President Obama Can Bounce Back

By Simon Johnson

Conventional wisdom is now that the parlous state of the economy will seriously damage President Obama’s reelection chances in 2012.  Perhaps, but this view misses what we should expect in terms of global financial dynamics – and how this is likely to affect the US economy over the next two years.

Details are in my Bloomberg column this morning.

58 responses to “President Obama Can Bounce Back

  1. You mean by becoming even more radically pro-corporate and anti-public he can regain the preponderance of bribes?

    And maybe by becoming even more of a war-monger and even more vicious in his assault on civil liberties he can attain his holy grail of getting conservatives to vote for him?

    Those are the only ways I can think of for him to “bounce back” given his ideological premises.

  2. If Republicans dominate Congress for the last two years of his term, it will be hard for him to bounce at all.

  3. No way. Obama has BETRAYED the people who supported him. Even his staunchest defenders are TIRED of defending him. The U.S. can not ‘bounce back’ from its mountain of debt. The future is DEFAULT for America. After that, the U.S. will take its place as a second-rate power, at best. Sorry, but while Bush was able to dirty trick the people into a second term, Obama has already played the people for all they’re worth. Anyone that could still support Obama at this point, must be high.

    http://www.bloomberg.com/news/2010-09-28/u-s-dollar-is-one-step-nearer-to-crisis-chinese-former-adviser-yu-says.html

    http://www.marketwatch.com/story/america-on-the-brink-of-a-second-revolution-2010-09-28

  4. High? Come, come, Tyrone, thou betrayest thy prejudices.

  5. I stand by the comment. Based on the campaign promises Obama made, and what he actually delivered, anyone who still supports Obama at this point is a fool.

  6. Rather frightening how every response to this post is absolutely polarized. Bill Clinton did just fine after a very similar situation. Read Obama’s interview in Rolling Stone and tell me the guy isn’t doing the absolute best he can under the circumstances.

  7. Obama is an actor playing a role. As such, he has nothing to bounce back from. He is exactly where the script told him to be. By throwing the fight the last two years, he has ensured that at least one house of Congress will turn Republican this year, which will allow him to argue in 2010 that he couldn’t get things done because of the Republicans (when, in fact, he never wanted to do those things). That’s what Obama is counting on to get him elected to a second term.

    People need to go back and read Thomas Frank’s “What’s the Matter with Kansas” and recognize that Democrats play the same game as Republicans. Anybody who voted for Obama the first time and votes for him again after the farce of the last two years should physically move to Kansas because you’re already there mentally.

  8. Bounce back? In terms of public opinion, historically he’s in good shape compared to Presidents who have suffered through recessions. Unless there is a serious double dip, he’ll certainly be reelected. This isn’t the issue.

    The real questions for policy progress have little to do with him – so will the US Senate change its archaic anti-democratic rules?

    Because we know other systemic cancers won’t be changed soon – over-representation of small states in the Senate, and the absurd campaign finance system that forces all politicians to be addicted to corporate money.

  9. I think the issues are so much deeper than this. People both sides of the Atlantic are deeply angry – read this from Will Hutton in last Sunday’s British Newspaper The Observer. http://www.guardian.co.uk/books/2010/sep/26/them-and-us-will-hutton

    Many will recognise similar issues in the USA.

  10. Jon Stewart identified one woman as “Obama’s Kryptonite” (sp?).

    There are a lot of “kryptonite” people hard at work holding up civilization who WILL BE HEARD.

    “Buck up”?!

  11. The comments I heard last night on MSNBC come close to reflecting how I feel about Obama’s actions so far.
    The example given was the ‘negotiation’ regarding the public option in the health care bill. Joe Leiberman’s constituents favored the public option 3 to 1, but rather than going to Connecticut and pressuring Leiberman, the democrats worked a back door deal with him.
    The other example was that Obama went too far in trying to get a couple of Republican votes. It always bothered me when he seemed to do that. This current crop of congressional republicans are not worthy of being bargained with. Their ideology is bankrupt, like our retirement accounts, and my company.
    I understand that hardliners never get anywhere, and that compromise is necessary, but he went way too far. I would just like him to put up some kind of fight, just once.

