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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.

249 Reader Comments (so far…) Sign In or Register to comment

deber B

starr Nite, you are staying up too late and based on your post at 4:00 a.m. you may need more sleep LOL!!    You, in no way, are qualified to state that Liz Peek’s credibility is zero.  No where close.   You are personally attacking  her and have absolutely nothing to back it up.

Shame on you!!!!  : ( 

By deber B on 10/11/2009 11:43 am
starry Nite
Thank you for your concern -about my lack of sleep but due to differing time zones it may not be as late as you think in my part of the world.  By the way I call what Liz Peek is doing a personal attack on President Obama since she does venture into his personal life in addition to his policy initiatives. She is also politically biased
By starry Nite on 10/11/2009 2:19 pm
deber B
starr Nite, the mastheads ALL venture into the personal lives of other people, too.   They, too, are politically biased.
By deber B on 10/12/2009 5:43 am
Smarterthan That

In that case, suggested reading for Liz would be ; "Arguing With Idiots" by Glenn Beck. That would be the only way for her "wake up" the chronically Obamanated.

By Smarterthan That on 10/13/2009 8:55 pm
deber B
Liberals and Taxes: The Big QuestionBy Gene Schwimmer
Like many Americans who watched their savings nosedive in the market crash of ‘08, I’ve had to retrench, rethink and re-strategize my retirement plans.  One course I’ve considered is to spend less and save more.  The second is, somehow, to get a nickel for every time some Liberal said or wrote something like this:
The last time the top income tax rate was 39%, the United States enjoyed a booming economy, rising incomes, low unemployment and expanding budget surpluses.
Unfortunately, that simple truth has been ignored by Republican propagandists and mainstream media alike during the debate over President Obama’s stimulus plan and budget proposal.
Well, there’s certainly a lesson here for Obama and the Democrats, and for Republicans, too.  Surprisingly, it’s the same lesson, and a lesson neither expects.
But first, a brief digression to dispel the Liberal claim that only "the rich" benefited from the Bush tax cuts: The graph is here: http://www.americanthinker.com/2009/10/liberals_and_taxes_the_big_que.html
By deber B on 10/11/2009 6:27 am
sibelle daubigne

Deber, Thanks for the link! I am totally with you on the money!

I think Obama and Michael Moore are coming, at the same time, on having a " Love affair with Capitalism!" :-)

By sibelle daubigne on 10/11/2009 12:42 pm
deber B

phyllis, as you are weary of Liz Peek’s talking points that in my estimation raises valid points on the direction Obama is leading this country, we, on the right, are extremely weary of the "unconditional love brigade" on the left who never question Obama’s decisions.   It is, indeed, frustrating, I’ll certainly give you that.   As I do agree with Obama on taking more time to assess the situation in Afghanistan, I do not agree with him that he is not accepting of General McCrystals assessment especially since Obama appointed him due to his expertise in this situation and has now decided to ignore him.    Once again, he places himself between a rock and a hard place.  

By deber B on 10/10/2009 5:38 am
deber B
Wonderful opinion piece, phyllis, as usual.   Remember, when you are bashing Bush about today’s economy you are falling on deaf ears!   Anyone with the capibility to read and a good memory KNOWS that Jimmy Carter with his ridiculous "affirmative action" policy went to the banks and said, "lighten up the qualifying process…Americans deserve a home."   The rest is history.   Clinton enhanced it…again…the affirmative action push and subprime mortgages went wild from coast to coast from country to country!   The brokerage firms all got in on the action….latinos, minorities…all you had to do is show up with a heartbeat and a pulse and you got a mortgage….no money down….no closing costs and a mortage of 120% with an ARM that was going to go up making the property no longer affordable on their limited incomes!   THAT is what started the whole economic mess we are in today.   ACORN was huge in giving out these loans over the past decade.    That’s why we’ve had so many foreclosures and bankruptcies….bank bailouts, TARP….and nothing has worked.    From my point of view, Obama didn’t bring this country back from the brink….he literally enhanced our economic woes only this time it is LONG TERM debt.   Obama simply didn’t fix the problems.   He put a bandaid on them….just like he’ll continue to do when he extends Stimulus I for longer unemployment benefits.   All he had to do was cut taxes on the small businesses, provide 1% loans (LOC) and give the American people $5,000 to spend in 60 days.   Had he done that we wouldn’t be posting about this today.   We would be praising him!!   He would’ve saved the jobs, added new jobs and Americans could’ve paid back mortgage payments (helps the banks) back rent, purchased retails items from A to Z….the building industry wouldn’t have suffered.   Why didn’t he do that?   Do you have an answer for why Obama felt the pork laden stimulus should go to special interest programs instead of to our country’s largest employer of jobs?   Think about the "trickle down" effect that would’ve had on our economy.   Just blows my  republican mind.   And, still, he snubs our small businesses….even today.     This is all about creating situations where government is forced to step in and take over.   The more government control the better in the Obama White House.
By deber B on 10/10/2009 1:52 pm
deber B
Dems Health Care Bill Will Cost Families $1,700 More a Year

