I believe Bill Clinton was the only Democratic President who actually sought to create growth within the economy when there was none. The other Presidents merely went about their way to increase the span and scope of government.

Also, the comment about the stimulus on my part was dumb. It was Congress, not the President, who pushed for that.

Originally Posted By Dane
That said, it’s not a myth that, with the exception of Bill Clinton, Democratic spending has a tendency to be of the “if we spend now, it will get repaid eventually” mentality.

Except that it is a complete myth – it seems that the idea that Democrats spend and Republicans save is so deeply ingrained, no amount of facts can shake it! And the financial crisis happened on Bush’s watch, partly as a result of relaxing financial regulation for his constituents far too much.

That said, it’s not a myth that, with the exception of Bill Clinton, Democratic spending has a tendency to be of the “if we spend now, it will get repaid eventually” mentality.

As you know, my area is in finance, and Obama’s decision making with respect to GM is absolutely appalling. He basically told the bond holders (who under US securities law are senior to shareholders in US bankruptcy court) that their bonds would be deemed virtually worthless, while granting GM pensioners and 401k participants (who were large shareholders in GM) that they would be granted preferential rights in the new GM.

While this sounds cheery on the surface, the reality is that many of GM’s bond holders were retirees from other companies. These were individuals who placed large portions of their retirement into GM bonds which were supposed to be secured against the assets of the company. Instead of helping these retirees out, Obama decided to give preference to the retirees of the UAW, since they were one of his main campaign supporters (both in donations as well as rallying votes).

Now, the problem is that Obama’s solution is to print more money and issue stimulus packages (~$300 per household) while getting rid of tax cuts.

When the lowest tax bracket returns to 15 percent (from the current level of 10 percent), every person who earns more than $6000 a year (after standard deductions) will be paying more in additional taxes than that palsy stimulus check.

Giving the American people a $25 a month bonus paid in arrears (since this is a $300 tax rebate against 2008 taxes, paid in 2009) in exchange for a minimum of 5 percent increase in taxes on the lowest bracket. That means that the only people who stand to benefit from said stimulus are those very near to the poverty line.

Families who earn $80k a year, are considered middle to lower-middle class in America. A couple who earns $80k a year can expect to see their tax liability increase by around $6k a year. So, in exchange for this wonderful stimulus package, the average American gets the privilege of paying the US government 7 percent more per year in taxes AND see the value of the US dollar decline due to anticipated inflation rates of 5-7 percent above current levels.

Blaming the current economic situation on Bush shows a drastic misunderstanding of monetary policy. The Federal Reserve increased rates to hedge against inflation, but not as quickly as was necessary. This was not the problem. The key problem was the fact that banks and mortgage lenders kept interest rates artificially low. This was exacerbated by people who thought they could buy a house for free, or in some cases be paid to live in a house (Option ARMs).

Now, blaming the future economic crisis (inflation on a scale of 10 percent per year) on Obama fits, as it is his primary solution to the problem. Rather than allow the issue to fix itself (force the banks, mortgage lenders, auto manufacturers/lenders, finance companies to answer to their solvency issues which they self-manifested), he has chosen to taken on all the bad debt of the last seven years and allow the banks to walk away clean.

This will further extend the ideals of entitlement, as, now, corporations as well as individuals will seek governmental hand-outs. One CIO, who I personally respect, placed his opinion of the TARP and TALF quite bluntly when he had his company apply for assistance from the government:

“Our books are quite solvent. We don’t need the money. However, if the US government is giving hand-outs, it would be at our strategic disadvantage to not attempt to get our share of the pie.”

The US government effectively gave a carte blanche to the finance industry. Rewarding those companies which created the financial nightmare opportunities to grow their assets at the expense of the everyday US citizen.

The problem is not with stimulating the banks. They won’t lend, no matter how much money the US government throws at them. The problem is with the American people being of a perpetual debtor, as opposed to a saver, mindset. We always believe that things will get better and that “American ingenuity” will save the day.

No one (save the extremely conservative fiscally) will ask the tough questions or seek the tough answers. Why? Because the reality is that the financial markets need to be cleansed. A correction is necessary.

Real estate prices, historically (dating back to the 1600s) grow at 2 percent per year. This was the historical basis for inflation. Equity investments historically grow at a rate of 5-7 percent per year. Commodity prices historically maintain pace with real estate prices, with the two having somewhat inverse growth patterns (one goes up when the other goes down), but their net correlation is 2 percent upward.

