Is anyone surprised at the GDP drop?

posted at 11:15 am on October 30, 2008 by Ed Morrissey

The Commerce Department announced that the US economy shrank in the third quarter, in a revelation that should have surprised no one. The loss of 0.3% from the previous quarter signals the recession that everyone knew was coming, and it will likely be followed by at least two more quarters of decline:

A day after the Federal Reserve slashed a key interest rate to battle an economic downturn, the government reported Thursday the economy did shrink in the summer, sending the strongest signal yet that a recession may have already begun.

The Commerce Department reported that the gross domestic product, the broadest measure of economic health, fell at an annual rate of 0.3 percent in the July-September period, a significant slowdown after growth of 2.8 percent in the prior quarter.

The spring activity had been boosted by the $168 billion economic stimulus program, but the economy ran into a wall in the summer as the mass mailings of stimulus checks ended and consumer confidence was shaken by the upheavals on global markets. Consumer spending, which accounts for two-thirds of the economy, dropped by the largest amount in 28 years in the third quarter.

In fact, it appears to have surprised no one on Wall Street, where traders continue to show mild optimism as liquidity returns to the credit markets.  The GDP has less significance now than usual, as markets have already lost trillions in valuation after the collapse of the housing market and the mortgage-backed securities sold by Fannie Mae and Freddie Mac.  The loss of valuation has much more to do with the availability of credit, and the efforts of Treasury have lessened worries about that this week.

This morning, the markets appear to be acting rationally, even in the teeth of the GDP report and a slightly higher joblessness report than usual.  As of this writing, the Dow Jones is up slightly over 100 points, and almost all of the global markets have kept pace as well.  Only Switzerland has fallen off the pace, and that only slightly.  Investors appear to be returning to the markets this week as confidence in institutions continues to improve.

But we do face a recession, higher joblessness, and tough economic times for the entire world.  How do we successfully endure it and emerge stronger?  The Wall Street Journal notes that the next administration will have a lot to say about that, and so far it looks as if they’ll botch it:

Though it often doesn’t seem like it, the world is making progress against financial panic. Capital — public and private — is now flowing into the banking system, reducing the risk of runs or a crash. Though we’re heading into a recession, how deep the downturn becomes will depend on the policy choices our leaders make. …

The larger policy point is that it is a mistake to rely on the Fed and monetary policy to do too much. Mr. Bernanke’s main obligation is price stability. As we’ve seen too often this decade, the Fed gets itself and the economy in trouble when it attempts to use monetary policy to manage growth, or when it lets its monetary decisions be dictated by a lagging indicator like the jobless rate. The Fed needs to look at forward-looking price signals if it wants to avoid another asset bubble down the road.

And if our politicians want to avoid a deep recession, they have fiscal policy — specifically, the economy could now use a big, immediate and permanent cut in marginal tax rates. That would help to spur incentives to invest, as well as increase money velocity. We realize this policy mix isn’t popular among the Democrats who expect to inherit all federal power next week. They’re still proposing to raise taxes substantially amid a recession, and their only proposed stimulus is as much as $300 billion in new spending. As we say, the depth of the recession will depend on our policy choices.

I’ll boil it down to the essentials.  A vote for Democratic policy is a vote to extend the recession and make it worse.  Harry Reid, Nancy Pelosi, and Barack Obama want to impose higher taxes in the face of a recession as well as put obstacles in global trade.  That combination proved disastrous the last time it was used — by Herbert Hoover.


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But, but, it’s all about the “O”………

Dr.Cwac.Cwac on October 30, 2008 at 11:17 AM

I am surprised it didn’t happen sooner.

upinak on October 30, 2008 at 11:17 AM

But we do face a recession, higher joblessness, and tough economic times for the entire world. How do we successfully endure it and emerge stronger?

Bomb the sh!t out of some jihadis.

