Failure Generation: Obama faces growing credibility crisis

Obama faces growing credibility crisis
By Edward Luce in Washington

http://www.ft.com/cms/s/0/434315b2-8ea6-11df-8a67-00144feab49a.html

Published: July 13 2010 18:51 | Last updated: July 13 2010 18:51

Robert Gibbs, Barack Obama’s chief spokesman, got into hot water this week for daring to speak the truth – that the Democrats could lose control of the House of Representatives in November. But it could be even worse than that.

Contrary to pretty much every projection until now, Democratic control of the Senate is also starting to coming into question. While Mr Obama’s approval ratings have continued to fall, and now hover at dangerously close to 40 per cent according an ABC-Washington Post poll published on Tuesday, the fate of his former colleagues in the Senate looks even worse.

EDITOR’S CHOICE
Opinion: ‘Hell no’ is not a platform for power - Jul-13In depth: The Obama presidency - May-23Obama attacked over business regulation - Jul-12Video: Donohue on business regulation - Jul-12Global Insight: US financial reform - Jul-12White House taps Lew for budget office - Jul-13In the past few days polls have shown Republican challengers taking the lead over previously safe Democratic incumbents, such as Barbara Boxer in California and Russ Feingold in Wisconsin. Indeed, given the uniformly negative direction in the numbers, it is now quite possible the Republicans could win the Senate seats formerly held by both President Obama in Illinois, and Joe Biden, vice-president, in Delaware.

Add to that the continuing woes of Harry Reid, the Senate Democratic majority leader, in Nevada, where the Republican party’s recent nomination of Sharron Angle, a far-right and highly eccentric Tea Party supporter, appear to have had no positive effect on Mr Reid’s prospects, and the Grand Old party has a good shot at taking control of both houses of Congress. Worse for Mr Obama, political scientists say that at this stage in the calendar, there is almost nothing he can do about it.

“If you ask me where the silver lining is for President Obama, I have to say I cannot see one,” says Bill Galston, a former Clinton official, who has been predicting for months the Democrats could lose the House. “Just as BP’s failure to cap the well has been so damaging, Obama’s failure to cap unemployment will be his undoing. There is nothing he can do to affect the jobless rate before November.”

see more :
http://www.ft.com/cms/s/0/434315b2-8ea6-11df-8a67-00144feab49a.html

“Spain’s downgrade just adds to more uncertainty,”

U.S. Stocks, Oil, Euro Tumble; Dow Ends Worst May Since 1940

May 28 (Bloomberg) -- U.S. stocks slid, capping the worst May for the Dow Jones Industrial Average since 1940, while the euro slumped and Treasuries rose as a downgrade of Spain’s debt rating and escalating tensions on the Korean peninsula triggered a flight from riskier assets.

http://www.bloomberg.com/apps/news?pid=20601087&sid=apgUzNgFGKLA

The Dow tumbled 122.36 points, or 1.2 percent, to 10,136.63 at 4 p.m. in New York and lost 7.9 percent this month. The Standard & Poor’s 500 Index sank 1.2 percent to 1,089.41, led by financial shares on the Spanish downgrade and energy companies after U.S. President Barack Obama extended a moratorium on new deep-water drilling. Oil erased gains after rallying as much as 1.6 percent to more than $75 a barrel. Ten-year Treasury yields decreased 7 basis points to 3.3 percent. The euro slipped 0.7 percent to $1.2273.

Equities and commodities extended losses after Fitch Ratings stripped Spain of the AAA rating it’s held since 2003, saying the nation’s economic growth will slow as it attempts to cut its debts. Earlier losses followed disappointing U.S. economic data and a North Korean general’s warning of “all-out war” if any accidental clashes with South Korea break out.

“Spain’s downgrade just adds to more uncertainty,” said Quincy Krosby, chief market strategist for Newark, New Jersey- based Prudential Financial Inc., which oversees about $667 billion. “There are too many geopolitical events. We have a three-day weekend in the U.S., and traders will definitely want to lighten their books.”