  12. I think Obama’s kryptonite woman is the one who gains 10 pounds every week and can regularly be seen with an ice cream cone in her mouth (double scoop). Rumor has it they’re married.

  13. I doubt that a US currency depreciation alone would be sufficient to replace the 8 million jobs lost since 2008. It might be enough to keep Obama in office but until some TBTF banks fail, and that at least some of the criminals that run Wall Street are prosecuted and jailed and that the U.S. Government dedicates itself to massive programs to upgrade infrastructure, develop mass transportation networks and creating a domestic green energy technology industry, the prospects are not good.

  14. I don’t get it, Simon. If we have QE2, which seems certain at this point, we will hopefully jump start inflation and if we are luck we won’t cause hyper-inflation. Regardless, we will have inflation and prices will go up- hurting people with limited purchasing power even more. How does this help?

    Maybe we get a few more jobs b/c inflation would give business a boost. Still, I don’t see how the net effect is a positive one. Inflation wouldn’t cause that many new jobs.

    I do not understand how another round of QE is possibly a good thing. If the QE gets to the point that the extended money supply actually reaches the “little guy” to me that says that the money supply has become impossible to contain and hyper-inflation results. I seriously do not understand where you are coming from here.

    I don’t understand how extending the money supply helps anyone at this juncture. Extending it to big businesses doesn’t seem logical- they are already sitting on piles of cash. Inflation may cause them to add a few jobs but I don’t see how that is worth the risk of hyperinflation or a debt deflationary environment.

  15. Unless there are price shocks with oil (because Israel striking Iran, or something very unexpected) we’re not going to see inflation until at the earliest the beginning of 2012. All this inflation spin is from people trying to talk up gold.

  16. Obama may well get re-elected, given the alternative. Maybe the “moderate” activist base he has been working to develop will finally coalesce.

    As for me, he clearly doesn’t represent the change I thought I voted for. He can accuse me of whining all he wants, but the fact is I don’t agree with his policies, I don’t trust him, and I don’t want him to be re-elected.

    It is highly unlikely I will be persuaded to donate to his campaign, and I can’t work to get his supporters out to vote because I can’t even imagine who they are. If the bankers and “moderates” choose to work with him I guess that’s arguably better than having them work with the Republican nominee, but not much.

  17. MSM lie when they say Russia and China won’t care if Iran gets “striked”.

  18. The POINT is that there is a lot of “kryptonite” out there. Obama was NEVER the best of at least 1000 people with the same on-paper qualifications as he has for “president”.

    Just the facts, Ma’am.

    And I doubt that what you see in the mirror each morning, Ted K, is a young Paul Newman staring back at you…but that never stopped protruding gut, red-nosed, toothless alcoholics from thinking they can call someone else in town ugly.

  19. Is that the “dead cat bounce” they sometimes talk about?

  20. No, not Paul Newman. I would say closer to Robert Redford in the mid-1980s.

  21. Has Simon Johnson been captured?

  22. Wonderful interview Simon…quite controversial, but definitely plausible. I’d like to play “Devil’s Advocate” on this one? Currently both Japan (yen) currency, and China’s (yaun) currency are being sold to others G-20 Nations, rather than the United States to strenghten their exports, and stimulate their economies. Their problem now is with (and has been for some time?) the S.Korean (won) currency manipulation (depreciation big-time). There is a (IMHO) collective idiom/thesis ground-swell brewing (out of the box zeitgeist) manifesting itself that the neutrality/equillibrium axiom should be implemented – rather than this race to the bottom by central banks ie.) EU/USA/Russia/China/Japan/BRIC’s, etc., etc., too stop with the (intervention) “Bandaid’s”! Let me simplify…”Central Banks” cannot manipulate currencies indefinitely – time in , and time out it just doesn’t work (lot’s of empirical data to back it up). The world must stand back, and take its medicine…be it austerity, or high unemployment (whatever, but please no more wars) until the financial houses of the world gets their own fiscal house’s in order. Sure this sounds euphonious, and out of touch for the cynic…who cares? The “FOREX Market” is just to big for intervention to work in the 21st century (not getting into it?), and the quick-fix financial (intervention/manipulation…you choose your own poison?) bandaid eventually turns into a crutch down the untimely road of insolvency! Let me reiterate…”Currency (Manipulation) Intervention” doesn’t work, period! Yes…in the short time weakening a currency helps exports…but it’s counterproductive at best. Thankyou Simon, and James ;-) Ref: http://www.ucdenver.edu/smith/econ4110/Alesina%20Summers%20-%20Central%20Bank%20Independence%20and%Macro%20Performance.pdf

  23. Google @ [PDF]…Central Banks Independence and Macroeconomic Performance:Some…please note – this is dated (1993) material but hits the mark! eg.) Italy & Spain???

