Liberal Narrative Blames Drought For Poor GDP, As If 1.5 Percent Growth Were Good

GDP for Q2 is revised down today to 1.3 percent annual rate, from 1.7 percent a month ago, and liberals are blaming . . .  the weather.

They are blaming 0.2 points of the 0.4 point decline on declining farm inventories due to the drought, as if it makes a difference whether GDP is 1.3 or 1.5. Hell, GDP of 2.5 percent represents treading water. Anything less than that is an economy in real trouble. By their own admission, farming is 1 percent of the economy, but the article to the left is already blaming lousy Q3 GDP, which isn't out yet, on the drought, too. This is the lamest excuse we've heard yet, and that's saying a lot.

Last August it was the earthquake and tsunami in Japan, the Arab Spring, and financial turmoil in the European Union which were responsible for everything going wrong for Obama.

In 2010 it was his peeps' fault, whom he told to pull up their socks, get off the couch and go vote.

Before that everything was Bush's fault.

After November Obama gets to blame the American people for all his troubles, none of which are ever his responsibility.

Q2 2012 Annual Rate Of GDP, Third Estimate, Revised Down To 1.3 From 1.7

The BEA reports, here:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.3 percent in the second quarter of 2012 (that is, from the first quarter to the second quarter), according to the "third" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 2.0 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 1.7 percent (see "Revisions" on page 3).

The third estimate indicates that the economy was growing in the second quarter 24 percent less well than thought in the second estimate, and 35 percent less well than thought in the first quarter.

As an annualized rate of growth, today's report of 1.3 percent represents more slowing since 2011, which represented slowing from 2010 after the depression of 2008 and 2009. Clearly the trend continues down despite unleashing the full force of economic stimulus, all of it borrowed and running up the debt in the process while monetary policy of the Federal Reserve has robbed savers in broad daylight, savers who depend on a free market in interest rates which Ben Bernanke, the appointee of George Bush and Barack Obama, has done everything he can to subvert. He is as much the enemy of the people as Bush and Obama have been. 

The Fed recently embarked on so-called QE To Infinity And Beyond because it knew what was coming in this report.

It is high time America shouted NO to this cabal. Mitt Romney is the most likely person to right this ship commanded by these pirates.

Can Liberals Count? Can Liberals Remember?

George Bush won Ohio in 2004 by 118,000 votes, but Andrew Sullivan remembers it differently, here:

"At this point in 2004, one recalls, George W. Bush was about to see a near eight-point lead shrivel to a one-state nail-biter by Election Day."

The real nail-biters were in Iowa, where Bush won by just 10,000 popular votes (7 electoral college votes), and in New Mexico, where Bush won by just 6,000 popular votes (5 electoral college votes), neither of which separately or together would have given victory to Democrat John Kerry.

Be that as it may, the real point of Sullivan's story is this:

"If Obama wins, to put it bluntly, he will become the Democrats’ Reagan."

Ah, no, he'll become the Democrats' W, or maybe their George H. W. Bush. Or if he's really really lucky maybe their Richard Nixon.

Obama's economic performance in the next four years would have to improve by 40 percent in seven key categories of economic measurement in comparison with all previous presidents to achieve the fair-to-poor record achieved by Ronald Reagan, whom I have shown elsewhere scored a lousy 42, just like Jimmy Carter.

President Obama's current score after 4 years is already 2 points worse than George Bush's score of 51 after 8 years, the worst two records in the post-war period. That means Obama would have to pull out  of his hat a veritable golden age to make him look as good as Reagan, which as I've said isn't saying much. To do it Obama would have to score a 32 in the next four years just to average out to a 42.

Can you imagine an Obama second term turning in an overall performance roughly close to that of JFK/LBJ, who rank 4th best out of 10 since WWII? Because that is what it would take.

Obama would have to go from worst for unemployment to 4th (think Clinton and W), starting tomorrow. He would have to go from worst to 4th for GDP (think Reagan and Eisenhower), for the next four years. He would have to go from worst to 4th for housing values (think Harry Truman). Only George Bush has been worse for the increase in Americans' total household net worth than Obama has been. To address that Obama would have to restore at least 1960s levels of prosperity to the country, if not Clinton era levels.

