New York University Professor Nouriel Roubini, who anticipated the financial crisis, called the fourth quarter surge in U.S. economic growth “very dismal and poor” because it relied on temporary factors.
Roubini said more than half of the 5.7 percent expansion reported yesterday by the government was related to a replenishing of inventories and that consumption depended on monetary and fiscal stimulus. As these forces ebb, growth will slow to just 1.5 percent in the second half of 2010, he said.
So let’s deconstruct that 5.7% a bit. For one thing, most of the gain — nearly two-thirds, in fact — was a result of an end to the panicked inventory liquidation that took place at U.S. firms last year. Remove that, and a different picture emerges — a 2.2% rise in GDP.
Most economists agree that GDP growth of 3% or so is needed to boost employment. That may in part explain why GDP could grow 2.2% in the third quarter and 5.7% in the fourth quarter, while businesses slashed 735,000 jobs over the same six months.
More meaningful is year-over-year growth. By that measure, we barely grew — real GDP rose just 0.1% in the fourth quarter from last year, virtually flat. Worse, real nonresidential fixed investment — a proxy for business investment in future output — plunged 14.6% from last year. That’s a shocking vote of “no confidence” in Obamanomics by America’s entrepreneurs and businesses.
We wish that was all, but it isn’t. According to the Labor Department, wages and benefits rose in 2009 by just 1.5%, the smallest rise in history. Meanwhile, weekly earnings for nonmanagement workers fell 1.6% last year, the worst since the 1991 recession.
These subpar numbers only underscore the weakness of our job market. In just two years, we’ve destroyed almost 8 million jobs and watched as the unemployment rate surged to 10%.
I watched this about a half-dozen times so far. It’s awesome! I love it!
I’m sure it will come as no surprise to everyone that I come out on Hayek’s side on this debate. I like the Austrian School of Economics. I’m a supply-sider. I believe in the free market, free trade, private property, saving and investing, entrepreneurship, distributed power, small government, and freedom from government intervention.
Who was F.A. Hayek?
F.A. Hayek was the greatest economist of the 20th century. He won the Nobel prize in Economics. His greatest works are “The Road to Serfdom”, “The Constitution of Liberty”, and “The Fatal Conceit”. If you take a look at the list of the top 10 books that all conservatives should read, you will see that The Road to Serfdom is #1 and The Constitution of Liberty is #10 on the list.
This is part 1 of a 3 part series produced for PBS called “The Command Heights: The Battle for the World Economy”. But the only part you need to watch to learn about Keynes and Hayek is part 1, which is 2 hours long.
This video is basically a history of the 20th century from the point of view of an economist. This is a must see for you young people who don’t know who Reagan and Thatcher were. These two leaders were the greatest defenders of freedom in the 20th century, along with Winston Churchill. And they’re both solid Christians, acting from a Christian and capitalist worldview that valued liberty, security and prosperity.
Today, Stephen Harper, the prime minister of Canada, best embodies the free-market, freedom-loving ideas of Hayek, while Barack Obama embodies the big-government, deficit-spending ideas of Keynes. Guess which economy is doing better?
ANNOUNCER: We will now take you live to Beijing for the joint press conference already underway between U.S. President Obama and Chinese President Hu Jintao.
OBAMA: As I already said privately, I would like to thank President Jintao for his kind welcome and generous hospitality, and I hope that during this visit we can have a productive dialogue about the serious issues of concern that remain between our two countries — issues ranging from the unfair valuation of your currency to the trade imbalance, and most importantly, human rights. I believe there can be a great partnership between us but it will require compromise and understanding.
(Hu Jintao “speaks.”)
INTERPRETER: Thank you, Mr. President. I would like to add that I completely understand why you feel entitled to come here and lecture China on our shortcomings. After all, my country does owe the United States a great deal of money. Oh, wait. Hold on a moment. I believe I had that backwards. In fact, now that I think about it, it is your country that owes us a large sum of money. Is this correct?
OBAMA: Uh… yes.
(Hu Jintao “speaks.”)
INTERPRETER: Now, it’s coming back to me. I believe it’s $800 billion.
OBAMA: That is correct.
(Hu Jintao “speaks.”)
INTERPRETER: Such a large sum.
OBAMA: Yes, it is.
(Hu Jintao “speaks.”)
INTERPRETER: And yet you haven’t even mentioned it. That’s so odd.
OBAMA: Uh, look, you’re going to get your money.
