There's a lot of uncertainty with the U.S. economy and a lot of its recovery hinges on some key policy decisions due from the federal government.
On CNBC's Nov. 2 "The Kudlow Report," CNBC host Maria Bartiromo discussed her interview with former Chairman of the Federal Reserve and Obama adviser Paul Volcker from the Global Financial Leadership Conference in Naples, Fla. One of the topics Bartiromo reported on from the conference was the possibility the Bush tax cuts would be allowed to expire, which she insisted is unlikely.
The White House is taking it upon itself to police the news media. The trend started of course with the Fox News Channel, but the administration has moved on to bash other organizations, most recently the Associated Press and car site Edmunds.com. It seems to believe that any criticism of its policies is worth attacking.
The White House claims, in the words of Valerie Jarret, that it will go after any organization that "spreads false news." But the attacks suggest that the administration will take on any outlet that challenges claims designed to further its agenda.
Edmunds calculated the number of cars purchased during the Cash for Clunkers program that would have been purchased without the rebates. The site determined that C4C had incentivized the purchases of only 125,000 automobiles, meaning taxpayers paid $24,000 per car purchase under the program.
The paper's headline at its report on Thursday's government announcement that the nation's Gross Domestic Product (GDP) came in at an annualized 3.5% after four consecutive quarters of decline was not only over the top. Its message went directly against an admonishment by an economist quoted in Paul Davidson's underlying report, which was to not "get carried away by the really strong number."
Many commentators, while gratified that GDP growth occurred, have cautioned that the growth was influenced heavily by government programs that either have already run their course with debatable long-term impact (e.g., Cash for Clunkers), or are probably not going to last much longer even if extended (e.g., the first-time homebuyers' credit), simply because the government is running trillion-dollar annual deficits and can't afford them.
Now that the Obama administration is attempting to take a victory lap on the U.S. economic recovery, claiming the $787-billion stimulus passed earlier this year was what did the trick, despite a cost of $160,000 per 'stimulus' job, as ABC's Jake Tapper pointed out, it has come at the cost of the U.S. dollar.
Since then, the stock market has rebounded nicely. The Dow Jones Industrial Average (DJIA) is off a March low of 6,547 points, even topping the 10,000-mark recently. But what has caused this nearly 50-percent jump? According to CNBC's Larry Kudlow - loose monetary policy by the Federal Reserve, with low interest rates, has made it possible for the markets to rise, with the 'loose' money going into the market.
"The funny thing is, Steven, it has gone into stocks - I mean the stock market guys ... there's no real multiplier for the economy, right?" Kudlow said on his Oct. 30 CNBC program. "But it has gone into stocks and the stock market crowd wants to see the Fed to keep pouring the money in no matter what happens to the U.S. dollar."
It would appear that the Apparatchik Press -- er, the Associated Press -- thinks that part of its job is to soften the impact of embarrassing admissions made by Obama administration members.
Take the wire service's Thursday afternoon AP report by Jim Kuhnhenn on Council of Economic Advisers' chair Christine Romer's observations about the stimulus package. Romer said (in AP's words) that "the government's economic stimulus spending has already had its biggest impact," and will (in Romer's words) "likely be contributing little to further growth by the middle of next year."
As you'll see shortly, AP's headline doesn't reflect what Romer said. Additionally, Kuhnhenn allowed Romer to mischaracterize the economy's performance in the second quarter without challenging it, and saved the big news -- yet another administration official admitting that unemployment will stay near double digit through the end of next year -- for his eighth paragraph.
Here's a graphic capture of Kuhnhenn's first eight paragraphs, posted for fair use and discussion purposes:
As I pointed out Monday night (at NewsBusters; at BizzyBlog), Associated Press reporter Martin Crutsinger, in his Saturday morning report on the federal government's full-year fiscal results, conveniently "forgot" about a major accounting change that enabled President Obama's Treasury Department to report a final "deficit" of "only" $1.417 trillion.
That's hundreds of billion of dollars lower than the $1.75 trillion expected in February. The change, which caused "investments" in financial institutions, General Motors, Chrysler, and other entities to be accounted for on a "net present value" (NPV) basis, had an initial impact of over $175 billion when first implemented. Crutsinger ignored the change, even though its implementation occurred after that February estimate.