Fat chance.

Despite all the ruin which one man can rain down on a country through sheer incompetence and arrogance, the American people are a resilient lot and things will improve no matter who gets elected. The economy adjusts and moves on, and in many respects there is only one way to go but up. But if it's Obama who is elected again, I don't expect him to finish much better than a 48 after 8 years overall, because the first 4 have been such a disaster.

Obama Replaces Bush For Worst Economic Conditions Since WWII

If you thought George W. Bush was the worst president ever, you were right . . . until now.

Compared to every president since WWII in seven broad categories of economic measurement, Bush came in dead last. But in just four short years President Obama has managed to mess up what it took George Bush to do in eight. Call President Obama "The Quicker Screwer Upper."

My readers know that I have been examining and ranking every president from Truman to Obama in recent days from best to worst in a variety of broad economic categories: increase in the national debt, control of the rate of inflation, growth of the economy, real stock market performance for investors, increase in housing values for savers, increase in household net worth and rate of unemployment. Follow the links to examine the results for each one.

When put all together, it's easy to see who has been the best president overall, and who the worst. The ideal president, naturally, would score a 7 overall on this scale, placing first in every category compared to his peers. The worst president would score a 70, placing last by every measure. That last number tells you how I have counted the presidents. JFK, who was assassinated in his first term, is grouped together with his VP LBJ. Nixon, who resigned in his second term, is grouped together with his VP Ford. That leaves eight others: Truman, Eisenhower, Carter, Reagan, Bush the Elder, Clinton, Bush the Younger, and Obama, stretching from 1948 until 2012.

Here's the list showing them all, from best to worst, including the numerical ranking in each category, and the overall score. Democrat Harry Truman comes out on top, and Democrat Barack Obama comes up in dead last. Over time the economic difference between Republican leadership in the White House and Democrat has been infinitesimally small, a difference of just 0.13 percent, slightly favoring Republicans who average 6.03 compared to Democrats who average 6.04.

Otherwise the main take away is that the only president to score in the 20s like long ago Truman, Eisenhower, and JFK/LBJ has been Bill Clinton, who spent the majority of his term in office with Republicans in control of the Congress. Any president who can again score in the 20s like him will necessarily be two times better economically for the country than George Bush and Barack Obama have been. They've both been unmitigated disasters.

Ranking for Debt+Inflation+GDP+SP500+Housing Values+Household Net Worth+Unemployment = score

Truman 1+6+2+1+4+6+1                       = 21

Clinton 4+5+3+2+1+4+5                        = 24

Eisenhower 2+1+5+3+6+7+2                 = 26

JFK/LBJ 3+3+1+6+8+5+3                     = 29

Carter 5+10+7+8+3+1+8                        = 42 (tie)

Reagan 10+8+4+7+2+2+9                      = 42 (tie)

Nixon/Ford 8+9+6+9+7+3+6                  = 48

Bush The Elder 6+7+8+5+9+8+7           = 50

Bush The Younger 9+4+9+10+5+10+4  = 51

Obama 7+3+10+4+10+9+10                   = 53 

Obama Ranks Worst For GDP, Kennedy/LBJ Best Since World War II

Average of quarterly reports of annualized GDP, November on November (Obama to date):

1948-1952 Truman                    4.9 percent

1952-1960 Eisenhower              3.2 percent

1960-1968 Kennedy/LBJ          5.0 percent

1968-1976 Nixon/Ford              3.1 percent

1976-1980 Carter                       3.0 percent

1980-1988 Reagan                     3.6 percent

1988-1992 Bush The Elder        2.2 percent

1992-2000 Clinton                     3.9 percent

2000-2008 Bush The Younger  2.0 percent

2008-2012 Obama                     0.8 percent   

What Obama and Granholm Have In Common: Forward To State-Capitalism

Shikha Dalmia calls what former Michigan Governor Jennifer Granholm did in front of God and everybody at the Democrat National Convention a "political pole dance", for Reason.com here:

But even more bizarre than Granholm’s convention appearance was that she was invited to make one in the first place. She was arguably the worst governor of her time who, during her eight-year term, took Michigan’s teetering economy into her firm hands and gave it a good, hard push off the cliff.