  24. Hmmm – an export driven recovery. Assuming that consumer demand, primarily from Europe, will be strong, and preferentially favor the US exporter, vs. others.

    Can you forgive my skepticism?

  25. Export lead recovery?

    QE2?

    Pardon me, but I’m rather sceptical these can lead the US economy back.

    But I guess my big question is – why do you want him to bounce back? He’s pretty much ignored your advice on how to deal with this crisis in any substantive way. Is this just a wish and a hope at this point?

    I’m a life time Democrat that voted for Obama, but after watching his policies to bail out the banks rather than break them up, and continue the War On Terror, both Bush policies which were did not have public support, I realized Obama does not care about the average American. I fully expect Obama and the Democrats to go after Social Security after the 2010 midterms, further pulling the rug out from underneath the average American. I decided I could no longer support Obama or the Democratic party.

  26. such a liar :-)

  27. Looks behind me to see who you’re talking to. Hmmm, strange…. nobody there….

  28. Simon has it right. It’s the jobs, stupid.

  29. Absolutely right, Glen. And absolutely depressing.

  30. Please correct me if I am wrong but I see 4 problems with the theory that a depreciating dollar/export led recovery will work.

    1) When the dollar goes down the price of oil goes up, that occurred today in fact.

    2) A falling dollar will deplete global savings in dollar related assets which will in turn have a negative affect on US exports.

    3) A dollar depreciation will make imports more expensive in the US and this will cause price inflation.

    4) The resulting price inflation just from numbers 1 & 3 will occur concurrently with the effort to increase exports as that effort increases the downward pressure on wages making wage inflation very unlikely.

    A loss of global and US purchasing-power does not add up to more job creation.

  31. Then isn’t it time to start supporting an alternative Dem candidate for 2012? Dean, Kucinich, and others are available. Even if this effort fails, it would still force Obama to pay attention to his base. Obama’s RS interview was arrogant, condescending, lacking in self-knowledge, out of touch, and petulant and shows he still takes his base for granted. The only times he ever makes concessions to progressives are when he feels his own job is in danger. It’s time to apply pressure.

  32. Chris follow the money, ie, who is “hedging” that Obama will not get reelected? Hmmmn! Yep! You’ve got to visit good old Wall Street. Jeezee there is a lot of money out there to be made this coming 2012

  33. He isn’t doing the best he can. HAMP is all his(well Geithner .. but the buck stops with Obama). Some of the bankstes should be in jail. And this:

    http://rortybomb.wordpress.com/2010/09/29/floridas-foreclosures-nightmare/

    That is called perpetrating a fraud upon the court. Anyway, there is more he could be doing despite a dysfunctional Congress.

  34. Good question! Yes, Simon, you owe us an explanation of why you think it would be beneficial for Obama to bounce back. Obama is a determined deficit hawk, and he will chip if not hack away at Social Security even though unemployment, falling demand, and soaring health care costs (despite the grotesque health care “reform”) are the major reasons for the expanding deficit. Obama is now planning to replace Summers with a corporation CEO, and if the Republicans win big in November, he’ll surely morph even more thoroughly into a slick facilitator for the American power elite. How about at least calling for a tough campaign financing reform bill? In 2008 Obama virtually destroyed the current system for publicly financing campaigns, and campaign finance reform is a lot more important than the way Obama bounces.

