Then there is George W. Bush. He is about to leave office in the next couple of days. President Bush has given his last press conference, attended his last cabinet meeting, and has left this country's economy in the worst possible shape ever. And let us not forget that Bush has left us with a $10 trillion dollar debt, and two disastrous wars in the Middle East. President Bush has been a complete failure in the Oval Office. I'm just patiently waiting for this ass to leave Washington--to go back to Crawford Texas and clear brush, or crash his mountain bike on some godforsaken trail.
Finally, there is the U.S. economy. For the entire month of December, 2008, I posted story after story about the U.S. economy collapsing like a house of cards. There was not much of an analysis on why the U.S. economy was collapsing. In fact, you probably know, as well as I, the reasons for this collapse--the housing crash, the subprime mortgage debt, the financial crisis and bailout, the huge U.S. debt, the war in Iraq and Afghanistan draining the U.S. Treasury. It all snowballed into a huge mess. Now we're entering the second year of the recession, and things are getting worst:
WASHINGTON - The U.S. economy started the new year on weaker footing as recession-shocked Americans retrenched further, forcing retailers to ring up fewer sales and factories to cut back production.
The Federal Reserve's new snapshot of business conditions nationwide, released Wednesday, suggested the country's economic picture has darkened over the last two months. The outlook appears equally dim.
"Overall economic activity continued to weaken across almost all of the Federal Reserve's districts," the report concluded.
To help brace the economy, Fed Chairman Ben Bernanke and his colleagues have signaled that they will leave a key interest rate at record-low levels for some time.
The Fed dropped the interest rate down to 0.25 percent in December--basically zero percent. The Fed will apparently keep this rate as it meets on January 27-28, perhaps for the rest of this year. The problem for the Federal Reserve is that they no longer have any ammunition left for their interest rate cuts, and the U.S. economy continues to worsen. U.S. retail sales have dropped 2.7 percent in December, more than double what Wall Street was expecting. Pending home sales plunged by four percent to 82.3, the lowest level since the National Association of Realtors Pending Home Sales Index started recording sales in 2001. Home prices fell by a record 18 percent from October last year, showing a year-over-year decline for 22 straight months. The unemployment rate jumped to 7.2 percent in December, as employers slashed over 524,000 jobs. For all of 2008, the U.S. economy has lost a net total of 2.6 million jobs, the first time payrolls have fallen for a full year, and the most jobs lost since 1945, where nearly 2.8 million jobs were lost. Around 11.1 million people were unemployed in December. And this number does not include those who were dropped from the unemployment rolls, who have given up looking for unemployment, or who are underemployed in part-time work. The number of people working part-time has jumped from 7.3 million in November to 8 million in December. The economic news is still god-awful. When you look at all the bad economic news coming out, the continued mess of the banking system, the subprime mortgage, the housing wasteland, the increasing unemployment, it is no wonder that consumers have been cutting back on their spending. It is no wonder that retailers have had a very "red" Christmas season, and they are still suffering from poor sales and high inventories coming into the new year.
This brings us back to the Federal Reserve. With so many economic problems that the U.S. is facing--high unemployment, high federal debt, a serious recession, and a disintegrating housing and financial market, I'm not sure that there is much the Fed can do. They have cut the interest rate down to zero, however the banks are refusing to loan out money to stimulate the economy. The Wall Street banks are facing huge losses on their own balance sheets after gambling on derivative strategies tied to the housing market. And all that $700 billion in the U.S. government's bailout to the Wall Street banks have gone into shoring up the banks' balance sheets--not giving out loans to American homeowners or businesses. I do not know what else the Fed can do in this troubled U.S. economy.
So I've been watching the news, waiting for the inauguration of Barack Obama in the White House. Obama will enter into the Oval Office in less than a week. Already he has announced an economic stimulus plan, a $775 billion plan combining tax cuts with infrastructure projects, that he had hoped would pass quickly in Congress. From what I can see, Congress is in no mood for quickly passing any legislation, and the Republicans are going back to their old ways of filibustering everything that they oppose. I'm just watching and waiting.
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