/sarc

Dr.Cwac.Cwac on October 30, 2008 at 11:18 AM

After months and months of the MSM stating we are in a recession when we were not, it has come true. If you wish something long enough, it usually comes to pass. Thanks MSM and Barney Frank, Chris Dodd, et. al.

carbon_footprint on October 30, 2008 at 11:18 AM

Markets are forward looking, so how is their recent tanking an “indictment of the past 8 years” as opposed to a forward discounting of likely investment landscape prospects?

aquaviva on October 30, 2008 at 11:18 AM

Ed,

where where the posts on the market this week when it gaine d 890pts? where were the headlines of the second best day for the day in history? Until our side start pushing good news at least as well as we highlight the bad news things will not change. Yes the GDP drop was seen by many including myself months ago when gas hit $4.00/gal. Yes a decrease in consumer spedning was also seen at the same time.

We should be blaring the good news and downplaying the bad news. Not blaring the bad news and downplying or no covering the good news.

unseen on October 30, 2008 at 11:20 AM

I’ll boil it down to the essentials. A vote for Democratic policy is a vote to extend the recession and make it worse. Harry Reid, Nancy Pelosi, and Barack Obama want to impose higher taxes in the face of a recession as well as put obstacles in global trade.

Coming soon to a neighborhood near you.

Dr.Cwac.Cwac on October 30, 2008 at 11:20 AM

Four words you will never hear from BHO or the Dems in Congress.
Tax cut for business.

The reality will set in some time in February. Buy gold.

FireBlogger on October 30, 2008 at 11:22 AM

Clinton would have gone down as the worst president in history without the dot.com boom. He kept projecting out the deficit and didn’t have a clue.

Bush rises to the occassion under huge circumstances and is considered a failure.

Life is a bitch sometimes.

tomas on October 30, 2008 at 11:24 AM

I think the only thing to correct the current economic situation is countless government programs and expanding spending.

/

cntrlfrk on October 30, 2008 at 11:25 AM

Buy gold.

FireBlogger on October 30, 2008 at 11:22 AM

gold is only good for inflationary events. Obama will bring deflation. gold will deflate along with everything else. Best thing to do during a deflationary events is too hoard cash.

unseen on October 30, 2008 at 11:25 AM

The Fed has totally botched this entire decade. Look at the chart today of the Fed funds rate and it’s ridiculous. The rate was a very reasonable, inflation-fighting 4% in 2000. After 9/11, the Fed dropped it precipitously to 1%, touching off an irrational boom and overinvestment in housing and mortgages. Then in 2004 the Fed just as suddenly and irrationally started ratcheting up the rate, guaranteeing that all those adjustable rate mortgages would start adjusting upward and the boom would turn into a bust. It got all the way up to 5% in 2006, making it impossible for millions to refinance their way out of those ARMs. Now it’s back down to 1%.

This is NO way to run a central bank. If the Fed had kept the Fed funds rate at a reasonable 3% or so throughout this decade, everything would have been fine.

rockmom on October 30, 2008 at 11:27 AM

The markets are also factoring in the steep drop in gas prices, which will act as a $200 billion economic stimulus in this quarter. Larry Kudlow has been all over this.

rockmom on October 30, 2008 at 11:28 AM

gold is only good for inflationary events. Obama will bring deflation. gold will deflate along with everything else. Best thing to do during a deflationary events is too hoard cash.

Are you kidding? Bernanke is inflating the heck out of the currency. They announced unlimited dollars for banks a few days back. Where do you think this 700billion and all the other capital injections are coming from? Lord knows, we aint borrowing it anymore. We’re just printing it.

lodge on October 30, 2008 at 11:30 AM

This is NO way to run a central bank. If the Fed had kept the Fed funds rate at a reasonable 3% or so throughout this decade, everything would have been fine.

rockmom on October 30, 2008 at 11:27 AM

Call it the God complex of all our leaders. The belief that they can overcomes human nature, see all the negative and positive consquences of their actions, that they alone know the proper way out of our problems.

unseen on October 30, 2008 at 11:30 AM

The reality will set in some time in February. Buy gold.

FireBlogger on October 30, 2008 at 11:22 AM

Great idea! Go from one bubble to another!

Tacitus_SGL on October 30, 2008 at 11:30 AM

The reality will set in some time in February. Buy gold.

FireBlogger on October 30, 2008 at 11:22 AM

That’s the dumbest thing you could possibly do. When the market does what Ed says it will in his Dolphins post, what will Obama do next? Of course he will move to seize gold assets a la Roosevelt 1933. Don’t think it can’t happen; it’s already happened once!

