A State of Resignation

451,000 new applications for unemployment benefits were submitted last week, yet Obama’s administration and the U.S. media continue to bombard us with “recovery” and “growth” spinnage.

The folks overseas, however, are inclined to tell it like it is. For example, here are some revelations from the Singapore Business Times, whose editors have nothing to hide from their readers.

– “US August car sales weakest in 27 years” (03 Sep. 2010)

“(DETROIT) Automakers posted their weakest US August sales in 27 years, underscoring uncertainty about the strength of the recovery in the world’s largest economy.

“Sales dropped more than 21 per cent from the government incentive-fueled boom a year ago. Monthly auto sales data represents one of the first and broadest-based snapshots of consumer demand …

“The bleak results were a reminder that, for all the good news about the turnaround of the Detroit automakers, the market for cars and trucks in the United States remains frail.” –

– “Box cargo capacity may shrink as demand declines” (09 Sep 2010)

“(HONG KONG) Maersk Line, the world’s largest container vessel operator, said the global shipping industry may have to cut box cargo capacity from the fourth quarter as demand growth slows at US and European retailers …

“A larger-than-expected jump in shipping demand in the second and third quarters prompted lines to deploy idled vessels to relocate empty containers and impose extra surcharges to offset the costs …

“The shipping market contracted in 2009 for the first time since containerisation became globalised in the 1970s …

“Maersk Line lost a a record US $ 2.09 billion last year.” –

– “Singapore holds firm as US loses competitive edge” (10 Sep 2010)

“SINGAPORE remains the world’s third most competitive economy, leapfrogging the United States, which has slipped to fourth place from second due to large deficits and a weakened financial system, the World Economic Forum (WEF) says in its latest annual review of the competitiveness of countries …

“Singapore took top place for three straight years for government efficiency, ethics and a lack of corruption among its civil servants, according to the 2010/2011 World Competitiveness Report.

“Switzerland is the world’s most competitive economy, followed by Sweden. The US, which fell from first place in the 2008/2009 survey, continued to lose ground due to government debt and uncertainty about the country’s overall economic outlook, the 2010/2011 report said.” –

Last Wednesday, Christina D. Romer, chairwoman of President Obama’s Council of Economic Advisers, gave a farewell speech at the National Press Club in Washington. That’s right – amidst all our economic woes the key member of the Council has resigned. Ms Romer used the occasion, however, to pass on some advice to anyone who might care to listen – advice, no doubt, that has been ignored by the administration, and which is unquestionably the reason for her resignation.

“While we would all love to find the inexpensive magic bullet to our economic troubles,” she said. “the truth is, it almost surely doesn’t exist. The only surefire ways for policymakers to substantially increase aggregate demand in the short run are for the government to spend more and tax less, and in my view we should be moving forward on both fronts …

“Given our long-run fiscal challenges, any additional support should be done in a responsible way,” she said. “But concern about the deficit cannot be an excuse for leaving unemployed workers to suffer.”

The US economy is not growing at its full potential because of a lack of consumer demand, Ms Romer said. She launched a vigorous defense of the stimulus and said this crisis is fundamentally different from other postwar recessions and required dramatic action.

After expressing concern for unemployed workers and a “lack of consumer demand”, Ms Romer strongly supported stimulus action, “and we need to do it quickly,” she urged.

But President Obama is on a different page. The “White House” announced on the following day that no second stimulus package is being considered. Instead, according to the Washington Post, among the options under review are “a temporary payroll tax holiday and a permanent extension of the research and development credit.” But not a word about job creation.

Economist Paul Krugman just gave us something to think about. “Here’s the situation,” he wrote. “The US economy has been crippled by a financial crisis. The president’s policies have limited the damage, but they were too cautious, and unemployment remains disastrously too high. More action is clearly needed. Yet the public has soured on government activism, and seems poised to deal the Democrats a severe defeat in the mid-term elections. The president in question is Franklin Delano Roosevelt; the year is 1938. Within a few years, of course, the Great Depression was over.”

And the formula for success? Emergency Shipbuilding Programs were established by FDR and millions and millions of jobs were created almost overnight. And it took just the “stroke of a pen”.