On her watch, the state's ranking in per capita GDP plummeted to 41st place from 24th. Michigan became the only state to suffer a net out-migration during the past decade, and its credit rating was repeatedly downgraded.

But since unemployment is the topic of the day, how was Granholm’s job-creation record? Worse than Katrina-struck Louisiana’s. Unemployment jumped from 6.8 percent when she was elected to 14.1 percent at its peak in 2009 – although some believe it reached as high as 15.2 percent. 

Granholm has never looked more marvelous, but pace Dalmia, Granholm's appearance wasn't bizarre.

There has been much commentary saying as much, as if Granholm's performance was like some sort of meltdown, something almost crazy and beyond the realm of understanding, not unlike Howard Dean's a few years ago.

But from the point of view of ideology her selection and presentation made perfect sense. Like the true believer of a religion, Granholm's emotional display was characteristic but superfluous. It was the content of her remarks which were significant because they were entirely in keeping with the blindness of the ideological mindset of the new old liberalism which calls failure success. Indeed, today's liberalism thrives on failure in order to succeed, and the more failure it has the more success it has. The rightness and success of the bailout of GM, the substance of Granholm's paean to Obama, isn't a bug of this new old ideology, it's a feature. Obama himself has said so. And he's now on a mission to spread the government control of business around, not just the wealth:

“I said, I believe in American workers, I believe in this American industry, and now the American auto industry has come roaring back,” he said. “Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry.

Therefore consider Jennifer Granholm as the prophet of the new religion, and indeed its forerunner.

Like Michigan's devastated GDP under Granholm, America under Obama has settled into dramatically lower GDP compared to the post-war average. It has descended to almost European proportions, which evidently was the whole point of Obama's 2009 European apology tour. It was as if he were announcing that under his leadership America was going to stop being the leader of the free world and become just like them, anemic and dependent social welfare states. At 1.7 percent currently, GDP in America has indeed been cut down to size, to less than half of the decades-long average of 3.5 percent. Meanwhile nearly one in six Americans are classified as poor, and almost half of all households receive some form of direct government assistance. Is it any wonder Europe wants Obama reelected?

Like Michigan's exodus not just of population but of businesses fleeing the dreaded "single business tax" under Granholm, the nation's only value-added tax, for the first time in living memory there has been a sudden appearance of wealthy "global" Americans actually renouncing citizenship to escape the growing worldwide reach of the Internal Revenue Service's Gestapo-like intimidation of foreign financial institutions, which no longer want the trouble of doing business with Americans. Talk of finding and going to a "back-up country" among the smart set is an alarming sign that the kind of people we need to attract the most in order to grow our economy are instead repelled by the political class' increasing repression of capital and its hatred of the rich.

Like Michigan's downgraded credit rating, America under Obama lost its gold-standard AAA rating, formerly probably the single most recognizable synonym for the country's reputation in the world as the one most likely to pay its bills.

And like Michigan's long period of unemployment under Granholm, America's 43 consecutive months of unemployment at 8.1 percent or higher under Obama speak for themselves.

One might even say that Jennifer Granholm in her eerie way prepared the way for the coming of the (slum) lord. It's only fitting that she should announce his second coming. 

All of this failure is success because it keeps Democrats in power. That's why Gov. Jennifer Granholm's appearance wasn't bizarre. Her governorship epitomized the failure of America under Obama.

And so the ideologues do rejoice, because it's all intended. Forward, to state-capitalism.

2nd Estimate of Q2 GDP Rises to 1.7 Percent from 1.5, Q1 Still at 2.0 Percent

The news release is here.

The awful number is no longer 1.5 percent, but 1.7 percent. An annualized growth of this small magnitude is about half of the historical average up until the year 2000. In the post-WW2 period GDP averaged about 3.5 percent per annum until the turn of the century.

From 2000 to now, however, GDP growth has been far less robust, with year 2004 the lone year as high as 3.5 percent. All the rest have been lower, with some negative in the little depression of 2008 and 2009.

The pdf is here.

Has it occurred to anyone we were spending too much money taking the war to the enemy, and making war on the American people in the name of security, and subsidizing too much stuff like drugs for seniors, food stamps, and healthcare? Ratcheting up these expenditures during the last decade has coincided with a streak of terrible growth numbers.

