Wall Street Weekly | 10/09/2009 12:45 pm
Sinking Dollar Fair Warning to Obama, by Liz Peek

Image: WhiteHouse.gov
Bears, Bulls, Chickens and Pigs: wOw’s Wall Street Weekly with Liz Peek (Week of 10/5)
Editor’s Note: Liz Peek is a financial columnist.
The New York Times ran a story this week about the art that the Obamas have chosen for the walls of the White House. Featured in the piece was a painting by Ed Ruscha. The chosen canvas has a red background with the words "wait a minute," "maybe yes" and "maybe no" floating across the space. What an appropriate choice for our young president, who is suddenly irresolute about Afghanistan. Having once pronounced Kabul as central to the war on terror (oops! make that the Overseas Contingency Operation), the president is now angling for a Goldilocks position: not too little, not too much, responding to polls that show waning support for our activities in that desperate country.President Obama is uncertain not only about our military options, but also – dangerously – about economic choices. He recently affirmed while addressing a Wall Street crowd that "I’ve always been a strong believer in the power of the free market." That was good to hear, because almost none of his proposed programs suggest a love affair with capitalism. Instead, he has offered up one measure after another that substitutes government fiat for market economics – most notably in autos, health care and energy. The newest entry is the proposed Consumer Financial Protection Agency whose czar will be empowered to decide on "the manner, settings and circumstances for the provision of any consumer financial products or services." Moreover, he has revved up his antitrust department, sanctioned pro-labor policies burdensome to American employers and started a trade war.
This litany of business-unfriendly stances is taking a toll, not only on the president’s popularity, but on the dollar. The dollar took a sizeable hit this week (and gold soared) when the Australians boosted their key interest rate, signaling a recovery in that country. While earlier this year global investors drove the dollar briefly higher in their quest for safety, they have since had second thoughts. The euro, for instance, has gained 18% in value compared to the dollar since March. You don’t have to read the tea leaves to find reasons to sell the dollar – you can simply delve into the budget projections.
To put things in perspective, note that budget deficits in the U.K. are about to sink the Labour Government. The IMF puts the U.K. budget deficit this year at 11.6% of GDP and at 13.2% next year. The net public debt of Great Britain is expected to amount to 92% of GDP in 2014, up from 58% today and 38%in 2007. (The Obamacare folks should note that the IMF has called for the U.K. to rein in their health-care program, a leading budget-breaker.) The Brits are alarmed about this state of affairs, which is why they are about to junk their existing government. David Cameron, the Tory leader most likely to take over as Prime Minister, has warned that the country is in for tough times – severe cuts in social spending and higher taxes. That is not the usual campaign rhetoric, but the country is looking the future square on, and does not like what it sees.
Here’s the sobering news for the U.S.: we’re not that far behind the U.K. Our budget deficit will total 12.5% of GDP this year according to the IMF, and our national debt will soar to 85% of GDP by 2014. These figures are spurring talk that the dollar will no longer be the world’s reserve currency and that oil producers may move to price their product eventually in a basket of currencies.
Read more about: Barack Obama, David Cameron, Economy, Ed Ruscha, Government, Liz Peek, Money, News, Politics, The New York Times, United Kingdom, Wall Street Weekly























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DOES THE B IN OBAMA’S PLAN B FOR AFGHANISTAN STAND FOR BUSH?
"Fresh from having taken down the "Pakistan First" option mooted by Joe Biden for dealing (or rather not dealing) with Afghanistan, the Washington Post editorial board turns its attention to the approach recently mooted by President Obama himself - maintaining current troop levels and building up the Afghan army. The Post notes that this approach, while sparing Obama from the wrath of his political base, would perpetuate the losing approach employed by the Bush administration in recent years while mirroring the pre-surge approach that "brought Iraq to the brink of catastrophe."