A 0.3% drop indicates that the marketplace is already anticipating Obama. Just wait until the 4th quarter stats come in if he wins. Talk about spreading the poverty around… the only change we can believe in will be the change left in our holey pockets.

flutejpl on October 30, 2008 at 11:35 AM

I’ll boil it down to the essentials. A vote for Democratic policy is a vote to extend the recession and make it worse. Harry Reid, Nancy Pelosi, and Barack Obama want to impose higher taxes in the face of a recession as well as put obstacles in global trade. That combination proved disastrous the last time it was used — by Herbert Hoover.

WHEN the economy tanks and if we have a *wingnuts* movement if it bottoms out badly enough we should resume the gold standard.

sven10077 on October 30, 2008 at 11:36 AM

Are you kidding? Bernanke is inflating the heck out of the currency. They announced unlimited dollars for banks a few days back. Where do you think this 700billion and all the other capital injections are coming from? Lord knows, we aint borrowing it anymore. We’re just printing it.

lodge on October 30, 2008 at 11:30 AM

Ok ;ool at it this way. The stock market has lost TRILLIONS that is deflationary, Homes have lost 20-50% of their vaules again deflationary. Gas prices are falling deflationary, income on savings are falling deflationary, Auto prices are falling deflationary.

The fact that the FED has to inject billions in new money tells you that we are in a deflationary event. One that we have not seen since 1932. The entiure depression was deflationary event.

The Fed and the gov are trying to stop this deflationary event by pumping money into the system. Will the money pumped in be more than the money in lost vaules of assets? Maybe but right now it isn’t enough and the deflationa continues. During an inflationary event buy stocks not gold.

Finally the price of gold over the last couple of weeks points to a deflatinary event. During one of the most intense economic times in our lifetimes the price of gold fell $200. If gold was a great investment for uncertain times it should be GOING UP not DOWN. Gold goes up during inflation.

We are not there yet. The Fed and the gov wants an inflationary event to occur to save our economy. When/if it does and the FEd does not pull the money out of the system then buy gold until than hoard cash.

unseen on October 30, 2008 at 11:36 AM

OT: Phil Berg rally at the Supreme Court today

Dr.Cwac.Cwac on October 30, 2008 at 11:37 AM

This is NO way to run a central bank. If the Fed had kept the Fed funds rate at a reasonable 3% or so throughout this decade, everything would have been fine.

rockmom on October 30, 2008 at 11:27 AM

*
*
Correct.

marklmail on October 30, 2008 at 11:37 AM

After months and months of the MSM stating we are in a recession when we were not, it has come true. If you wish something long enough, it usually comes to pass. Thanks MSM and Barney Frank, Chris Dodd, et. al.

carbon_footprint on October 30, 2008 at 11:18 AM

The Left got what they wanted – a manipulated economic collapse just in time for the election. How convenient. And the Dow is being manipulated on a daily basis, depending on what’s happening with the campaign. Let’s see. On Friday, it will lose points. On Monday, where we’ve been seeing a bit of a rise, this time it will probably lose more points. Tuesday will either drop again or just maintain Monday’s low. If Obama wins, the market will soar.

Call me cynical.

Oh, and by the way, the spin has already begun and Frank, Dodd, and the rest of the Democrats responsible for this mess will get off scott free.

Connie on October 30, 2008 at 11:38 AM

Connie on October 30, 2008 at 11:38 AM

very true. and if the new messiah becomes president, any downturn will be blamed upon republicans, whites, christians, KULAKS…you get the picture…

right4life on October 30, 2008 at 11:40 AM

ROTFLMAO

Isn’t it ironic that the very ones that have worked so hard for a depression it’s hitting them in the butt?

I mean the MSM LOL

The Democrats and the MSM have worked tirelessly for 7 1/2 years for a depression. HMMM seems like they hurt the most, the very same people that will vote Democratic.

Under the “O” Dumbo regieme the poor will get poorer.

If gold is going up why are the people that have it are selling it????????