  35. Bayard Waterbury

    The administration’s globalists, as well as those in our richest and corporate sectors don’t want our economy to bounce back, and that may be the main reason why Bernanke would say he doesn’t care about the value of the dollar in global terms. In fact, he does care, but not to the benefit of our economy, rather to the detriment. The globalists will continue to support the Euro, even in the face of the next crisis. The most prevalent reason is that their is hyperlinkeage between the large US manufacturing and financial interests, and because, the way things are, it allows them the best arbitrage between all global sectors. They want the dollar strong, and even would like to see the yuan go down a bit. Sad, but the coming elections will do nothing to change all of that, as the long term governmental stalemate will go on to the benefit of the richest in our country. Stalemate means no tax reform, and lots of meaningless, but strategic churning.

  36. Word Tyrone. Obama betrayed his base. His base did not want to see the fascist in the bushgovernment majikally forgiven for systemic pathological lying, for treason, and for the unanswered questions of 9/11.

    Obama’s base did not and will not support bailing out the FAILED managements, of FAILED institutions, bruting and pimping FAILED products and PONZI Schemes benefiting the predatorclass den of vipers and thieves on Wall Street.

    Obama’s base wanted a “Public Option”!

    Obama’s base wanted a recanting and reversal of the criminal policies of the fascist bushgov Patriot Act, Homeland Security, Rendition, torture, Iraq, Afghanistan, NSA, private military, private intelligence, and countless other abuses of the Constitution, the peoples rights and freedoms under the previous pernicious and fascist regime.

    Obama’s base wanted and wants a REAL investigation into the causes, activities, and those responsible for the horrors of 9/11.

    Obama’s base wanted a government and leadership that would give voice to the voiceless and NOT pander, cowtow, and bow to the will of the predatorclass.

    Obama’s base wanted culpability, accountability and prudent responses to the den of vipers and thieves on Wall Street who ushered the entire globe to the brink of economic collapse and cause severe pain and suffering and losses for America’s poor and middle class in what is deceptively termed “the great recession”!

    Obama’s base wanted an increase in infrastructure spending, education funding that hit the classroom first, and avoided the administrative, consulting and the fiendish contracting side of the education industrial complex.

    Obama’s base wanted and end to the wanton profiteering and criminal activities of the private military, private intelligence industrial complexes.

    And I could go on for pages.

    The point is, all of us who fought for, and defended Obama have been betrayed.

    If Obama wants our support then bring us the heads of Timothy Geithner, General Patreaus, bush the idiot, and that satanic beast dick cheney!!!!

    If not!!! Obama is one term president, because he BETRAYED the people that put him into office, and a position of socalled leadership.

  37. As always, fascinating and deeply interesting comments. Glen wrote, “I’m a life time Democrat that voted for Obama, but after watching his policies to bail out the banks rather than break them up, and continue the War On Terror…. SNIP…. I decided I could no longer support Obama or the Democratic party.”

    To me, what Glen wrote, which has been echoed by others, is the essence of the issue. Millions feel let down. Perhaps we have always known in our hearts that politicians always let us down but there was something about Obama that felt different when he was elected. After all, the first man to be elected with his background was an amazing milestone.

    But America with its 300m people, more cultural pluralism, huge geography/natural resources to exploit and a $13T economy will correct – it’s a great country. (OK, must declare my interest. I’m here in London, my birth city, awaiting my immigration fiancée visa so I can return to Arizona to live happily for the rest of my days. But I have done business with the US for 30 years and have known for a long time, that it really is a great country!)

  38. I feel a little let down, but more by the Congress than by the President. Look, for all those areas where he needed Congress to pass legislation, Senate rules and extremely disciplined opposition from Republicans really diminished the scope for making significant changes. And the President is in no way responsible for Senate rules. Even things that sound purely Executive – like shutting down Guantanamo – actually need some Congressional appropriations to implement. Afghanistan – well he kind of told us in advance what he planned there. Bailing out the banks….does anyone think that the good Senator from New York was going to do different – or that the one from Arizona would have? Health care is moving in the right direction, financial reform has at least started (oh, by the way, Prof. Warren is a sure filibuster or outright loser in the Senate). The auto bankruptcies were about as favorable to workers as was possible. But I will say this to an above comment: nothing in Obama’s background seemed as compelling as McCain’s. Father decamps and is raised by his Mom and Grandparents….hundreds of thousands just like this. Does well through his own efforts but also skillfully attaches himself to available people of influence as he rises up a fairly average academic and political career. Nothing wrong with this, but not so amazing. McCain was born with the silver spoon, served his country, was shot down, imprisoned and tortured. Sure, he had a lot of connections also and used them, but I still take McCain’s life story as a clear cut above Obama’s at the time of the last election.