Though the end of a fiscal year represents a perfect opportunity to extend readers' understanding of how our government (sort of) works, Crutsinger also did not tell readers that the reported "deficit" is nowhere near the amount of the increase in the national debt that occurred during the fiscal year. As of September 30, the national debt was $11.910 trillion, or $1.885 trillion higher than the national debt a year earlier. That means that the most recent year's "unreported deficit" was $468 billion.
One other area where Crutsinger erred was in his breezy opening paragraph assessment that the precipitous drop in cash receipts during the most recent fiscal year -- officially understated for a reason I will note shortly -- was entirely due to the recession:
A lefty magazine editor has come up with a list of brilliant solutions to the planet's purported climate change problem: make the recession worse, make goods more expensive, and restrict all intercontinental travel to blimps.
So said Emily Douglas, web editor for The Nation, who, when asked Wednesday how we could "reverse our culture of consumerism," replied immediately "make the recession worse."
She later claimed that her response was a bit "tongue-in-cheek," according to CNS News, but admitted that her magazine "never shies away from doomsday scenarios."
Quite a few, if anyone is keeping track. Now the Dow Jones Industrial Average (DJIA) has broken through the 10,000-point barrier. But that begs the question given the inevitable credit Obama will get from the media and other supporters for this rally, should former President George W. Bush get some of the credit if Obama is so willing to blame him for the collapse?
It's a question Neil Cavuto put to the test on his Oct. 14 Fox News "Your World" program speaking to Macro Portfolio Advisors Vice President Jim Lacamp.
It's an odd natural occurrence when you put MSNBC "Hardball" host Chris Matthews and CNBC "Mad Money" host Jim Cramer together, but when it happens they seem to draw some obvious conclusions - albeit nearly 10 months too late.
Here was a chance for Sen. John McCain, R-Ariz. to admit he was wrong, and to conclude publicly that government intervention in the private sector doesn't always result in the best of outcomes.
McCain appeared on CNN's Oct. 11 "State of the Union" in a pre-recorded interview and was asked by host John King if the lackluster recovery of the economy warranted more government intervention.
"The president has said he's considering new initiatives to help job creation," King said. "They passed one stimulus plan and most Republicans, including John McCain, have been pretty critical of this $787-billion stimulus passed early in the year. Should the President do more now through government spending, though tax incentives or should he wait because, as you have said many times, we have so much red ink, we can't afford much more?"
As if the Fannie Mae and Freddie Mac (Fan and Fred) crackups weren't bad enough, IBDeditorials.com noted on Thursday evening that another bad-mortgage shoe is about to drop. This time it's at the Federal Housing Authority (FHA).
First, let's revisit Fan and Fred to remind readers just how complete the disaster has been at these decades in the making Democratic crony-controlled entities.
A little-noticed CNNMoney.com item by Chris Isidore in late July told us what the original announced loss estimate had been a year earlier (bolds are mine throughout this post):
When Congress was debating the bailout of Fannie and Freddie last July (of 2008), the official estimate from the Congressional Budget Office was that a bailout would most likely cost taxpayers $25 billion, with only a 5% chance of the price tag reaching $100 billion between them.
Isidiore then noted that just one year later the loss estimate had doubled:
It isn't often that one can see two decades of history re-written in under ten minutes. But such was the occasion on this morning's episode of Morning Joe. Max Blumenthal, author of "Republican Gomorrah: Inside the Movement that Shattered the Party," spent his time on the show demonstrating the combined power of cognitive dissonance, wanton ignorance, and a willingness to re-write historical fact.
Let's take it in chronological order, shall we?
First, Blumenthal is asked to present the major thesis of his book:
Reviewing September's detailed sales results in the car business carried at the Wall Street Journal, three things stick out immediately:
The awful performance at General Motors -- down 45% from September 2008.
Chrysler's even worse performance -- down "only" 42% from September 2008, but a mind-boggling 61% from September 2007 (62,197 in 2009, 156,799 in 2007)
Ford's tiny decline of only 6% from a year ago, despite the end of the Cash For Clunkers program in August.