It will be quite something if Obama’s "Plan B" for Afghanistan turns out to be more of the Bush policy he regularly castigated. It’s fine to criticize that policy, but only if you’re prepared to change it. Thus, the Post shows intellectual honesty - it blames the Bush administration for leaving Obama with the current mess, while supporting what may well be a more effective approach to fighting a war it has consistently supported.
The same cannot be said for liberals like E.J. Dionne who accept the importance of succeeding in Afghanistan, excoriate Bush for leaving a mess, but balk when it comes to adopting a more aggressive approach. As the Post notes, to the extent that Bush left a mess, he did so because he kept "sending just enough reinforcement s each year to match the growing threat of the Taliban but never enough to turn the situation around." Those who are unwilling now to raise troop levels exponentially should have the decency to stop carping about Bush’s refusal to do so.
E.J. Dionne’s position amounts to this: (1) only Republicans have the stomach for fighting wars to win; (2) it was therefore up to them to win in Afghanistan; (3) instead they focused on Iraq and left Afghanistan in poor shape, (4) don’t ask us to take political risks in Afghanistan to further America’s security interests, that’s the Republicans’ job.
That’s a deplorable posture for anyone to assume; it would be a criminal one for our president to adopt.
http://www.powerlineblog.com/
That was perfect, Lee!
Liz Peek provided her usual right wing commentary. Her commentary was echoed in posts by her right wing base who write bucolic blogs as if they were experts on foreign policy and global economics.
The White House Art work is on loan and will be returned . No need to search for cost. . I am sure the Artists are honored to be chosen. The Art reflects the diversity of our nation.
The world was saved from an economic melt down and hopefully new regulation and consumer law will prevent this from happening in the future. Fincancial free fall started before President Obama took office. President Bush does not bear the blame for this - we all do. When Phil and Wendy Graham were crafting the deregulation and Wendy his wife was a Lobbyist for Enron - —- who knew what a derivitive was ?
We are getting back on track.
Oh, starry nite, Obama didn’t save this country from an economic meltdown….he enhanced it! None of the bailouts have worked not even for the auto industry. Nothing Obama has done has helped our economy. He has pushed us further and further into unsustainable debt and yet you cheer him on! Breathtaking. What Obama is responsible for under his watch is $1.4 trillion deficit compliments of failed attempts to stimulate our country. He made a HUGE mistake up front by not cutting taxes to our small businesses and provide very low interest loans so that we could keep the jobs and create more. That has to be the dumbest oversight ever made during a recession. Now we get read for "Son of Stim Two, three maybe four" and still….no jobs. He is putting a bandaid on these issues and that never works. If we are getting back on track I’ve missed something. Last time I looked our deficit is three times higher than it was last year, the healthcare bill costs will escalate each year just like England and France….bad ju ju in those two countries due to healthcare costs!
We’ll be getting back on track in 2010 and 2012 when the republicans can take back the country and stimulate her.
We’ll be getting back on track in 2010 and 2012 when the republicans can take back the country and stimulate her.
By deber B on 10/09/2009 4:30 pm The were in charge for the last 8 years and they are the ones who got us into this mess. That is why President Bush ordered the first bailout. You asked if you missed something and yes you did. The right-wing is lacking in emphathy and immagination. The left wing would not spend money on a war but they have never seen a social program they didn’t like. So the rest of us are somewhere in between. If we could all just move a little one way or the other.starry Nite, once again you are so wrong….the economic crisis started with your very own Jimmy Carter enhanced by Bill Clinton….as they sowed the seeds for affirmative action mortgages. The republicans in 2005 realized the magnitude of the subprimes and tried to correct it with the GSH Reform bill. However, your very own Barney Frank and Chris Dodd in all their glory in a democratic congress shot it down and said we had nothing to worry about it. If you don’t remember anything else, starry Nite, please remember how this whole thing started…."social" programs to help the minorities. ACORN got in there and got the illegals their homes which most are in foreclosure now.