The necessity of spending cuts has never been greater, but our politicians, of both parties, seem bent on doing anything but cut spending. Which is why AAA went away.

Monetarist Ambrose Evans-Pritchard Eats Keynes For Dinner, Austrians For Dessert

Frustratingly inconclusive and full of explanatory power at the same time, here:

Monetarists blame the ECB and the Fed for keeping money too tight in early to mid 2008, pushing a fragile credit system over the edge. They blame “pro-cyclical” regulators for aborting recovery ever since by forcing banks to raise asset ratios too fast. They are right on both counts.

Yet the `Austrian School’ is surely right as well to argue that a rise in debt ratios across the rich world from 167pc of GDP to 314pc in just thirty years was bound to end badly. There comes a point when extra debt draws down prosperity from the future. The future arrived in 2008.

Bob Brinker Of "Money Talk" Is Wrong: GDP Isn't Growing At An Average Of 1.75 Percent

On his radio program "Money Talk" yesterday Bob Brinker sought to defend recent economic performance as better than the Q2 report of 1.5 percent makes it appear. He accomplished this feat by averaging that number 1.5 with the 2.0 percent reported in Q1, coming up with a little better number, 1.75 percent.

This is wrong and I stated so in a post I have since removed.

I thought Bob Brinker said this for political reasons in the context of the remarks, and in a fit of pique I posted that Bob Brinker is a shill for the Obama regime in doing this, remembering as I am wont that Bob Brinker has stated on the program, among other things that hint of leaning to the Democrats despite calling himself an independent, that Obama's man in the US Senate, Dirty Harry Reid, is "a good man, a good man." Harry Reid is manifestly not a good man, recently using the well of the Senate to innoculate himself for potentially libelous remarks he has made from there against Mitt Romney, a fellow Mormon to Reid no less. Harry Reid has also been the chief instrument of gridlock on Capitol Hill, both now and when Pelosi was Speaker of the House. Just ask her how many bills she sent to him which never received action.

I've removed that post because I think it's possible Bob Brinker made the comments entirely out of ignorance, not from political bias. The reason is that I've realized that I've made the exact same mistake about GDP myself on this very blog, and my bias against Obama didn't keep me from making it. I actually forgot about those errors long after I had improved my understanding of GDP. So even if Bob Brinker did make the statements in order to put Obama's performance in the best possible light, it's also possible Bob Brinker just isn't as smart about GDP as he thinks he is. After all, it is a complicated subject about which very few people really are expert, and if I can make an honest mistake about it, so can he.

So the politics aside, it is impermissible to take the sum of quarterly headline GDP and divide by 2 or 3 or 4 to get an average rate. Each quarterly statement of GDP is already stating the annual rate, that is, the annual rate prevailing during the quarter. That's what the meaning of annualized is. As the quarters roll and the data become more full and complete, the numbers are routinely refined, even many years after we learn of the third and final estimate of quarterly GDP for month x, y or z. GDP is always a work in progress, and even somewhat controversial among the truly expert.

So in the second quarter, the annualized rate of GDP growth is 1.5 percent, not 2 percent, and not 1.75 percent. And that is terrible for everyone, Democrat, Republican and independent alike, because we are all in this together.

At least that is what we would like to think.

Here's A Conservative Tax Idea For Mitt Romney And The Republicans

Current dollar GDP is $15.596 trillion.

All you get, for everything, is $1.56 trillion.

Capice?

Obama's War On Coal Is A War On The Heartland Of America

From a worthwhile discussion of the issues, here:

America produces 40 percent of its electricity from coal. Eight states, including Kentucky, Indiana, Ohio, Missouri, and West Virginia, use coal to generate more than 80 percent of their electricity. But over 100 coal-fired generating plants have closed since January 2010, mostly due to Environmental Protection Agency regulations.

EPA's Mercury and Air Toxic Standards for Power Plants rule, issued last December, will make electricity generation more complex and expensive, especially in the eastern half of the United States. It will lead to the closure of many coal- and oil-fired power plants that would be too expensive to bring into compliance. Ultimately, power users will bear these costs.

Can We Call It A Depression Yet?