No other major maker had a year-over-year September decline that was even half of that seen at GM or Chrysler.
Yet the press, while beginning to acknowledge serious problems at the companies, both of which were first bailed out by the government and then taken through government-orchestrated, contract law-violating, UAW-favoring bankruptcies (GM discussed here, Chrysler here), still will not entertain the possibility, despite the evidence, that consumers are shunning them because of their bailed-out status and their heavy-handed tactics in bankruptcy.
What follows are excerpts from three reports that covered September's industry results.
As the Business & Media Institute's Julia Seymour previously reported, the September unemployment data just released by the Bureau of Labor Statistics revealed a larger than expected decline in non-farm payrolls.
Yet, as employers shed another 263,000 workers, the healthcare industry ADDED -- yes, ADDED!!! -- 19,000 employees.
As NewsBusters reported last month, the healthcare industry, despite dire warnings from Democrats and their media minions that it's in a crisis, continues to add to payrolls month after month during this recession.
Millionaire Michael Moore says capitalism is evil and that the entire system should be thrown out for one that is "democratic" and "fair."
That's the overarching message of Moore's new documentary, "Capitalism: A Love Story," which will be widely released Oct. 2. The film won two prizes at the Venice Film Festival and was lauded by critics there and at the Toronto Film Festival. Now Moore is being warmly greeting in softball interviews by television anchors and reporters - particularly on ABC.
ABC's "Nightline" ran an 8-minute long segment Sept. 22 interviewing Moore and showing clips of his film, an it received an additional five minutes on "Good Morning America" Sept. 23. ABC didn't include a single critic of Moore in those 13 minutes, and neither segment rebuked Moore for past lies in his movies.
The film has generated uncritical buzz among many other news outlets including MSNBC, The New York Times, Associated Press and "The Jay Leno Show." He is also scheduled to be a guest of "Larry King Live," "The Situation Room," and "The View" Sept. 23 and 24. Four networks, a wire service and three out of five major newspapers will have covered the movie in the span of a week.
Somebody really needs to find the Associated Press's Martin Crutsinger some OCD therapy. It seems that he has a not-magnificent obsession with the two major theaters of the War on Terror (yeah, I still call it that), and that he seemingly won't be able to conquer it without outside intervention.
In his report on August's federal budget deficit, the AP reporter continued to cite the wars in Iraq and Afghanistan as contributors to the increase in the federal budget deficit, when they are in fact virtually if not totally irrelevant. Additionally, he betrayed a critical misunderstanding of how the government has decided to account for "investments" the Treasury Department has made in many financial entities, General Motors, and Chrysler.
This is the third consecutive month for Crutsinger's war-connected crud:
Since hitting their lows back in March, financial markets have rallied in the wake of last year's financial crisis. The Dow Jones Industrial Average (DJIA) is up 43 percent since March 9. But can it last?
It could be all given up with this rate of government spending according to CNBC "Mad Money" host Jim Cramer. Cramer, responding to a viewer e-mail on his Sept.8 program, explained what a higher national debt would mean to the average citizen and investors in the near and long term. He said expect the market to go down and higher taxes eventually.
"I know that this is going to mean our taxes are going to go way up," Cramer said. "I have to tell you this eventually means this market will come down. It is in when what I call the out years, not to worry about it yet."
It's clear that President Barack Obama's $787-billion stimulus hasn't worked as advertised, but some economists are worried it could backfire and cause something much worse.
According to a new study by economists Charles Rowley of George Mason University and Nathanael Smith of the Locke Institute and endorsed by Nobel laureate James Buchanan, the Keynesian tactics employed by Obama "will ultimately hamper the long-term growth potential of the U.S. economy and may risk delaying full economic recovery by several years." The study accuses the president of making Depression-era mistakes.
Stephen Moore, member of the Wall Street Journal editorial board and senior economics writer, explained the study on Fox News "On the Record" Sept. 7 and said that the stimulus certainly hasn't lived up to its billing.
