HI-TRANSFER

Last night’s “job bill” speech was nothing short of a travesty, a decisive and freakish reminder that America has been taken deeply down the worst possible path.

While somewhat surprising, I suppose it just makes sense that both the Federal Reserve and the Federal Government have simultaneously lost all credibility and that both are seemingly exhausted of policy tools.

When the window of reality opened briefly in 2008 with colossal failures and crisis in every direction, many Americans got a brief and uncomfortable sense of what it feels like to be truly concerned about their current wealth and future prosperity… a sharp contrast to the heyday of the housing boom era where levering up on residential real estate was all the rage.

With a host of broken, deteriorating and dysfunctional markets, stocks down over 50%, a few notable public bank runs and several earth shaking “buck breaking” money market events, the Feds panicked and abruptly snapped into a mode of propping and bailing using creative accounting trickery, blanket guarantees and boat loads of massive Keynesian boondoggles.

What we are now seeing, I believe, is the clear recognition that the propping and stimulus action was an unmitigated failure and further that the political process and institutions that brought us these “solutions” are as weak and phony as the “recovery” they attempted to manufacture.

Bernanke’s speech yesterday at the Economic Club of Minneapolis revealed this somewhat in his recounting of events of the past few years and his recognition that the massive housing slump has made all the difference to the severity of the recession and the lackluster “recovery”, a fact that the Federal Reserve appears to have underestimated at every turn.

With a litany of platitudes and talk of the “enduring strength” of the American economy, Bernanke concluded his speech by assuring listeners that the long term prospects of the U.S. economy does not have to be materially affected by the ongoing financial crisis so long as we take the necessary steps to “secure that outcome”.

President Obama did no better last night when he outlined a list of futile fiscal policy gimmicks that could have been borrowed right from the “American Recovery and Reinvestment Act” a 2009 policy action carrying over twice the supposed Keynesian punch that we all know did little to nothing to build a durable long term recovery.

It’s over folks… By hook or crook the Feds did their best to reassemble our Humpty Dumpty economy but it can’t be done… you can’t paper over the serious mistakes made by millions of households or the bad policy created by generations of Washington DC vote peddling hucksters.

Let’s take a moment to handicap the president’s remarkable press conference from earlier today.



First, citing Warren Buffett’s absurd notion that he would rate the U.S. government “quadruple-A” was nothing more than a silly gimmick… Of course Buffett, who is deeply invested in all things U.S. (rails, insurance, brick and mortar), would like to maintain a positive outlook on the U.S. but this is hardly a thoughtful or meaningful or even coherent assessment of our long term outlook.



OBAMA: “Last week, we reached an agreement that will make historic cuts in defense and domestic spending. But, there’s not much further that we can cut in either of those categories. What we need to do now is combine those spending cuts with two additional steps. Tax reform that will ask those who can afford it to pay their fair share and modest adjustment to healthcare programs like Medicare.”



Here is a nearly perfect example of Obama either missing the severity of the situation or so ideologically rigid that he cannot see beyond his fraudulent tax and spend policy “solutions”.



There are not only plenty of domestic (and likely defense) cuts that can be made (food stamps, long term unemployment benefits, section-8 housing, government worker pensions, etc. etc.), these cuts are mandatory.



This is what the downgrade is all about. Classic social safety net programs cannot be protected or restructured they need to be dismantled.



This is what “austerity” means… serious real deal cuts and a rollback of fraudulent policy tools that we can no longer afford.



OBAMA: “Specifically, we should extend the payroll tax cut as soon as possible so that workers have more money in their paycheck next year and businesses have more customers next year. We should continue to make sure that if you are one of the millions of Americans who’s out there looking for a job, you can get the unemployment insurance that your tax dollars contributed to. … In fact, if Congress fails to extend the payroll tax cut and unemployment benefits that I have called for, it could mean one million fewer jobs and half a percent less growth. … We should also help companies that want to repair our roads and bridges and airports, so that thousands of construction workers that have been without a job the last few years can get a paycheck again. That will also help to spur economic growth.”



Again, the president appears to be compelled to pair an absurd and un-fundable policy tool with the obvious and sound benefit of extending the payroll tax cut.



Recipients receiving unemployment benefits for longer than the current 99 weeks have largely long surpassed the amount they paid into the system.



As I have noted before, unemployment insurance was NEVER intended to be an endless stipend and by perpetuating the idea that Congress can just continuously extend the benefits, the president is demonstrating that he has no idea of the severity of our current debt situation.



OBAMA: “I know we’re going through a tough time right now. We have been going through a tough time for the last two and a half years, I know a lot of people are worried about the future, but… here’s what I also know. There will always be economic factors that we can’t control; Earthquakes, spikes in oil prices, slowdowns in other parts of the world. But how we respond to those test, that’s entirely up to us. Markets will rise and fall but this is the United States of America. No matter what some agency may say, we’ve always been and always will be a triple-A country.”



This is probably the most pathetic statement of all… We always will be a “triple-A” country?



Guess what… no matter what fantasy the president or those in Washington DC want to believe in, we are NO LONGER a triple-A rated country.



Worse yet, the specter of additional downgrades loom in the near future and with the “leadership” on display in this press conference you can bet our sovereign debt rating is going lower.