‘All-Out War’

Losses in U.S. stocks widened earlier after North Korean Major General Pak Rim Su disputed the results of the international investigation that found his nation sank a South Korean warship. “Any accidental clash that may break out in the waters of the West Sea of Korea or in areas along the Demilitarized Zone will lead to all-out war,” he said, according to North Korea’s official news organization.

http://www.bloomberg.com/apps/news?pid=20601087&sid=apgUzNgFGKLA

The government’s finances have been “substantially worsened by the credit crisis, recession, and government spending to address these shocks,”

Moody’s Reiterates U.S. Spending Risks Credit Rating (Update1)

By Mary Childs

http://www.bloomberg.com/apps/news?pid=20601087&sid=az1YD_O3PXz4

May 25 (Bloomberg) -- The U.S. government’s Aaa bond rating will come under pressure in the future unless additional measures are taken to reduce projected record budget deficits, according to Moody’s Investors Service Inc.

The U.S. retains its top rating for now because of a “high degree of economic and institutional strength,” the New York- based ratings company said in a statement today that was little changed from a credit opinion released in February. The outlook is stable, the statement said.

The government’s finances have been “substantially worsened by the credit crisis, recession, and government spending to address these shocks,” Moody’s analysts lead by Steven A. Hess wrote. “The ratios of general government debt to GDP and to revenue are deteriorating sharply, and after the crisis they are likely to be higher than the ratios of other Aaa-rated countries.”

Debt to revenue has more than doubled over the past three years and is now over 400 percent, which could lead to “potential stress” on finances, the report said.

“This whole financial crisis in Europe has actually benefitted the U.S. government in its access to finance,” Hess said in a telephone interview. “The U.S. Treasury market has become once again, as it was during the recent financial crisis globally, the safe haven, and therefore lots of money flows into the U.S. Treasury market and that is a very positive.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=az1YD_O3PXz4

OBAMA'S ODD 17-MINUTE, 2,500-WORD RESPONSE TO WOMAN'S SIMPLE CLAIM OF BEING 'OVER-TAXED'...

Obama's 17-minute, 2,500-word response to woman's claim of being 'over-taxed'
by Anne E. Kornblut

http://voices.washingtonpost.com/44/2010/04/obamas-17-minute-2500-word-res.html

CHARLOTTE - Even by President Obama's loquacious standards, an answer he gave here on health care Friday was a doozy.


Toward the end of a question-and-answer session with workers at an advanced battery technology manufacturer, a woman named Doris stood to ask the president whether it was a "wise decision to add more taxes to us with the health care" package.

"We are over-taxed as it is," Doris said bluntly.

Obama started out feisty. "Well, let's talk about that, because this is an area where there's been just a whole lot of misinformation, and I'm going to have to work hard over the next several months to clean up a lot of the misapprehensions that people have," the president said.

He then spent the next 17 minutes and 12 seconds lulling the crowd into a daze. His discursive answer - more than 2,500 words long -- wandered from topic to topic, including commentary on the deficit, pay-as-you-go rules passed by Congress, Congressional Budget Office reports on Medicare waste, COBRA coverage, the Recovery Act and Federal Medical Assistance Percentages (he referred to this last item by its inside-the-Beltway name, "F-Map"). He talked about the notion of eliminating foreign aid (not worth it, he said). He invoked Warren Buffett, earmarks and the payroll tax that funds Medicare (referring to it, in fluent Washington lingo, as "FICA").

Always fond of lists, Obama ticked off his approach to health care -- twice. "Number one is that we are the only -- we have been, up until last week, the only advanced country that allows 50 million of its citizens to not have any health insurance," he said.

A few minutes later he got to the next point, which seemed awfully similar to the first. "Number two, you don't know who might end up being in that situation," he said, then carried on explaining further still.

"Point number three is that the way insurance companies have been operating, even if you've got health insurance you don't always know what you got, because what has been increasingly the practice is that if you're not lucky enough to work for a big company that is a big pool, that essentially is almost a self-insurer, then what's happening is, is you're going out on the marketplace, you may be buying insurance, you think you're covered, but then when you get sick they decide to drop the insurance right when you need it," Obama continued, winding on with the answer.

Halfway through, an audience member on the riser yawned.

But Obama wasn't finished. He had a "final point," before starting again with another list -- of three points.

"What we said is, number one, we'll have the basic principle that everybody gets coverage," he said, before launching into the next two points, for a grand total of seven.

His wandering approach might not matter if Obama weren't being billed as the chief salesman of the health-care overhaul. Public opinion on the bill remains divided, and Democratic officials are planning to send Obama into the country to persuade wary citizens that it will work for them in the long run.

It was not evident that he changed any minds at Friday's event. The audience sat politely, but people in the back of the room began to wander off.