On Friday, Uncle Sam's Bureau of Labor Statistics reported that the nation's unemployment rate rose to a seasonally adjusted 9.7% in August, and that the economy lost another 216,000 seasonally adjusted jobs.
In various ways, the press tried to put a happy face on the news and otherwise tried to minimize its impact. It also continued, as it has for years, to ignore what really happened on the ground (i.e., the not seasonally adjusted numbers) during the month; in August, a look at that info punctures any illusion that the employment situation is improving. It also ignored prior-month downward revisions to both June and July totaling 49,000 seasonally adjusted jobs.
Ford and the United Auto Workers are set to begin new contract talks under a set of circumstances radically different from any previously faced by either party. There is the "minor" matter of the union's ownership stakes in General Motors and Chrysler that arose in the wake of those two companies' government-engineered bankruptcy filings, accomplished with more than a little rule-bending by the Obama administration and its car czars.
But you wouldn't learn about any of this, let alone its potential effect on negotiations, from reading coverage of the situation by the Associated Press's Kimberly Johnson. Additionally, there's quite a bit of emphasis on the idea that Ford can supposedly afford to be more generous with pay and benefits than its two major Detroit rivals. How convenient -- for the union and the the other two companies.
They warned back in 2008 what might happen if Barack Obama was elected president, and according to conservative talk show host Rush Limbaugh and Fox News Channel host Glenn Beck, a lot of bad stuff is unfolding right before our eyes.
Limbaugh appeared on Beck's Aug. 26 program to discuss the threat of the federal government attempting to regulate the media. He explained the president's policy maneuvers were evidence that this can happen - with very limited opposition in the media.
"The stimulus plan - Glenn, look at what they're doing to the U.S. economy," Limbaugh said. "Anybody with a sense of economic literacy would know that this is not how you create jobs. You do not rebuild the private sector. This is being done on purpose. All of these disasters are exactly what Obama wants - the more crises, the better, the more opportunity for government to say let us in and fix the problem. And, with his number one opposition is on radio and Fox News. His number one opposition is on radio. They can't go Fairness Doctrine because it's too obvious. So, they're trying to do this backdoor route with diversity and ownership, a 100-percent tax on operating in order to pay public radio because they're supposedly fair."
Try to keep a straight face when you hear this: President Barack Obama isn't getting enough media love.
That's the world view of MSNBC "Hardball" host Chris Matthews - at least when it comes to the economy. According to Matthews, there has been a plethora of positive economic news - from a stock market that has shrugged off the threat of bad liberal policy, i.e. cap-and-trade or ObamaCare, to the actions of newly reappointed Federal Reserve Chairman Ben Bernanke of pumping liquidity into the economy.
"What do you make of this whole thing about the good economic news out there the president gets no credit for?" Matthews said on his Aug. 25 show. "I'm in the stock market. I have suffered like others before and I have seen this comeback - back up to almost 10,000 now. He gets nothing for this. The fact that consumer confidence, which was once closer to the bone, is way up. The fact that the Fed chair has done such a good job in pumping up the money supply and pumping back the economy, and averting a Great Depression - no credit."
On Friday’s CBS Early Show, co-host Maggie Rodriguez interviewed commentator Dick Morris about his latest book critical of the Obama administration, Catastrophe. After reading the book’s full title, Rodriguez observed: "This title, though, Mr. Morris, can’t you see a lot of people dismissing it right off the bat as alarmist? It screams at you."
In response, Morris pointed out the dire state of the economy: "9.5% unemployment, four quarters of negative growth, our car companies in receivership, our health care program about to be taken over, and banks being nationalized, and I’m alarmist?"
Rodriguez replied by citing recent media spin that the recession is over: "Well what about the positive indicators? Because not so long ago, it was on the cover of every magazine, the topic of every cable show and Sunday morning show, that we were kind of digging out of the recession. We saw three straight months of rising home sales, the stock market up more than 40% since March. Ford beat expectations. Doesn’t that count?"
Does the Associated Press's Martin Crutsinger moonlight as a Code Pink operative?
There has to be something that explains what I'll call his Iraqnaphobia.