2008 GDP in 2005 dollars didn't recover until 2011, and only just barely so. 

Per the latest revisions from the Bureau of Economic Analysis here, real GDP in 2005 chained dollars:

2008 $13.162 trillion

2009   12.758

2010   13.063

2011   13.299

2012   13.558.

I've written that I think we had a depression starting in 2008 when GDP declined from the previous year 2007, and that the depression ended based on reports of real GDP, but perhaps looked at from the point of view of chained 2005 dollars the depression ended just last year and not in 2010 as I've maintained previously.

Al Lewis for MarketWatch here disagrees:

The Great Depression that Federal Reserve Chairman Ben Bernanke claims to have averted has been part of the background radiation of our economy since at least 2008.

It’s just that like radiation — it’s invisible.

We’ve called it the recovery, the jobless recovery, the slogging recovery and more recently the fading recovery. We’ve measured modest growth in our nation’s gross domestic product to record that our so-called Great Recession ended in June 2009. And now we are saying that if this disappointing growth suddenly disappears, as currently feared, we will be in a new recession.

There is nothing more depressing than hearing about a new recession when you haven’t fully recovered from the last one. I take heart in suspecting that in a still-distant future, historians will look back with clarity and call this whole rotten period a depression.


Lewis' remarks at least show that calling what we've been through a "depression" is now possible in polite company.

I'd call that . . . progress!

The State-Capitalist Quotation Of The Day Comes From Elizabeth Warren

Elizabeth Warren provides the state-capitalist quotation of the day, as seen at this link:

“We've got bridges and roads in need of repair and thousands of people in need of work. Why aren’t we rebuilding America? Our competitors are putting people to work, building a future. China invests 9% of its GDP in infrastructure. America? We’re at just 2.4%. We can do better.”

Oh, if only Obama were the head of China, things would be so much better . . . here!

Interest On The Debt 2007-2012 Has Completely Swallowed GDP Growth

Using the numbers from the June Z.1 release from the Federal Reserve, combined with the latest revisions to GDP from the Bureau of Economic Analysis, I'm showing current GDP, Q2 2012, at $15.596 trillion. GDP in 2006 was $13.377 trillion, for a nominal gain of $2.219 trillion over the period.

The Treasury Department indicates that for fiscal years 2007 through 2011, interest payments on the debt have totaled $2.132 trillion. Extrapolating to twelve months for fiscal 2012 from nine months so far, I add an additional $504 billion to get $2.636 trillion in interest payments over the period, for a net loss of $417 billion. If I forget the current fiscal year and substitute 2006, interest payments have totaled $2.538 trillion, for a net loss of $319 billion.

Either way, America isn't growing at all, and hasn't since 2006. In point of fact, America is in decline. Our national income is not growing sizeably enough even to keep pace with interest payments on the debt.

Ask many people who have gone bankrupt in recent years if they are familiar with the phenomenon of more going out than coming in.

Noted Progressive Calls Second-Great-Depression-Excuse For TARP "Crap"

Dean Baker, here:

[T]he commonly claimed "second Great Depression" scenario is, to use a technical economic term, "crap."  The first Great Depression, by which I mean a decade of double-digit unemployment was not locked in stone by the mistakes made at its onset. There was nothing that would have prevented the government from having the sort of massive stimulus spending that eventually got us back to full employment (a.k.a. World War II) in 1931 instead of 1941 and without the war. The fact that we remained in a depression for more than a decade was due to inadequate policy response.

Don't you see? There are no problems which Keynesian monetarism cannot solve, it's just that FDR didn't practice them then,  and that Obama is not practicing them now.

Otherwise Baker makes the case for clearing the system the quick and dirty way, the way free markets are supposed to work:

The place to look for insight on this question is Argentina, which went the financial collapse route in December of 2001. This was the real deal. Banks shut, no access to ATMs, no one knowing when they could get their money out of their bank, if they ever could.

This collapse led to a plunge in GDP for three months, followed by three months in which the economy stabilized and then six years of robust growth. It took the country a year and a half to make up the output lost following the crisis.

While there is no guarantee that the Bernanke-Geithner team would be as competent as Argentina's crew, if we assume for the moment they are, then the relevant question would be if it is worth this sort of downturn to clean up the financial sector once and for all. I'm inclined to say yes, but I certainly could understand that others may view the situation differently.