Rick007 on October 30, 2008 at 11:41 AM

We’re not actually in a recession yet. For those in Rio Linda, it’s two consecutive quarters of a reduction in GDP. So we won’t know we’re in a statistical recession until the 4th quarter numbers come out.

That being said, with the MSM saying we’re in a recession for the past year, it may become a self fulfilling prophecy.

NoFanofLibs on October 30, 2008 at 11:42 AM

The real question is how long corrupt and incompetent Democrats will be able to use the “Bush’s fault” excuse.

These clowns have “led” Congress for two years and they’re still using it.

Obama will be using it to excuse his complete and utter incompetence up to and after he’s impeached, if he gets elected.

NoDonkey on October 30, 2008 at 11:43 AM

If gold is going up why are the people that have it are selling it????????

Rick007 on October 30, 2008 at 11:41 AM

last time we elected a Messiah on the scale Bambi wants with this rhetoric the guy managed to get almost all the Gold in the nation at the threat of gunpoint.

sven10077 on October 30, 2008 at 11:43 AM

I’d hook Pelisi and Reid to Obama in EVERY AD.

marklmail on October 30, 2008 at 11:44 AM

There ya go McCain. Cut marginal tax rates and swarm your opponent with his own economic idiocy.

You win. Will you do it???

TheHat on October 30, 2008 at 11:44 AM

very true. and if the new messiah becomes president, any downturn will be blamed upon republicans, whites, christians, KULAKS…you get the picture…

right4life on October 30, 2008 at 11:40 AM

so do you think that he’ll try enforced dportation to help “economic growth of the Chihuahuan Desert” first or just go straight to the Gulags in Death Valley?

sven10077 on October 30, 2008 at 11:47 AM

But, but, it’s all about the “O”………

Dr.Cwac.Cwac on October 30, 2008 at 11:17 AM

I guess the New Kids on the Block can do the party……OH, OH, OH, OH, OH, OH, Socialist Stuff.

VikingGoneWild on October 30, 2008 at 11:47 AM

That being said, with the MSM saying we’re in a recession for the past year, it may become a self fulfilling prophecy.

NoFanofLibs on October 30, 2008 at 11:42 AM

Which of course will allow the Left to spin that Obama inherited the “failed economic policies of George Bush.” They will rely on the media to maintain that meme to give Obama a path to 2012.

Connie on October 30, 2008 at 11:52 AM

Oh thank God, Fox is finally leaving Obama’s speech. I can’t bear listening to his voice anymore.

Connie on October 30, 2008 at 11:54 AM

The Fed has totally botched this entire decade. Look at the chart today of the Fed funds rate and it’s ridiculous. The rate was a very reasonable, inflation-fighting 4% in 2000. After 9/11, the Fed dropped it precipitously to 1%, touching off an irrational boom and overinvestment in housing and mortgages. Then in 2004 the Fed just as suddenly and irrationally started ratcheting up the rate, guaranteeing that all those adjustable rate mortgages would start adjusting upward and the boom would turn into a bust. It got all the way up to 5% in 2006, making it impossible for millions to refinance their way out of those ARMs. Now it’s back down to 1%.

Don’t blame the Fed! After 9/11, something needed to be done to re-stimulate the economy after all air traffic was suspended for two weeks, and every company formerly in the World Trade Center had to re-locate and start over. About a year later came the Enron and WorldCom meltdown, and again things needed to be stimulated.

For every homeowner who foolishly borrowed using an ARM, there are probably 10 or 20 homeowners who re-financed in 2002-04 to low-interest FIXED-RATE

Steve Z on October 30, 2008 at 11:55 AM

Harry Reid, Nancy Pelosi, and Barack Obama want to impose higher taxes in the face of a recession as well as put obstacles in global trade.

Obama just said “if I’m elected President, I will go through every entitlement line by line and eliminate those entitlements that are not working”.

GET OUT THE HISTORY BOOKS AND TRY TO FIND THE LAST TIME A DEMOCRATIC PRESIDENT ELIMINATED AN ENTITLEMENT!

Rovin on October 30, 2008 at 11:55 AM

Nope: the recession is a phony

The Democrats have wanted a recession, have jawboned a recession, and now we have the makings of one. Gee, what a surprise.