Last month (at NewsBusters; at BizzyBlog), the AP reporter erroneously cited the cost of the wars in Iraq and Afghanistan as a "major factor" explaining why "the deficit has widened." In a quick review of the related June 2009 Monthly Treasury Statement, I cited three examples of higher spending in other areas of government that were larger than last year, both in dollar and percentage terms, than the $33 billion, 7% increase in total defense spending. NB commenter Arminius further pointed out that "Our military spending amounts to 5 percent of GDP. Iraq and Afghanistan amount to 15 percent of that 5 percent. Obviously, as Tom notes, larger culprits are responsible for the massive deficit."
It's simply not possible that the two wars can be a "major factor." No matter -- This month, in an otherwise fairly decent report, Crutsinger did it again (bold after title is mine):
Ben Bernanke's able use of monetary policy to steer the economy during the current financial crisis sometimes makes it easy to forget that Bernanke helped steer the ship into that crisis early in his term as Federal Reserve Chairman and a member of the Fed's Board of Governors. That's a point Strategic Forecasting (Stratfor) founder and CEO George Friedman made when asked the likelihood of President Obama reappointing Bernanke.
"Bernanke presided over the events leading up to the greatest financial crisis we've seen in quite a while," Friedman told CNBC's Steve Liesman. "The best that can be said is that he didn't make it any worse than he already made it. The president is not going to be wanting to reappoint the man that most of the country regards as responsible for the problem."
Times have been tough financially for media companies across the board and satellite radio has been no exception.
On Aug. 6, Sirius XM Radio (NASDAQ:SIRI) posted a second-quarter loss and the company hasn't lived up to expectations after Sirius and XM completed a merger a little over a year ago. According to "CNBC Reports" host Dennis Kneale, part of the satellite radio's problem is shock jock Howard Stern's compensation and the company's debt.
"I feel so, bad - there's, being run by one of what I think is the best executives in media, Mel Karmazin, a great salesman," Kneale said on CNBC's Aug. 6 "Power Lunch." "But in the end, does it turn out they just overpaid for Howard Stern and they have too much debt? I wonder if John Malone bailed them out temporarily hoping that they kind of go belly-up so they can get a hold of those assets really cheap."
Yours truly and others have since April noted a precipitous and likely historic dive in Uncle Sam's monthly collections. Year-over-year declines actually began last summer. The degree of monthly fall-offs has gotten "progressively" worse since then.
Yesterday, the Associated Press finally went beyond blandly reciting year-to-date comparisons to note the historic significance of the cash crash at the Treasury. Even then, Stephen Ohlemacher's report understated the degree of the decline in receipts from economic activity (i.e., excluding last year's stimulus payments, which were treated by Treasury as "negative receipts"). He also only carried his analysis through June 2009, even though sufficient information about the full month of July was available in Treasury's last daily statement of the month released yesterday afternoon.
Is there a double standard in how the struggling economy is being portrayed during the Obama presidency vs. the Bush administration?
While the 1% contraction in the economy reported by the Commerce Department on Friday was seen as a "hopeful sign" by the New York Times, "crystallizing expectations of a turnaround," actual economic growth of 1.9% during the Bush years was just another "arrow" seen pointing to a recession.
Subtitled: "Washington is spending $60 billion to create the careers of the future, but not a single green job yet exists. Obama's 'green czar' explains."
The Leftist publication deserves some plaudits for exploring this $60 billion gaping hole in the $787 billion "stimulus" package President Barack Obama signed into law in February. But there are many points in the article where they could have done better.
It would have been nice, for instance, if Newsweek had exhibited some of the scrutiny they show here in advance of the massive plan's passage. They begin with an interesting realization:
CNBC "Mad Money" host Jim Cramer credits lack of government regulation with a recent market jump in technology stocks. The tech-heavy NASDAQ composite (NASDAQ) shot upward 3 percent, from July 8 through July 23, even defying other market indexes that had down days in the same time period.
"So, now let me explain a pattern that I've discerned that could be incredibly important - important for you to take profits on if President Obama regains his clout and starts pushing hard with the rest of his agenda," Cramer said. "Everyone today wrote him off because of health care. I got to tell you, you can't write this guy off. He's too darn popular."