If either or better yet, both of these individuals were to do nothing, nothing at all through Q1 it would almost guarantee a rapid rebound. They apparently simply cannot help themselves, cannot stop their fidgeting.
Obama and other partisans went a long way in creating the mess of ‘08, then Obama went right on ahead and made it much worse. The stimulus nonsense was, as we had predicted before a cent was wasted, like taking water out of one end of the pool and pouring it into the other, and, on a very hot day as not quite as much made it to the other end. That is, the whole mess was a retardant on margin.
Next, being a leveler, ever-apologetic of American greatness and looking to ape the social democracies of Europe, Obama created a galaxy of regulations, each one of which scared the pants right off free enterprise. Forbes notes that, “.. studies estimate the total costs of regulation in the economy to be rapidly rising towards $2 trillion per year, or $8,000 per employee. That is close to10 times the corporate income tax burden, and double the individual income tax. When the resulting effects on the economy are considered, the total losses due to regulatory burdens may total $3 trillion, or one fifth of our entire economy.” Nice work Obama.
Then for good measure and to secure himself a place in history as the greatest obstructionist of all time, Obama has secured tax increases in the year 2013 for nearly every federal tax. It happens that Obamacare tax hikes hit then,and the Bush cuts expire. As Forbes had is figured, “... if the Bush tax cuts just expire for these upper income taxpayers, along with the Obamacare taxes, in 2013 the top two income tax rates will jump nearly 20%, the capital gains tax rate will soar by nearly 60%, the tax on corporate dividends will nearly triple, and the Medicare payroll tax will leap by 62% for those disfavored taxpayers. This is on top of the U.S. corporate income tax rate, which is virtually the highest in the industrialized world.” Nice, very nice.
Finally to Bernanke. He can’t hold still either. He too figures it’s bad PR to sit and do nothing. He’s not looking to create mediocrity as is Obama, but the result is identical. As a central banker he knows the masses can be taken with stuff that bores them to death, at least for a while before they catch on to what in this case amounts to meddling. The QEII hatched Nov/2010 was ruinous, exactly as we predicted it would be. It distorted markets and, aided by the Arab Spring, lifted commodity price inflation, bringing the consumer and thus the US economy to a near halt Q1, and as a bonus, punishing world consumers (most commodity pricing is in dollars).
The US recovers in spite of, not because of Obama or Bernanke. An activist, interventionist president and central banker can separately do harm but in combination can do a great deal of harm.
From a past member of the grievance industry we can understand the lack of interest but why in the world the chair of the Federal Reserve, one who considers himself a student of things economic, never bothered to become acquainted with F.A.Hayek, is beyond us.
Robert Craven
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