In reality, however… the credit meltdown has been a disaster long in the making. That it happened just at the perfect time for Democrats is probably a coincidence.

Meanwhile the rest of the economy is strong, and a correction, however severe, in the housing market won’t derail it.

What could derail it is a bad election result: if the Democrats win we’ll get higher taxes, more trade restrictions, and reduced spending on economic drivers like defence. That’s a disaster waiting to happen.

But if enough Republicans win, particular McCain/Palin, none of these things will happen. We’ll see riots in Chicago, Denver, Washington, etc but fires are final consumption too. :)

Meanwhile the other big driver: oil prices, will stay low because the higher prices were never justified to begin with – and that means the economy will settle down, people will keep their jobs, and life will go on without a recession.

Paul Murphy on October 30, 2008 at 11:57 AM

(continued) mortgages, who are NOT fretting the housing market right now. They’ll stay in their homes, make their low payments, and wait for a better time to sell.

Don’t blame the Fed–blame the Fred(die Mac and Fannie Mae). Now who was pushing them to make bad loans? Chris Dodd and Barney Frank. Oh, sorry, thou shalt not speak ill of Democrats. My bad.

Steve Z on October 30, 2008 at 11:58 AM

That combination proved disastrous the last time it was used — by Herbert Hoover.

An interesting quote from Hoover:

“It is a paradox that every dictator has climbed to power on the ladder of free speech. Immediately on attaining power each dictator has suppressed all free speech except his own.”

Kevin in Washington State on October 30, 2008 at 11:59 AM

Dumb, Dumber, and Pelosi!!!

(and if you disagree, you’re racist!!!)

/snark>

landlines on October 30, 2008 at 11:59 AM

“We inherited this mess,” -Obamunist spokesthing, June, AD 2011.

Akzed on October 30, 2008 at 12:01 PM

“It is a paradox that every dictator has climbed to power on the ladder of free speech. Immediately on attaining power each dictator has suppressed all free speech except his own.” Kevin in Washington State on October 30, 2008 at 11:59 AM

This is hardly paradoxical. It’s to be expected. The sine qua non of tyranny is intolerance of criticism.

Akzed on October 30, 2008 at 12:04 PM

Finally the price of gold over the last couple of weeks points to a deflatinary event. During one of the most intense economic times in our lifetimes the price of gold fell $200. If gold was a great investment for uncertain times it should be GOING UP not DOWN. Gold goes up during inflation.

Gold is going down because the dollar is going up. This dollar rally isn’t going to last though. Look at the fundamentals. Why would the dollar rally when the Fed is flooding the system with dollars? This rally is fake – maybe from deleveraging and hedge funds having to meet margin calls.

lodge on October 30, 2008 at 12:11 PM

Talk about spreading the wealth….

Great vid from TeachFreedom

http://www.youtube.com/watch?v=moTAI4VDIJw

Well worth the 8+ minutes.

How much do we really understand the Reagan Revolution of the 1980s? The clash of worldviews between Senators John McCain and Barack Obama have brought to light the nearly century long struggle between those who trust ever-increasing state power and those who seek to limit government, to maintain free markets, individual liberties, and the “under God:” traditions of our country. The second Reagan revolution is now underway.

Dr.Cwac.Cwac on October 30, 2008 at 12:13 PM

Are you kidding? Bernanke is inflating the heck out of the currency. They announced unlimited dollars for banks a few days back. Where do you think this 700billion and all the other capital injections are coming from? Lord knows, we aint borrowing it anymore. We’re just printing it.

lodge on October 30, 2008 at 11:30 AM

Yeah, but inflation is a measure of all of the money and credit in the marketplace. At the very most, Bernanke’s move, should it cause the markets to kill the bears, will make for a flat rate of inflation. With the trillions of dollars that have evaporated this month, I have to agree with other commenters that we’re in a deflationary period right now. When bad loans are written off, that is negative on the credit side. When house prices drop, that’s negative on the credit side. When credit isn’t offered, all these other things happen, and other current loans are repaid, overall credit drops. If the current cycle isn’t deflationary, I don’t know what is.