I’m like you in that I’m in the middle. I don’t mind social programs as I believe in a helping hand up. I also believe in getting people off of those social programs and making them responsible taxpaying Americans. I don’t like war, however, it is necessary and probably always will be in America as other countries look to us to bring democracy, equal rights and safety to their countries. That will never change. How we engage in those wars is changing every day. It is costly, most importantly the number of lives it takes from our American families and after that is the cost to each and every one of us.
We need to have a moderate republican run for office in 2012. We know what we don’t want as the polls have indicated. We do not want far left leaning and we absolutely do not want far right.
What we do know, starry Nite, is that the bailouts haven’t worked. Putting a bandaid on a system never corrects it. Tampering with a recession historically prolongs it. Now Obama has to go back in and bail them out again. Companies need to fail. That’s the only way they can begin to start over again and get it right.
The economic crisis started with your very own Jimmy Carter enhanced by Bill Clinton….as they sowed the seeds for affirmative action mortgages. …" by deber B
It actually started with the good ol’ "Trickle-down economics" of Regan! Why do you suppose the Republican congress members, corporate bandits, wall street, stock-holders, et al enjoy his type of system so much?? They got REAL lucky when the Congress, WhiteHouse, etc., handed over millions and billions in their tax breaks, their no bid contracts, and all the crap they’ve pulled esp., in the past several years?
Now, President Obama and the Congress are left to clean up the mess after the fact, and some want to criticize HIS handling of the wars??????????????? Let us NOT forget how this whole mess began… It is shameful however, that we cannot agree on much of anything right now, we are so badly divided. Didn’t anyone else see the divisionary tactics happening before we got this convoluted? President Lincoln was certainly right in regard to "… a nation divided cannot stand…"
Ro H, try to stay current when discussing President Obama. This is HIS presidency now. Ronald Reagan inherited a WHOPPER from Jimmy Carter. He didn’t moan, groan, blame or whine. He rolled up his sleeves and cut taxes for our largest employer of jobs in this country….the small businesses. He was such a genuine President and Americans loved him. He brought our country back together because he was an excellent leader. President Obama is a polarizing president, a poor leader and very bad at economics and which comes first….the horse or the cart seems to trip him up on most issues.
I know the democrats are now desperate for him to get something right. You are hopeful, supportive and blind at times to his deficiencies. When you aren’t happy with Obama’s decisions you immediately blame Bush. I hope you’ll see the light soon but if you don’t that’s alright, too. We all have to believe in something so I believe I’ll just keep saving my money and not stimulate an economy that cannot be stimulated because Obama’s promise of jobs didn’t work out for millions of Americans. I believe I’ll get ready for inflation and another recession. What about you?
Good post , Starry, and the reminder of the legacy of Phil and Wendy. Yes, WH art is on loan and reflects this administration’s belief about diversity. Ditto to other valuable pieces of art and momentos from around the world. The Obamas also play host to diverse musical groups each month at the White House.
I also believe we are getting back on track, and some good can be found if one cares to dig through the rubble. Many items are downright cheap right now. Cars, houses, and fixed rate mortgages. Refinance while rates are still low. People are now understanding how credit card companies make many millions on over drafts alone that are usually built into their agreements. Buy one latte at Starbucks and go over with your debit card, and there is a $ 34 fee. People are more savvy now and watching the bottom line.
We just survived a near collapse, and people are looking at how and where they have been spending money. Suddenly being a cheap skate who counts his change is cool again. Things are not rosy, but there are some glimmers of hope. Of course, we will not see them in the weekly Peek column.
Starry,
Are you saying those of us with conservative points of view are country bumpkins?
Lee, those who are corrupting the Conservative Party are two loose-cannon factions, and it’s sad, in many ways - they’re protesters, period - a new factor on the ‘streets.’ They copy, paste, memorize, and shout down others. Amazing concept now termed revangers. Now there is every indication of "Pride before the fall," and this new socio-political group is not helping the Conservatives, or their multitudinous causes, at all.
http://www.amazon.com/Death-Conservatism-Sam-Tanenhaus/dp/1400068843/ref=sr_1_1?ie=UTF8&s=books&qid=1255183165&sr=1-1