in the House, maybe 60 in the Senate, and Hillary Clinton or Barack Obama (long shot but still more likely than any Republican) in the White House. Hillary was always much more Progressive than Bill, and as they had tremendous experience they probably would be very effective in advancing the Progressive agenda. Barack would be less effective but if anything was even more Leftist than Hillary. As an investor in 2007, you ask yourself “What will Democrats, Progressive Democrats, do when they control everything?”. Even as you phrase the question you begin to limit your American exposure. Because the answer is exactly what the Democrats have done: spend, borrow, tax, regulate, promote unions, demonize business, introduce massive amounts of fear, uncertainty, and doubt into the market. Not an environment in which you want to lend money, and the credit markets began their deterioration. Nothing to do with lax regulation, Bush tax cuts, Darth Cheney, evil Republican greed unicorns, whatever. This is a “correct” market response to Democrat governance; a crisis of confidence in our ability to tax our descendents to pay all of our debts, in order to redistribute wealth from America at large to Democrat interest groups, particularly unions..
The economy began to tank when Congress was controlled by Democrats, on Harry Reid and Nancy Pelosi’s watch, and began to really free-fall whan it was clear Obama would be President. The economy is terrible because the world markets correctly anticipated complete Democratic governance. You want the economy back? Restore confidence. Present a plan to go from deficit to surplus and pay off our debt, and then start to execute that plan.
Barack Obama did not inherit a bad economy; he was “off the bus” on the campaign Prius when the bad economy got started by his Brain Trust, Pelosi & Reid, anticipating his arrival.
Barack Obama did not inherit a bad economy, the economy saw him coming and got sick. When he arrived and prescribed more leeches, the deterioration accelerated.
Barack Obama did not inherit a bad economy, Barack Obama’s left-wing ideology is the root cause of our economic problems.
P.S. Those were not Bill Clinton’s surpluses, they were Newt Gingrich’s.
Bonus P.S. The DCCC Chair said last Sunday that 600K jobs were lost during the Bush presidency. Two much more informative numbers: 20.7 million new jobs were created during Republican control of the House; the Democrats have lost 6.6 Million jobs so far since they took power in Jan 2007.
Notes:
Unemployment numbers from the Bureau of Labor Statistics, total non-farm employment, 1994 – 2010, http://data.bls.gov/PDQ/servlet/SurveyOutputServlet, using CES0000000001, 1994 – 2010
116,378,000 employed Jan 1995, 137,067,000 employed Jan 2007 = 20,689,000 jobs gained during Republican House years
137,067,000 employed Jan 2007, 130,470,000 current employed = 6,597,000 jobs lost during Democrat House years
GDP numbers from http://www.usgovernmentspending.com/federal_deficit_chart.html