As for the gas price, well, all the news can’t be bad, I suppose. That plus Bernanke’s printing press will make for weaker deflation, but it’ll still be deflation. In such a time, a stash of cash rules; weak interest beats negative growth anyday. When the market really looks to be turning around (and this isn’t it), 0-4% will once again be the realm of fools.

flutejpl on October 30, 2008 at 12:15 PM

Nope: the recession is a phony
– Paul Murphy on October 30, 2008 at 11:57 AM

I agree, I think the economy was in the pool.

-FatOldGuy

Fogpig on October 30, 2008 at 12:19 PM

“Everyone knew the recession was coming”? Funny, that’s not what Don Surber said in January. Or Don Blumer from NewBusters, in July. As little as six months ago, the conservative blogosphere was in full “dude, where’s my recession?” mode – back then, everyone blamed stories of a bad economy purely on the media and refused to credit any analyst who said that things were in bad shape.

Funny how that worked out, eh? Apparently, denial is a lousy economic tactic.

So… explain to me again how the people who thought “the fundamentals of our economy are strong”…. not just within the past month, but all this year… are to be trusted to set things right?

Mal Carne on October 30, 2008 at 12:46 PM

We’re going to get slammed very hard again soon no matter who is President. A big problem now is world shipping is almost grinding to a halt. The other problem later related to the liquidity blowback with inflation after the deflation sets in is not just the growing supply of money and credit but the high velocity which will serve as a multiplier effect. The value of the dollar is going to come back down to earth very hard and fast when we’re still in a deep recession and cause all sorts of problems. We haven’t even started to see the derivatives problems bite us. That’s going to make us wish we were having only another subprime-Alt-A crisis. The combined problem to come will be too complex for any human or computer to solve in it’s current form. It can’t be modeled because there are far to many unknown variables and high-volatility coupled moving parts. We can barely understand or hold things together now.

A US default or Weimar Germany scenario is entirely possible still unless that Bretton Woods II summit pulls a golden rabbit out of the empty monetary hat. That’s why it’s not a good idea to say we should just elect Obama and let him have this ugly presidential term and economic default/collapse blame. There’s nothing a Marxist radical acolyte wants more than to have power during that sort of crisis. It’s his lifelong dream to be able to “rescue” the failed capitalist system in America by blaming capitalism and replacing it with his pet political and economic system. He also gets to blame the last guy in office for everything that happened before and for all the new problems of transitioning.

econavenger on October 30, 2008 at 12:57 PM

Is anyone surprised at the GDP drop?

How about everyone on the right who described the economy as ‘fundamentally sound’ and didn’t understand the scope of the financial crisis 6 or even 3 months ago?

Obama has the support of Warren Buffet for the same reasons that Clinton’s policies had the support of Alan Greenspan in 1992. Despite Republican claims that without lower capital gains taxes in 1992 the economy would enter a massive recession, Clinton managed an ecomomic turnaround based on policies intended to lower long term interest rates through actions that instilled confidence in the bond and other markets.

Either candidate faces a nightmare scenario when entering the White House in 2009. Although Cheney famously claimed that “deficits don’t matter” several years ago, Americans are about to find out why right wing policies are not only wrong, but dangerous to the country. Massive tax cuts for the wealthist didn’t create an ‘economic miracle’ of growth over the last 6 years. Now that the housing bubble has popped we see that those tax cuts only lead to a huge re-distribution of wealth from the middle class to the wealthiest Americans.

bayam on October 30, 2008 at 12:59 PM

Mal Carne

Joe the Plumber’ll fix it.

Grow Fins on October 30, 2008 at 12:59 PM

sending the strongest signal yet that a recession may have already begun.

Almost every economist out there agrees that a recession is 2 quarters of negative GDP, but even this one shows a 0.3% increase.

JeffinSac on October 30, 2008 at 1:01 PM

To be honest, I thought it would be worse than this.

Terrye on October 30, 2008 at 1:05 PM

bayam:

Are you dense? I heard today that the unemployment rate in California was 7.7%, the highest in 12 years. But then again, 12 years ago was the age of Clinton when everyone was happy go lucky and there was no war or recession blah blah blah.

In fact when Clinton was leaving office a recession was on the way. There is nothing unusual about recessions. We get them periodically. That does not mean that the economy is not fundamentally sound.