Once again, the domestic analogy would be 1920, but that's so, I don't know, modern.

Q2 2012 Anemic GDP Nearly Swallowed Whole By June's Debt Service Payment

WTOP reports the annualized dollar figure for Q2 2012 GDP at almost $118 billion, here:

Current-dollar GDP increased at an annual rate of $117.6 billion in the second quarter to $15.6 trillion.

Unfortunately, interest payments on the public debt swelled in June to nearly $104 billion:

The debt service shark just chomped the thing down, leaving the head and shoulders on the beach.

Q2 2012 GDP, First Estimate, Up Only 1.5 Percent. Q1 Revised Up To 2 Percent.

The Bureau of Economic Analysis report may be found here. The customary summer revision of the data going back several years is also part of the release, here.

The revised real GDP numbers going back to 2008 are something of a stunner, revealing no real GDP growth in any year from 2008 at 2.5 percent or above.

I am reminded of this statement attributed to Ben Bernanke three years ago today at Reuters, here:

It takes GDP growth of about 2.5 percent to keep the jobless rate constant, Bernanke noted. But the Fed expects growth of only about 1 percent in the last six months of the year.

"So that's not enough to bring down the unemployment rate," he said.


Since we haven't had annual GDP growth of 2.5 percent for going on five years, declining unemployment obviously has had nothing to do with government action, but rather with the growing number of people not counted as unemployed. Headline unemployment is based on the answer to the question "Did you look for work in the last four weeks?" and if you answered "No" you are not counted as unemployed even if you are.

Americans have dropped out in massive numbers because they are tired of beating their heads against a wall of mismatched skills, massive age discrimination, cheaper foreign labor and inhospitable government policy toward business, and they no longer count, quite literally.

It's no surprise really. 50 million abortions since 1973 haven't counted either. And while a gunman killing a dozen or more in a theatre makes big news for a few days, a similar number of illegals dying in a truck crash a few days later doesn't.

The message of the "modern" world is that lives are expendable, especially unemployed lives, who are now nothing more than "depreciating assets".

The Whole World Is Turning Japanese, He Really Thinks So

So says Scott Sumner, here:


Wherever people draw a line, bond yields just seem to plunge right through, to one record low after another. And we know from Japan that they can go even lower. But what does this mean?

It probably means multiple things. ... We are looking at BOTH low inflation and low real GDP growth for many years to come. ... Japan is the future of the world.

I'm Shocked: George W. Bush Warns Against Spending Cuts Same As Romney

The Keynesian grip on the Republican Party continues apace, which is why it is no match for the real Keynesian deal in the form of the Democrats:

[W]hile warning of the consequences of spiraling federal debt, the book cautions against deficit reduction as an immediate goal, saying tax increases and spending cuts in the short term could strangle growth.

Read all about it here.

The reason these clowns are against spending cuts is they don't have enough confidence in their growth measures. Without the GDP gained from government spending, their policies look weak.

Because they are.

As Ever, Monetarists Blame Savers For Depression Instead Of Themselves

So Martin Wolf, here:

In 2007, US gross private borrowing was 29 percent of GDP. In 2009, 2010 and 2011, however, it was negative.

Above all, private sectors are running large surpluses of income over spending. In the U.S., the financial balance of the private sector turned from a deficit of 2.4 percent of GDP in the third quarter of 2007 to a surplus of 8.2 percent in the second quarter of 2009. This massive shift would surely have caused a huge depression if the government had been unwilling to run offsetting fiscal deficits. That is how the depression was contained. ...

Austerity should follow a strong recovery, not proceed [sic] it.

Should! What a crock!

Private actors in every economy everywhere work every day year in and year out in the hope that they will and the belief that they can save enough to enjoy and care for themselves and their families, but governments never save a damn thing, not even in the good times, which is why citizens hate taxes.

The promise of the time value of money leads the wise always to save, and when they cannot save to economize. Truly exceptional individuals always do both, but neither idea can even be found in the track record of governments.

Think of it as a form of bipolar disorder writ large. The whole world is suffering from it.

"Liberalism is a mental disorder."

-- Michael Savage