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Fed’s Ivory Tower Just Got Smaller

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Photo Credit: fbobolasToday’s weaker than expected GDP report shows just how out of touch most professional economists remain with respect to the fundamental weakness of the US economy. After more than four years of nearly never ending monetary stimulus and more than $5 trillion worth of new federal debt, the economy remains stuck in a serious recession.

The report shows that federal stimulus and deficit spending can’t create sustainable economic growth.

Although the tepid data shocked many economists, I was not surprised. I believe zero growth is consistent with the state of the real economy. The stronger growth numbers that we saw in the second half of 2012 were likely inflated due to pre-election hopes.

The disappointing economic data takes on an even gloomier tone when considered against factors that will make recovery that much more difficult. Interest rates are making their first strong upward move in nine months. Yields on 10 year Treasury bonds are up 60 basis points since the end of July, and are over 2.00% for the first time since April 2012.

The dollar is falling against most currencies except the Japanese yen (it is down more than 11% against the Euro since July), and energy prices are rising (crude oil is approaching $100 per barrel). Although these conditions are not promising, the stock market seems blissfully out of touch. As of yesterday, the S&P 500 had advanced for 8 days in a row, its longest daily winning streak in eight years.

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Obama Continues to Violate His Own ‘Stimulus’ Law by Not Releasing Quarterly Reports

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Have you heard much about President Obama’s $787,000,000,000 economic “stimulus” (now estimated to cost $831,000,000,000) lately? In its last report, published in 2011, the president’s own Council of Economic Advisors released an estimate showing that, for every $317,000 in “stimulus” spending that had by then gone out the door, only one job had been created or saved. Even in Washington, that’s not considered good bang for the buck.

Moreover, that was the fifth consecutive “stimulus” report that showed this number getting progressively worse.

Alas, that was the last report we’ve seen. Never mind that Section 1513 of the “stimulus” legislation, which Obama spearheaded and signed into law, requires the executive branch to submit a new report every three months. It reads:

“In consultation with the Director of the Office of Management and Budget and the Secretary of the Treasury, the Chairperson of the Council of Economic Advisers shall submit quarterly reports to the Committees on Appropriations of the Senate and House of Representatives that detail the impact of programs funded through covered funds on employment, estimated economic growth, and other key economic indicators.”

(The head of the Council of Economic Advisors, currently Alan Krueger, is appointed by the president, confirmed by the Senate, and works in the Executive Office of the President. He is the president’s chief economic adviser.)

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Report: Solar Firms Under Investigation for Stimulus Swindle

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photo credit: mountain/ash

The nation’s three most productive solar installation firms are under investigation for allegedly exaggerating business costs to get larger cash payments through a federal stimulus program.

The Treasury Department’s inspector general is asking SolarCity, SunRun and Sungevity to justify the more than $500 million in federal grants and tax credits they got for their work, according to The Washington Post.

The companies in question received payments through Treasury’s 1603 program, which was designed to increase renewable energy use.

The cash grant program pays installers up to 30 percent of the project cost. So by inflating business expenses, the firms would be eligible for a larger payout.

The firms might have to repay the government if found to have abused the program and could face other penalties.

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Obama Wrong Again: Unemployment Now Even Higher Than What He Predicted Without $800 Billion Stimulus

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Remember those halcyon days early in 2009 when some people believed all things seemed possible with the Messiah to lead the United States?

Remember when the White House, via their economists Christina Romer and Jared Bernstein, sold the $800 billion stimulus by saying that if it were passed, the unemployment rate would be 5.2% in October 2012?

Now those days are gone. The October 2012 unemployment rate was 7.9%, up from 7.8% in September, and the same number as when Barack Obama took office. Romer and Bernstein’s projection even had unemployment under 6% by now — without the stimulus.

23 million people out of work. 8% or higher unemployment for 42 months – 3 ½ years.

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Bernanke Pursuing Failed Policies of the Past, Pushing For Yet Another “Stimulus”

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Photo Credit: DerFussi

The Federal Reserve chairman, Ben S. Bernanke, delivered a detailed and forceful argument on Friday for new steps to stimulate the economy, reinforcing earlier indications that the Fed is on the verge of action.

Calling the persistently high rate of unemployment a “grave concern,” language that several experts described as unusually strong, Mr. Bernanke made clear that a recent run of tepid rather than terrible economic data had not altered the Fed’s will to act, because the pace of growth remained too slow to reduce the number of people who lack jobs.