Terrye on October 30, 2008 at 1:08 PM

Ed! You’re sly, man!
“Pelosivilles, Harryvilles, and Obamavilles in the upcoming Hoover Administration.”
I get it, and wonder why no one else caught that:
“Hoover Administration. As in suck up all the money!”

I know-Herbert Hoover-but I think you snuck one in.
Lighten up, people-it’s only an election!

Doug on October 30, 2008 at 1:14 PM

So… explain to me again how the people who thought “the fundamentals of our economy are strong”…. not just within the past month, but all this year… are to be trusted to set things right?

Mal Carne on October 30, 2008 at 12:46 PM

The economy is fundamentally strong if you consider the supply side. Our economy has produced a ten-months supply of housing, has filled shelves with food and flat-screen TV’s, and without having to fight wars over land and resources (no, Iraq is not about oil, every $65 will get you a barrel of oil, no weapons required).

When too many homes are built, a fundamentally strong economy dictates reallocation of resources. Put the saw down and send the lumber back to 84. That sucks for many people, but to go on building would not be good for the economy.

The demand side is problematic, but that’s WE the PEOPLE. When we go past spending what we make to serially maxing out credit cars, recharging those with HELOCs, not to mention having bought overpriced homes before we could afford them so not to be “priced out forever,” at some point credit is used up and the spending has to slow down. That means recession if growth goes negative. Fred reigns in spending and Mike loses his job. Mike does the same and Fred loses his. The economic engine will still forge on, but will adjust for smaller demand.

So, if getting a people who have exhausted their credit to spend even more is what’s needed to turn around this economy, why would you trust want anyone in government to “set things right?” And if setting things right is putting lying CEO’s in prison, will it also include putting your neighbor who lied about her income to buy her home in prison as well? Will Obama put those folks in jail or will he instead rescue both groups by “restructuring” mortgages to save banks and borrowers at everyone else’s expense?

shuzilla on October 30, 2008 at 1:41 PM

Sources: Sarkozy views Obama stance on Iran as ‘utterly immature’

French President Nicolas Sarkozy is very critical of U.S. presidential candidate Barack Obama’s positions on Iran, according to reports that have reached Israel’s government.

Sarkozy has made his criticisms only in closed forums in France. But according to a senior Israeli government source, the reports reaching Israel indicate that Sarkozy views the Democratic candidate’s stance on Iran as “utterly immature” and comprised of “formulations empty of all content.”

http://www.haaretz.com/hasen/spages/1031943.html

2008. The year The One (Barack Obama) … Lost.

Obamalies or Lies Obama Tells
http://www.nextgenerationcorp.com/NextGenBlog/?p=73

AdrianS on October 30, 2008 at 1:55 PM

An Obama administration actually represents another FDR administration http://www.flyatnight.com/?p=1131 and we shall see that only time has changed while the policies will continue to contrain growth and “fairness”

cacpa on October 30, 2008 at 2:18 PM

Look, we are talking about a minuscule drop that if continued for 12 months would amount to an annual 0.3% drop. Yeah, it is a drop but a 0.025% drop for the month. So basically the economy was flat. Not exactly flat, but for all practical purposes flat. This is NOTHING like the contractions seen during the Carter administration. We don’t have 12% unemployment, we don’t have 18% interest rates, we don’t have 15% inflation. People want to blow one flat quarter WAY out of proportion.

crosspatch on October 30, 2008 at 2:23 PM

So… explain to me again how the people who thought “the fundamentals of our economy are strong”…. not just within the past month, but all this year… are to be trusted to set things right?

Mal Carne on October 30, 2008 at 12:46 PM

Fox had been talking about the housing bubble for 2 years. We were waiting for the weakness to be exploited as a campaign tactic, but I don’t think even the Left realized what damage their interference would cause. The MSM tried to talk down the economy for well over a year and the talk down wasn’t working because unemployment was low and people were buying. Some of us, knowing that the Dems were losing Iraq as an election issue, tried to keep them from getting traction with the economy, and it was working.

Until someone pulled the trigger.

Connie on October 30, 2008 at 2:27 PM