Suddenly Mr Obama's government is out of funds. Let us review where it went:
First we bailed out the banks.
Then we bailed out the car companies.
Then we bailed out the state governments and the real estate flippers with the first stimulus - which gave a massive tax subsidy to flippers and a large injection of desperately needed capital to states. What that stimulus did not do is provide a significant source of new federally subsidized jobs. At best it kept state governments from massive layoffs or previously planned project cutbacks.
Then we bailed out the car companies again with the massive car rebate bubble that at least did put some cars in driveways. a better bubble - but not more than a better bubble. The resultant increase in GNP was predictably temporary and thereby mostly illusory.
Now we are in a Depression. And we are told there is no money left now for the most essential bail out of all. Consumers-workers are impoverished. Most critically their are no jobs for them. They have no credit so the recovered banks won't lend to them. Buying a new car is likely to become an ever more distant memory to millions of families. Buying new school clothes or home computers isn't even possible for millions this year. And in this climate consumers are going to sustain a production and company expectations rally with the consumption necessary to drive both? They must be putting hallucinogens in the DC bubble machine. This will be a double dip depression with GNP following the consumers capability.
We are in a deflationary spiral. Think of the nations vitality swiftly rushing down the drain of a sink. Increasingly lowered spending leads to increasingly lowered employment which leads to even more increasingly lowered spending. The only way to plug this drain once it reaches a critical point we have likely passed is with government funded jobs. At one time these morbid depressions always ended with morbid wars - as millions were mobilized. The brilliance of FDR was demonstrating that a federal jobs program could accomplish the same end as war mobilization. In fact Mr Roosevelt restored the jobs market to the level it was at at just before the Depression BEFORE Pearl Harbor. We need only to convince the private investor the new consumers working on government projects are really significant and stable income streams for new stores and new plants to meet new demand.
Things are so much different than in the 80's mini-Depression. For consumers this downturn goes back to the recession and jobless recovery when Bush took office. In a decade there has been only a few months real growth for consumers incomes and those were just before the bottom fell out of the housing market. The balance sheet of families hasn't been lower in most of a Century. The short crises of consumers in the 80's was actually ended by a miraculous product. The PC hit the markets in 1980 - three years before the 80's Depressions peak and jobs were increasingly created by the bushel full until the computer revolution ended what otherwise would have been a much longer nightmare. There is no such miracle product that will be snapped up by both companies and families on the horizon.
Without the exact right policy in a deflationary spiral (one that convinces producers of new stable consumers) the only way to go is down. By spring unemployment will be over 12%. Then things start to change beyond any experience most alive have ever known. If we don't do exactly the right thing unemployment will increase 50% every six to 18 months for a year to three years. At that point the government will do something because it would then face massive street riots involving all political extremes which soon will seem part of the regular landscape as millions stridently call for this governments end. Seriously. The public won't stand for 25% unemployment. They will literally revolt.
Mr Obama seems to be a novice being tutored in economics by morally bankrupt fools he otherwise calls his staff economists. But, optimistically, perhaps he is just biding his time till the crises becomes obvious even to the idiot conservatives in Congress and he has the votes to do what is necessary. It looks like the former. Hopefully sanity is restored to a condition rapidly spiraling out of human ability to resolve in a generation!
the financial model has been a great success from the vantage point of the top of the economic pyramid looking down? The economy has polarized to the point where the wealthiest 10% now own 85% of the nation's wealth. Never before have the bottom 90% been so highly indebted, so dependent on the wealthy. From their point of view, their power has exceeded that of any time in which economic statistics have been kept.
You have to realize that what they're trying to do is to roll back the Enlightenment, roll back the moral philosophy and social values of classical political economy and its culmination in Progressive Era legislation, as well as the New Deal institutions. They're not trying to make the economy more equal, and they're not trying to share power. Their greed is (as Aristotle noted) infinite. So what you find to be a violation of traditional values is a re-assertion of pre-industrial, feudal values. The economy is being set back on the road to debt peonage. The Road to Serfdom is not government sponsorship of economic progress and rising living standards; it's the dismantling of government, the dissolution of regulatory agencies, to create a new feudal-type elite.
We need to cancel the other bailouts if necessary, Mr President. For if we don't bail out workers there will be few banks will loan to, a tiny number in car dealerships and no one to pay taxes. Mr Obama will find the money to employ a huge portion of America's workers, hopefully in necessary infrastructure improvements, soon. There is no alternative which we might all survive. There is no alternative that Mr Obama wants to be responsible for.