Even Obama seemed to recognize that he had gone on too long. He apologized -- in keeping with the spirit of the moment, not once, but twice. "Boy, that was a long answer. I'm sorry," he said, drawing nervous laughter that sounded somewhat like relief as he wrapped up.

But, he said: "I hope I answered your question."

http://voices.washingtonpost.com/44/2010/04/obamas-17-minute-2500-word-res.html

“bond vigilantes” : Supply fears start to hit Treasuries

Supply fears start to hit Treasuries
By Michael Mackenzie in New York and David Oakley in London

http://www.ft.com/cms/s/0/c51fbbce-3908-11df-8970-00144feabdc0.html

Published: March 26 2010 19:18 | Last updated: March 26 2010 19:18

The bond vigilantes are finally flexing their muscles. A long period of stability for the US government bond market showed signs of cracking this week as a lack of investor appetite for new debt sent the benchmark 10-year yield to its highest level since last June.

For more than a year, analysts have been warning that record sized debt sales by the US Treasury were at odds with a 10-year yield sitting comfortably below 4 per cent. This week, the yield on 10-year notes jumped from 3.65 per cent to a peak of 3.92 per cent on Thursday. On Friday it was 3.87 per cent.

Falling inflation, rising unemployment, the housing market slump, the Federal Reserve’s policies of a near zero overnight borrowing rate and its purchase of up to $1,700bn in bonds have all helped keep Treasury yields near historic lows.

But this week the mood shifted as yields for $118bn of new US debt were much higher than forecast, sparking overall selling of Treasuries. Sentiment also deteriorated in the UK bond market after the government’s budget ahead of a general election expected in May failed to resolve doubts over future spending and debt reduction.

The term “bond vigilantes” was coined in the 1980s when bond investors pushed up long-term yields to force central banks into taking action to curb inflation. This time, bond investors are less worried about inflation: they are fretting about huge fiscal deficits and the looming bond supply needed to finance them.

“Everyone thought we would see rising rates due to higher inflation, but it appears the bond vigilantes are demanding a higher real rate due to concerns about Treasury issuance,” says George Goncalves, head of fixed income strategy at Nomura Securities.

http://www.ft.com/cms/s/0/c51fbbce-3908-11df-8970-00144feabdc0.html

Welcome to Socialism Unemployment “remain elevated for an extended period,”

Obama Aides See ‘Extended Period’ of Unemployment (Update1)

By Rebecca Christie and Mike Dorning

http://www.bloomberg.com/apps/news?pid=20601087&sid=aXaMufrB.FA0

March 16 (Bloomberg) -- U.S. employers won’t hire enough workers this year to lower the jobless rate much below the level of 9.7 percent reached in February, three Obama administration economic officials said today.

The proportion of Americans who can’t find work is likely to “remain elevated for an extended period,” Treasury Secretary Timothy F. Geithner, White House budget director Peter Orszag and Christina Romer, chairman of the Council of Economic Advisers, said in a joint statement. The officials said unemployment may even rise “slightly” over the next few months as discouraged workers start job-hunting again.

“We do not expect further declines in unemployment this year,” the officials said in testimony prepared for the House Appropriations Committee. They predicted the economy would add about 100,000 jobs a month on average -- not enough to bring the jobless rate down substantially.

Today’s projections are in line with the 10 percent average unemployment forecast for this year in last month’s budget plan. Christopher Rupkey, chief financial economist at Bank of Tokyo Mitsubishi UFJ Ltd. in New York, said the administration’s language risks damping expectations for a recovery.

“They need to work on the message, and right now the message is that there is not a lot to be hopeful about,” Rupkey said. “Warning about a slow jobless recovery can help make it a reality.”

see more:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aXaMufrB.FA0

CBO: Budget Deficit a post-World War II record at 10.3 percent of the overall economy

National debt to be higher than White House forecast, CBO says

By Lori Montgomery
Washington Post Staff Writer
Saturday, March 6, 2010

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/05/AR2010030502974.html

President Obama's proposed budget would add more than $9.7 trillion to the national debt over the next decade, congressional budget analysts said Friday. Proposed tax cuts for the middle class account for nearly a third of that shortfall.

The 10-year outlook released by the nonpartisan Congressional Budget Office is somewhat gloomier than White House projections, which found that Obama's budget request would produce deficits that would add about $8.5 trillion to the national debt by 2020.