 

 

The Democratic nationalized health care bill will cost American families $1,700 a year according to a newly released study.
Premiums for a single person would go up $600 than would be the case without the legislation.
The AP reported:
The health insurance industry has been working until recently to help draft legislation, while publicly endorsing President Barack Obama’s goal of affordable coverage for all Americans. The alliance has grown strained as legislation advances toward votes in Congress.

Late Sunday, the industry trade group America’s Health Insurance Plans sent its member companies a new accounting firm study that projects the legislation would add $1,700 a year to the cost of family coverage in 2013, when most of the major provisions in the bill would be in effect.

Premiums for a single person would go up by $600 more than would be the case without the legislation, the PricewaterhouseCoopers analysis concluded in the study commissioned by the insurance group.

"Several major provisions in the current legislative proposal will cause health care costs to increase far faster and higher than they would under the current system," Karen Ignagni, the top industry lobbyist in Washington, wrote in a memo to insurance company CEOs.

The study projected that in 2019, family premiums could be $4,000 higher and individual premiums could be $1,500 higher.
Of course, the fact that a government run health care program would cost more than a privately run system surprises no one.
http://gatewaypundit.blogspot.com/2009/10/dems-health-care-bill-will-cost.html
By deber B on 10/12/2009 6:40 am
Kathy Lee
Huh?  Why is this directed at me????
By Kathy Lee on 10/09/2009 10:11 pm
Kathy Lee

Liz Peek,

I want to compliment you on another great Friday editorial.  You are always spot on.  Many of us live for Fridays on Wow!

By Kathy Lee on 10/09/2009 10:19 pm
deber B

THE WILL TO COWER

"The single most important essay on the Obama administration’s first year is Charles Krauthammer’s "Decline is a choice." It usefully collects evidence to advance the argument that Obama’s domestic and foreign policy positions work together to support the decline of American power. As Krauthammer more broadly puts it: "The current liberal ascendancy in the United States—controlling the executive and both houses of Congress, dominating the media and elite culture—has set us on a course for decline. And this is true for both foreign and domestic policies. Indeed, they work synergistically to ensure that outcome."

Krauthammer emphasizes the contraction of American power abroad. Krauthammer makes the essential points. Bowing and scraping has become something of a habit, literally and figuratively. One might add footnotes referring to Hillary Clinton’s salute to the Saudi king and the State Department’s $2.5 million foreign-aid earmark for Libya that was to include $400,0000 for two foundations─one headed by Kaddafi’s son Saif al-Islam al-Gaddafi, and another headed by his daughter (reworked upon exposure).

What is to be done? Here Krauthammer is simply prescriptive: "Resist retreat as a matter of strategy and principle. And provide the means to continue our dominant role in the world by keeping our economic house in order." For now, it is enough that he has described the syndrome that afflicts us."

http://www.powerlineblog.com/

By deber B on 10/12/2009 6:43 am
elle vee
I always enjoy Liz’s threads. She pulls no punches and tells it like it is. Thanks Liz for your great topics.  
By elle vee on 10/09/2009 10:29 pm
Kathy Lee

Elle Vee,

Oh so do I.  Seems like Liz Peek’s threads are where we can discuss the truth about Obama and what he is doing to our economy and the war.  I like her editorials and she does post on other sites.  Always the best.  She chose a perfect pic of Obama, just like him to have that "non caring look" during a meeting.

By Kathy Lee on 10/09/2009 10:37 pm
Frank Somsel

Bottomline: Obama has no idea what he’s doing. He duped everybody into believing things will change and get better. Its been 9 months. Wheres the beef?

For all of you Obama supporters. Hows that CHANGE working out for you?  Not much good to say about him, is there?

 

By Frank Somsel on 10/10/2009 3:56 pm