Even accounting for the recent turmoil in the markets, the DJIA is just about on pace for growth since 1993, witnessing 137% aggregated growth over that time period. We’ve seen 5.5-6 percent annualized growth over the last 16 years. That includes three major market downturns, and does not account for dividend distributions.

So, the markets (from a trading standpoint) were never in much danger, yet the government threw unacceptable sums of money at the problem hoping to fix it. Instead, we now have two problems:

1) Banks are still going to fail due to poor asset management with respect to their financial book-keeping.
2) The government must find a way to pay for all of this.

If Japan, China and the rest of Asia take a serious look at the ability of the US government to pay on treasuries, they will see the problem.

Originally Posted By Dane
As Obama continues to release dollars into the money supply, he perpetuates the idea that Democrats will spend to create a perfect world, under the assumption that a government’s debts need never be paid.

Welcome back Dane! Still, you aren’t trying to perpetuate the myth that Democrats are big spenders while the Republicans are fiscally responsible, are you? Because as you should know by now, that’s a complete load of rubbish. Obama is spending big, yes, but he has a very good reason to, just like every other developed country right now – it seems to be the only way to avert a depression. Unlike his Republican predecessor Bush, who spent big to fund tax cuts for the rich and support a stupid, senseless war, leaving Obama with by far the biggest debt in US history and a major financial crisis.

On the issue of Presidential vacations, I must say that I don’t counter the argument at all. It is clear that the nation voted for a hands-off approach to the Presidency in 1980, 1984, 2000, and 2004 by electing individuals who took a hands-off approach to their governorships. It really shouldn’t surprise any Americans that Bush and Reagan spent so much time outside of the office, as that is exactly how they did it in Texas and California, respectively.

I’m not saying it’s right, and I’m not going to bother justifying it. I’m just saying that the American people knew what they were getting when they voted for these individuals. To paint the entire party based upon the leadership approach of two men seems unreasonable and unfair.

Now to the more important issues…

Obama is being a great diplomat to the Middle East. He is being a terrible domestic President, however.

During his tenure in office, Barry is expected to deficit spend at a rate of $1 Trillion per year for his first four years. Assuming he is still in office after those four (which shouldn’t be a stretch, as neither party has major names coming through the pipeline… maybe I should run for the Presidency), he will probably be able to trim the deficit to $500-700mm per year through additional levy of taxes.

The statement of Obama being the favoured son of the poor is not entirely true. While it is true that blacks and Latinos showed unified support for Obama’s campaign, I think the larger impact was the fact that 20 percent more black voters showed up in this election than in any in the past, coupled with the hard-line conservatives not showing up at the polls. Many conservatives viewed McCain as a liberal who happened to sit on the Republican side of Congress. For this reason, some chose not to vote at all.

Given the following conditions (2004 data sets), the black voters accounted for 20 percent of the total voting population. A 20 percent increase over that would bring the total black vote to around 23 percent. Assuming 95 percent of black voters chose Obama over McCain, that would give Barrack Obama 22 percent of the vote versus McCain’s 1 percent, just on the black voters alone.

With the youth and new voters turning out at a nearly 2:1 ratio in support of Obama, the election was one more of philosophy of change than one of political interpretation.

Obama’s six percent overall margin of victory would indicate that he lost 16 percent on non-Black votes. This is absolutely astounding when one considers that he took the Latino vote by nearly 40% in raw numbers.

Given that McCain held a 12 percent edge among white voters, this would force an indication that Asian voters supported McCain by over four percent raw weighted votes. Given that I think Asians account for 10 percent of the vote, that would indicate that over 70 percent of Asians voted for Senator McCain over Senator Obama.

This does not surprise me, at all, since first and second generation Asians (who would be the most likely to vote, as they have not been disillusioned by the spectre of the US media) still hold many of their racial prejudices. They believe that if you vote in a black President, the majority of spending will go toward helping the black communities advance, at the expense of other groups.

Given that President Obama has taken every opportunity to spin financial results to favour his constituents (GM pensions getting preferential treatment over bond holders, bailouts granted to those banks whose Board of Directors openly supported Obama, etc), perhaps they weren’t so far off.

As Obama continues to release dollars into the money supply, he perpetuates the idea that Democrats will spend to create a perfect world, under the assumption that a government’s debts need never be paid.