  39. I’ve been taking notes and studying the male human since I was in 3rd grade – copying the method of Fossey watching the gorilla tribe – and how to cower in front of the alpha gorilla…

    But the alpha gorilla is alpha based on MERIT – whassup with the toothless alcoholics having “power”?

  40. I’m no longer the “Devil’s Advocate”…rather a messenger of reinforcement? Ref: http://www.factcheck.org/2010/09/factchecking-the-pledge/

  41. Mercenaries creating virtual “enemies”….Stalin copycats…

    It’s all about the $$$ – always was and always will be – the predator class is in charge of “surveillance”!

    What part don’t people understand how the role this warrantless surveillance had in turning USA into a freekin’ wannabe Saudi Arabia?!

    Feeling “safe and secure” knowing a booger-eating IT pervert is stalking YOU FOR THE MONEY at the command of some sheikh or some other such self-proclaimed “authority”?

    It’s gonna get so ugly….but not because “they” were not given chance after chance after chance after chance to STOP their psycho acts…

    but a brain calcified in thought:

    More misery for others = more money for ME ME ME

    is incapable of anything other than generating “inspired” dogma and thongma to rationalize cruelty and greed and hatred and revenge…

    The “us” and “them” is starting to line up – which is needed before the “force” part of the program gets deployed.

  42. It’s sad to see that at a moment when the country is really in trouble, all people seem to be able to do is point fingers and talk about how Obama “betrayed them.” First of all, Simon’s column had nothing to do with an endorsement or critique of the administration’s policies; it was simply offering one possible theory on how things could unfold over the next couple years.

    Second, while I’ve done by share of criticizing from the left these past couple years, the comments above need some balance. The fact that in that same year and a half time period that we emerged from the fiscal crisis, Congress also passed the biggest health care reform in 50 years AND financial reform tells me that people are either being unfair, or simply being ignorant, when they talk about a do nothing Congress.

    In fact, this is a Congress that simply by objective comparison, accomplished a great deal. Why on Earth do you think the opposition from corporate interests – who are spending something like 70 million to help Republicans in the final laps of the campaign – is so mobilized?

    If there was any kind of overall logic to the way America rewarded or punished politicians, you’d think we’d be voting out the obstructionist Republicans and self-interested elitist Dems in the Senate. Instead, after the House passed cap and trade, AND HCR with a public option, Nancy Pelosi stands to lose her leadership of the House in favor of lobbyist rep John Boehner, thanks to the apathy coming from liberals out there.

    More broadly, the fact that people on the left now seem to think a less-than-two-year window is the appropriate time frame in which to judge a party’s success or failure is a self-defeating proposition. The severe structural problems in Washington demand, to the contrary, long term, strategic, unwavering support.

    Congress not left enough? Vote in more left wingers. The alternative is that such problems will never get fixed, or worse, that the radical right will sweep in and make things far, far worse than we can even imagine (see Bush, 2000). Already the primary result of a Republican takeover this fall will likely be a 4 trillion addition to our debt as the Bush tax cuts get extended in full – something that will affect us all profoundly for decades to come.

    In other words, the biggest lie here isn’t Obama’s support for progressive policies. If I had to guess I’d say he does share mostly progressive views but is also faced with the task of governing which requires compromise and tactical decisions and therefore restricts your options, but and at the end of the day I don’t really care. The real delusion is this idea that we can swap out Obama for “a better Democrat” – or any politician who will solve all our problems in two years.

  43. As for ‘pro-corporate’ policies, the most pressing and substantive issue seems like whether to extend the Bush tax cuts for the wealthiest Americans. On one hand, it is a credible concern whether raising anyone’s taxes could jeopardize the fragile recovery before it really takes hold. No one should want that. On the other hand, it seems likely that many high-income Americans invest substantial wealth in firms growing outside the United States. If so, it’s not a foregone conclusion that raising taxes on the wealthiest Americans would necessarily harm America’s competitive standing in the world. Indeed, if some of that wealth were reabsorbed into the U.S. economy, it could actually help U.S. firms to grow more than by making all the Bush tax cuts permanent and allowing the wealth to flow anywhere and everywhere.