(Hu Jintao “speaks.”)
INTERPRETER: Are we? Are we going to get our money? Because from what I read your country is in the middle of a serious recession.
OBAMA: Uh, while this is true, there are signs that our bailout has steadied the financial markets and our stimulus package has been effective in fixing the job crisis.
(Hu Jintao “speaks.”)
INTERPRETER: I’m curious. How many jobs has it created?
OBAMA: Uh, so far, none.
(Hu Jintao “speaks.”)
INTERPRETER: I see.
OBAMA: But our health care reform plan, we’re confident, is going to lead to enormous savings.
(Hu Jintao “speaks.”)
INTERPRETER: How exactly is extending health care coverage to 30 million people going to save you money?
OBAMA: I… don’t know.
(Hu Jintao “speaks.”)
INTERPRETER: And this “Cash for Clunkers” program– I have read that you purchased many clunkers with our money.
OBAMA: Yes, we have.
(Hu Jintao “speaks.”)
INTERPRETER: What does this word “clunkers” mean?
(Hu Jintao “speaks.”)
OBAMA: Well, a clunker is a car…
(Hu Jintao “speaks.”)
INTERPRETER: I know what a clunker is. And just so there is no misunderstanding, you are not allowed to pay us back in clunkers.
OBAMA:Of course not.
(Hu Jintao “speaks.”)
INTERPRETER: You know, as I listen to you, I am noticing that each of your plans to save money involves spending even more money. This does not inspire confidence.
OBAMA: I assure you, you’re going to get your money.
(Hu Jintao “speaks.”)
INTERPRETER: Will you kiss me?
OBAMA: Sorry?
(Hu Jintao “speaks.”)
INTERPRETER: Will you kiss me?
OBAMA: I don’t understand.
(Hu Jintao “speaks.”)
INTERPRETER: I like to be kissed, (shouts) when someone is doing sex to me!
OBAMA: There’s no need for that.
(Hu Jintao “speaks.”)
INTERPRETER: No? You know how many uninsured we have in China? One and a quarter billion, billion. But I’ll tell you this: We don’t owe anyone $800 billion.
OBAMA: Well, obviously, we take our debt to you very seriously.
(Hu Jintao “speaks.”)
INTERPRETER: I suppose if I really wanted to get my money I could call and say I was a Wall Street banker who needs his bonus. But really, why should I have to stoop to that level?
OBAMA: You don’t have to stoop to any level.
(Hu Jintao “speaks.”)
INTERPRETER: Please understand if it were my $800 billion I wouldn’t care, but it belongs to my country. I feel like I should bring it up.
OBAMA: You’re going to get your money.
(Hu Jintao “speaks.”)
INTERPRETER: Say, while you’re here, are you at least going to treat me to dinner and a movie?
OBAMA: I’m sorry?
(Hu Jintao “speaks.”)
INTERPRETER: I think it’s the polite thing to do, (shouts) before doing sex to me!
OBAMA: Mr. President, please.
(Hu Jintao “speaks.”)
INTERPRETER: Very well.
OBAMA: I assure you that as soon we solve this economic crisis…
(Hu Jintao “speaks.”)
INTERPRETER: Which one? The one that your country’s reckless real estate speculation caused? That one? I just want to make sure I know which one we’re talking about.
OBAMA: We are taking steps to make sure that what happened will never happen again.
(Hu Jintao “speaks.”)
INTERPRETER: What steps?
OBAMA: Uh, reform of banking regulations.
(Hu Jintao “speaks.”)
INTERPRETER: Do I look like Mrs. Obama?
OBAMA: What?
(Hu Jintao “speaks.”)
INTERPRETER: Do I look like Mrs. Obama?
OBAMA: Of course not.
(Hu Jintao “speaks.”)
INTERPRETER: Then why are you trying to (shouts) do sex to me like I was Mrs. Obama?
OBAMA: Now, now.
(Hu Jintao “speaks.”)
INTERPRETER: Just do it. Get it over with.
OBAMA: Mr. President!
(Hu Jintao “speaks.”)
INTERPRETER: Don’t be a tease.
OBAMA: I just…
(Hu Jintao “speaks.”)
INTERPRETER: I can take it.
OBAMA: This is not the time or place.
(Hu Jintao “speaks.”)
INTERPRETER: Very well. In that case, I call this press conference to a close, and Live from New York, it’s Saturday Night!
WINTERY KNIGHT 