The CBO and the White House are in relative agreement about the short-term budget picture, with both predicting a deficit of about $1.5 trillion this year -- a post-World War II record at 10.3 percent of the overall economy -- and $1.3 trillion in 2011. But the CBO is considerably less optimistic about future years, predicting that deficits would never fall below 4 percent of the economy under Obama's policies and would begin to grow rapidly after 2015.

Deficits of that magnitude would force the Treasury to continue borrowing at prodigious rates, sending the national debt soaring to 90 percent of the economy by 2020, the CBO said. Interest payments on the debt would also skyrocket by $800 billion over the same period.

http://www.washingtonpost.com/wp-dyn/content/article/2010/03/05/AR2010030502974.html

California is a greater risk than Greece, warns JP Morgan chief

California is a greater risk than Greece, warns JP Morgan chief
Jamie Dimon, chairman of JP Morgan Chase has warned American investors should be more worried about the risk of default of the state of California than of Greece's current debt woes.

By James Quinn, US Business Editor in New York

Mr Dimon told investors at the Wall Street bank's annual meeting that "there could be contagion" if a state the size of California, the biggest of the United States, had problems making debt repayments. "Greece itself would not be an issue for this company, nor would any other country," said Mr Dimon. "We don't really foresee the European Union coming apart." The senior banker said that JP Morgan Chase and other US rivals are largely immune from the European debt crisis, as the risks have largely been hedged.

California however poses more of a risk, given the state's $20bn (£13.1bn) budget deficit, which Governor Arnold Schwarzenegger is desperately trying to reduce.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7326772/California-is-a-greater-risk-than-Greece-warns-JP-Morgan-chief.html

Unemployment Rate surges to 9.8 % as Obama’s stimulus package is pronounced failure

The Labor Department said the unemployment rate was the highest since June 1983 and payrolls have now dropped for 21 consecutive months.U.S. employers continue to cut a jobs in September, ballooning the unemployment rate to 9.8 percent, raising fears that the weak labor market is continuing to undermine the economy.

It seems obvious now that the government lead stimulosus package has been a complete and utter failure. Businesses continue to postpone key decisions while congress and the president debate ever higher taxes for health care ,and cap and trade . It seems no one wants to make a decision when the air of uncertainty is so heavy.

Both consumers and business face the specter of significantly higher taxes, higher energy costs, more regulation ,higher healthcare cost and significantly lower demand as the US Government continues to expand and control ever increasing pieces of the economy.

Hair Care Bomber and Breaking the Buck !

Nothing could be more symbolic for the systematic failure of the policies of Barrack Obama than the continued talk by global leaders of removing the Dollar as the worlds reserve currency . An explosion of US Debt ,a declining economy ,no US job growth ,falling real estate values and an enormous growth in the size and scope of the US Government has lead to a continued decline in the value of the dollar and a suspicion the the US Government's backing is no longer worth very much.

The G20 lead by Beijing has begun to call for a new global currency as an alternative to the US dollar as the US deficit rocketed. The White House it self is estimates US Debt could reach nine trillion dollars over a decade.

The inability of the 70's Generation to offer any intelligent leadership has created a climate of catastrophic leadership failure on all levels. Not since the Carter Administration has the US global position been so weakened . It appears to be only a matter of time before events take a turn for the worse . This weeks terror threat and multiple arrests triggered by the 'hair care" bomber seem to be a sign of things to come. The empty talk may go well with the pro big government US media and rambling talk show hosts but does little to solve to days pressing problems.

On this blog I have long warned that the philosophy of the 70's Generation is the philosophy of failure. I have attempted several times to online what I see as the coming crisis. The dollar is now key . A collapse will signal the beginning of the long term demise of the US economy and perhaps the demise of freedom it self.

Quote of the Day............................

"Giving away other peoples money does not make you generous it makes you a parasite"

"no good deed goes unpunished"

In the words of an old wall street sage, "no good deed goes unpunished" and seems bankers and auto companies have found out the hard way. The big banks Faustian deal with the government has not gone the way they had planned and now perhaps way too late there is an attempt to undue the damage.Auto companies tried but failed to stop their demise, for everyone except the UAW fell short and their attempts to save them selves.

With the 1970's ideology of failure taking hold ,the government appropriately reaches for someone with no auto experience to run an auto company but if you look at the level of gross incompetence of guys in Washington with one failure after the next stacking up it may not make any difference anyway. These are the same guys who want to tell you how much money you can make . I do have to laugh when even the administrations full blow attempt to destroy the US economy has in it self met failure, failing to fail sorta speak.