    It also seems like a fallacy in the tax-cut debate that taxing individuals necessarily limits the growth of small businesses. Republicans love to make that argument, but it’s not as simple as they suggest. If the owner of a “small business” (like, say, a hedge fund manager) is facing personal income tax, that implies the owner has actually taken profits out of the business. So in that scenario, the owner has chosen *not* to hire more people or otherwise grow the business. By raising taxes on personal income above $250,000 for families, the owner may have an incentive to keep more wealth in the business and reinvest in personnel, equipment, etc., in order to keep the business’s taxes lower.

    That leaves the classic argument that it’s important to reward success, no doubt true to a point. But there’s also a law of diminishing returns, which suggests at some point a person can have so much wealth that another Ferrari or vacation home will not be a big incentive. There are probably clever economists out there who measure optimal incentives, beyond which the mega wealthy will work hard anyway for a variety of other reasons (like fame and power). And they could still compete to be the #1 wealthiest person on the planet if that is important to them, even if they pay more taxes in the process.

    Thanks for any push back on these points.

  44. Solid counterpoint Andrew. From the purely economic perspective, the Obama administration, and presumably Obama himself participates is culpable and responsible for breaking the promises of CHANGE, by enabling the predatorclass den of vipers on Wall Street to shift select oligarch debt to the Fed balance sheet, and in practical application the American taxpayer. This shifting of toxicity from the socalled TBTF oligarchs, and the predatorclass den of vipers and thieve managing and profiting from those oligarchs is prosecuted by resorting to, and application of the same kinds of derivative, collateralized debt obligation products and PONZI schemes that are singularly responsible for piloting the entire globe to the brink of economic collapse.

    Debt problems cannot be resolved by issuing more debt.

    Sooner or later massive restructuring, and “haircuts” (more like scalping) will result. The only question is who exactly is scalped and restructured.

    Obama promised to give voice to the voiceless. Instead his economic policies, (and I would argue all policies) overtly favor, benefit, protect, cloak, and advance the best interests of the predatorclass, and the terrible pain and suffering, the restructuring and scalping is heaped on the American poor and middleclass children.

    If the Obama government forces the predatorclass den of vipers and thieves on Wall Street, and the socalled TBTF oligarchs to realize losses, and share in the pain and suffering – then I would support him.

    Oceans of Debt piled on mountains of debt, and an entire system based on, and rooted in debt as asset, is doomed to collapse.

    NOTHING has changed.

  45. Of course, Andrew, you’re right that no one could have solved all our problems in two years, and I don’t think anyone expected that.

    But Americans are right to be profoundly disappointed with this President, who has followed and even extended the Bush/Cheney war policies and now has us fighting wars not just in Iraq and Afghanistan, but in Pakistan, too.

    Is the vaunted healthcare reform an improvement over our disgusting status quo? Perhaps marginally, more likely not. But we won’t know for a long time, and in the meantime, people are suffering and will continue to suffer.

    Without the reinstatement of Glass-Steagall, there’s no game-changer in the financial arena.

    It’s really hard to take your remarks seriously when you hail the healthcare and financial bills signed by Obama as achievements. For all the rhetoric that has been spent on them, they are piddling and inconsequential.

    We need constructive, transformative change.

    That’s why I keep asking people to go to http://www.steadystate.org and learn about an equitable economic system that we can put in place when the current global financial system blows up.

  46. Those are all the same lies the elites have been pimping since the 60s.

    1. Trickle down (everything in there boils down to a claim for it) does not happen. It’s factually disproven. Since the 70s real wages have stagnated while every other aspect of the non-elites’ economic position has deteriorated. Wealth has done nothing but further concentrate.

    The only way the “middle class” was propped up over those years was through working longer hours for less (two earner families now make relatively less than one earner in the 50s, and each works longer hours) and exponential debt.

    So every claim made for how the rich need to be “incentivized” to invest by lowering their taxes is a lie. We know for a fact they don’t invest, but only hoard or gamble. We know that concentrated wealth is never anything but a malevolent parasite.