The federal government said on Wednesday that the economy expanded at an annual rate of 1.7 percent in the second quarter, slightly higher than its initial estimate of 1.5 percent but lackluster in normal times. A measure of consumer confidence hit a three-month high on Friday, but that, too, was impressive only in comparison with the immediate past. The government will release a preliminary estimate of August job growth next week; it is expected to show that the unemployment rate remains above 8 percent.

Mr. Bernanke said that the Fed’s efforts over the last several years had helped to hasten economic recovery, that there was a clear need for additional action and that the likely benefits of new steps to stimulate growth outweighed the potential costs.

“It is important to achieve further progress, particularly in the labor market,” Mr. Bernanke said. “Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”

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Obama Admin: “Proud” that stimulus produced jobs at $738k each (+video)

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Secretary of Transportation Ray LaHood told The Daily Caller that he is “very proud” of the Economic Recovery Act of 2009 that put 65,000 people to work with $48 billion in federal funds for the Department of Transportation, amounting to $738,461 per job.

The Recovery Act of 2009, which in total cost taxpayers $825 billion, has been criticized because it did not prevent the unemployment rate from rising above 8 percent, contrary to what the Obama administration predicted.

“Yeah, we spent $48 billion and we put 65,000 people to work in 15,000 projects in two years with no problems,” LaHood told The Daily Caller in a video interview in Alexandria, Va., on Friday. “I’m very proud of that. I know that the governors can spend this money because over two years we gave them $48 billion, they created 65,000 jobs in 15,000 projects. This is doable. We’re going to get the money out and get people to work.”

TheDC also asked LaHood about the Obama administration’s decision to send an additional $473 million in unspent earmarks to states.

“You know what? These are old earmarks. There are earmarks that were set aside by members of Congress going back several years,” LaHood said. “We’re in the no earmark era. There are no more earmarks. This money needs to be spent because we need to get people to work.”

Undercover Video: NY union bosses – “$112 million in green jobs is ‘bulls__t’, but we’ll take the money”

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If you want to understand the idiocy of green jobs, this is a must-see video.  A word of warning: you’re going to hear “bulls__t” a dozen or so times, but that’s because the union bosses are talking about green jobs where people can get paid for doing digging holes and filling them back in.  It gets really good at 3:18, so stay with it.

Photo credit: aflcio

Morning Bell: The Unstimulated Obama Economy

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Newsflash from The New York Times: President Barack Obama’s stimulus did not work. No, the Times doesn’t say that in so many words, but in an op-ed this morning, the paper laments the sputtering economy and the fact that Washington just isn’t doing enough to help the economy grow. The problem, of course, is that Washington has done too much of the wrong things to get the economy moving again.

The economic news that’s really sticking in the Old Gray Lady’s craw is revised data released last week that shows the economy’s growth stuck at 1.8 percent, slow consumer spending, stagnant wages, higher prices for gas and food, the poor housing market, flagging consumer confidence and a recent Labor Department report showing a higher-than-expected rise in claims for jobless benefits. The Times complains:

The grim numbers tell an unavoidable truth: The economy is not growing nearly fast enough to dent unemployment. Unfortunately, no one in Washington is pushing policies to promote stronger growth now.

What the Times forgot to mention, though, is that Washington over the past two years has done a lot—a whole lot—with the biggest ticket item being the Obama-Reid-Pelosi $787 billion stimulus that was designed to “create or save” 3.5 million new jobs by 2011. Despite the extraordinarily high cost, that didn’t happen, and unemployment has increased to 9 percent.

But don’t tell that to the Obama stimulus apologists, though. In an interview on Fox News Sunday, host Chris Wallace remarked that in light of the dismal economic numbers, the Obama Administration’s policies and near $1 trillion stimulus “isn’t working” and asked Rep. Donna Edwards (D-MD), a member of the Congressional Progressive Caucus to respond. For her, those dots just don’t connect:

Well, I mean – I don’t know that I agree with that, because, you know, first of all – let me finish here. I mean, first of all, the trillion dollars for stimulus package – actually $786 billion – was absolutely necessary to make sure that this economy didn’t go into a freefall. We also know that we had to make sure that we began to stimulate the kind of growth that we need in this country to invest in the future.

For the American people, though, that reality is hitting home. Joseph Lupton, an economist at JP Morgan Chase and Company, says, “There are pretty big costs to not really generating a sizeable recovery.” And as The Wall Street Journal reports, those costs are high unemployment, with 5.8 million people out of work for more than six months.

Read More at The Foundry Mike Brownfield, The Foundry