And this is where we sit only four months in ,huge deficits .increased taxation ,heavy regulation, zooming oil prices and absolutely no job creation what so ever! No administration not even Jimmy Carter failed so massively so quickly !

dare I say GO OBAMA ,keep on keeping on

Is Obama's Bear Market ending or is it just a case of "You Cant Fall Off the floor?"

Increased volume and a continued move up ward suggest both the worst is over and the end is already in site for Obama's socialistic agenda . I would like to see the market move to over 9000 on the DOW to confirm . Remember the market always anticipates future economic activity and it seems the failures of the last 3 months appear to be heading for an end or is it just as some would suggest you cant fall off the floor ?

Failure as an Ideology

The 70's generational worship of FAILURE as an ideology can only lead to crisis and chaos.Recent polls show only 53% of Americans now believe that Capitalism and freedom is better than Socialism and enslavement. That means the 47% of the population now think its Ok for people like New York's Mayor Mike Bloomberg , to tell them what to eat ,drink,smoke, when to sleep and where to go dancing. Some states like tech driven California is looking to BAN large flat screen TV's ,brilliant ! Clearly this is not an atmosphere for leadership

Seems Worshiping of FAILURE has become the new social disease where the power of envy will drive even the most well meaning people to shot the self's in the foot. What amazes me is how many people seem to buying the fantasy's about the Obama administration. Despite the massive tax increases ,unprecedented national debt and despite the massive increase in unemployment many are still blinded by the phony mainstream media Orwellian fantasy of big brother.

Market Up on Obama's Failure to make lasting changes ?

So Obama turns to private enterprise to save the sinking financial ship.The Geitner plan depends on private investors buying up the segregated toxic assets after the treasury goes for the no money down strategy and picks up the dead wood off the banks books .But Wait aren't these the same investors that are saddled with the toxic junk now? So the real story is tax payer gives private investors a better price.There is more private investors better get a pre-nup from the administration which seems to have a new policy inactive every minute and depending which way the wind blows can turn you from hero to target in one media cycle.

On thing is clear about the presidents recent campaign stop on jay Leno ,the white house dog is getting a more serious vetting than the Secretary of the treasury . Obama seems more in campaign mode than presidential mode but I am not sure even with all the hero worship from the mainstream media or stone age media is working.

Congress on the other hand looks to reward the mainstream media for there support with a nationalization of news papers plan,ah to work once again for the fuhrer !

This week Obama got some breaks with housing and durable goods orders posting upside surprises and the market continued its upside rally. Investors continue to wonder was this the bottom ? The sure fire wall street answer is when people stop asking if its the bottom it is the bottom . However given the significant down turn in the market since the election of Obama and his socialist leaning became more apparent the market has taken a perspicuous drop ,so we be infor a very vigorous Bear Market rally in the offering .The other big plus is the Citibank signal giving investors an "its over" cheer .

Some traders feel the markets strenght signals the inability of Obama to create lasting change toward socialism and that as in the past the 80's generation will reject and change everything the 70's generation tries to put in place . This last explanation seems to square better with Obama's sinking popularity and the lefts continued isolation from middle class Americans with their tax every thing that moves and any body that works policy .

let the kids Dance !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

So Mayor Mike says its OK to dance in NYC again and as the word spread that the repressive dance ban in the city was about to end the market responded with a bit of a dance of its own ! Putting together back to back wins for investors. While some licked their wounds from the recent market turmoil other expressed optimism that toilet paper will continue to have strong sales in the current market environment.

Crowds filled the down town underground club scene and an excitement in the air that seemed to spill out and into the streets and perhaps into the hearts and heads of investors . Perhaps this is a sign of things to come and perhaps that the next generation that is waiting in the wings with new ideas and a solve the problem get it done attitude unlike the down trodden 70’s generation is starting to feel its own.

Perhaps we have reached the depths of financial and sub prime despair and banks have finally told us what is really on their minds and on their balance sheets . Better yet perhaps the solutions will be reached despite the best intentions of the political class and the worlds largest economy will once again create jobs by getting back into the energy business.

So look for more volatility till the end of the summer in to the middle of October . October 21 or so should see some kind of direction set and the playing of both sides of the fence the short and long should come to the end .