    2. The whole fraud that America needs to be “competitive” according to the slave-driving measure of the elites has no reality basis, but is only a Big Lie perpetrated for the elites’ benefit.

    We know for a fact that the American non-rich would be far better off if America pulled out of “globalization”, since the result of it has been nothing but our steady economic and political liquidation, temporarily papered over by the debt and rat-racing I mentioned above.

    But those can no longer be propped up. That’s why the system has now entered upon the final liquidation. The Bailout and “austerity” are the final looting binge to suck up all the wealth capitalism generated. Just as the enclosure of land was the primitive accumulation which closed the era of medieval feudalism and prepared the ground (literally, in terms of “property ownership”) for capitalism, so now capitalism is ending with another final accumulation as we’re being driven as the new serfs into the restoration of feudalism.

    And that, finally, should put to rest the fraud that there’s any kind of “recovery” happening for anyone except the disaster capitalists and neo-feudalists. The “New Normal” (Obama’s own phrase) is 9.5%+ nominal unemployment, 17%+ actual. They expect and want these numbers to get far worse. That’s just one metric. We the people are being driven forcibly into a Permanent Depression.

    Or, this Depression will be permanent if we continue to let ourselves be herded.

  47. Andrew wrote, “The real delusion is this idea that we can swap out Obama for “a better Democrat” – or any politician who will solve all our problems in two years.”

    Your last sentence, to my mind, captured the kernel of the problem. Read what Carla and Tony wrote after you. Sense the anger and passion. It’s this anger that is spreading across the democratic West.

    You are right, there has been a real delusion that politicians can solve problems. That’s what so potentially frightening about the despair that has followed all the hopes of the Obama election. I think the idea that politics is ‘broken’ is gaining ground both in the US and in the UK, from where I am writing just now.

    It’s very difficult to see what the solution is but it will right itself eventually. People like Simon and James are key to promulgating new ways of thinking.

    In conclusion, this is not about Left or Right, this is about restoring fairness to society, as espoused by Will Hutton in this piece http://www.guardian.co.uk/books/2010/sep/26/them-and-us-will-hutton

    Ultimately this will lead to a much better and fairer society.

  48. I don’t think Obama’s supporters invested themselves into his campaign because they believed he was better than nothing. When your campaign is based on camelot, you had better deliver *something*. At the very least, your net effect shouldn’t transform hope and optimism into virulent mutant cynicism. Did the people who supported Obama get what they genuinely believed and thought they were bargaining for??

    http://michael-hudson.com/2010/05/trouble-in-europe-china/

  49. What worries me most is that, historically, when liberal democratic politics is broken -which usually entails a breakdown of the policial/financial nexus – the iron clad “fixes” are most unpleasant and only then do the sheeple remember why they had liberal democracy in the first place…

  50. You should be a little more careful before labeling what you read as “lies.” Because if you had read more carefully, you might notice I was suggesting arguments that actually support your world view. To restate more simply, I suggested perhaps it’s better for America to increase taxes on the wealthy if that results in more of their wealth being absorbed into the U.S. economy, rather than deploying the extra tax savings anywhere and everywhere. Second, I questioned whether raising individual income taxes really affects small business growth — in one sense, it may work the opposite. And I cited the law of diminishing returns to suggest the extra Ferrari or vacation home doesn’t provide as much incentive to work hard as the first. I don’t mind your passionate opinions, but just try to characterize others’ positions fairly. And by the way, none of this was a ‘repetition’ of anything I’ve heard in the tax debate.

  51. Sorry, I was too brusque in my tone. I wasn’t calling you the liar, but rather I thought you were being perhaps too respectful toward the arguments I called lies. It seems like you’re still trying to rationally debate against positions which have long since been proven to be lies driven by irrational greed.

    I guess it’s only a difference in tone.

  52. In my opinion Mr. Obama should make it this time also as he did it on the last time. He did it when he had absolutely nothing, where this time around he has proved his capabilities. Even during recession period the way he controlled the country’s economy is commandable.

  53. A well written content giving a insight of whole scenario. Now let us see when the time comes when Obama will really strike back.