The Obama economic freefall
Posted in the Erie Forum
#1 Feb 26, 2013
February 26, 2013
Get Ready for Obama's Impending Economic Free fall
Despite what the president may say when the Day of Reckoning finally arrives, he is ultimately responsible for what is likely to take place.
Unbeknownst to most Americans and despite the fact that inflation at the grocery store and at the gas pump is beginning to take its toll, the simple fact that the dollar is the global reserve currency has protected U.S. citizens from the kind of commodity price increases that set off the Arab Spring in Tunisia. But things are beginning to change rapidly. Iran is moving ahead with its plan to trade oil in other currencies besides the dollar on March 20, 2013:
Last week, the Tehran Times noted that the Iranian oil bourse will start trading oil in currencies other than the dollar from March 20. This long-planned move is part of President Mahmoud Ahmadinejad's vision of economic war with the west.
"The dispute over Iran's nuclear programme is nothing more than a convenient excuse for the US to use threats to protect the 'reserve currency' status of the dollar," the newspaper, which calls itself the voice of the Islamic Revolution, said.
"Recall that Saddam [Hussein] announced Iraq would no longer accept dollars for oil purchases in November 2000 and the US-Anglo invasion occurred in March 2003," the Times continued. "Similarly, Iran opened its oil bourse in 2008, so it is a credit to Iranian negotiating ability that the 'crisis' has not come to a head long before now."
Iran has the third-largest oil reserves in the world and pricing oil in currencies other than dollars is a provocative move aimed at Washington. If Iran switches to the non-dollar terms for its oil payments, there could be a new oil price that would be denominated in euro, yen or even the yuan or rupee.
India is already in talks with Iran over how it can pay for its oil in rupees.
The dollar's position as the global reserve currency has been under attack for several years now. A sampling of recent articles on the subject point to the ramifications of a shift in the dollar's status:
Why the Dollar's Reign Is Near an End
The dollar's days as reserve currency are numbered
The Curse of the Reserve Currency
I have focused attention of this crucial issue for a couple of years. Two of my commentaries address it specifically:
The U.S. dollar is under siege and for good reasons.
What are commodities, and what do commodity prices tell us?
What does this economic gobbledygook mean for average Americans? This is the simple answer: you can expect inflation to skyrocket at some point in the near future and with it will come a rapid decline in our nation's ability to influence global political events. The root cause is misguided U.S. policies, and since policies are a function of people, in this case that means President Obama is to blame. He has had four years to right the ship of state, but he has failed the test.
#2 Feb 26, 2013
As the dollar loses the protection provided by its global reserve currency status and countries are no longer required to stockpile dollars for oil trades, the dollar will rise or fall in value based on the strength of the U.S. economy. So will interests rates and inflation. Unfortunately, with deficit spending looming for as far as the eye can see and our debt burden growing more ominous every day, that doesn't bode well for the dollar's ability to compete on an even playing field.
Our government officials in Washington should have dealt with our debt and deficit problems before our economic situation deteriorated to a crisis point, but they didn't and calamity is just around the corner. For example, our penchant for routinely spending more than we collect in tax revenue, subsidizing able bodied men and women who contribute virtually nothing to our economy, paying the bills of illegal aliens who should not even be in our country, and ignoring our burgeoning debt problem because interest rates are at historically low levels have the effect of weakening our economy at a time when we should be doing everything that is humanly possible to shore it up.
It's obvious that President Obama is incapable of dealing with the serious problems that we face. His first term in office provided all of the evidence we needed to prove that he is an ideologue who is willing to do just about anything to advance his political agenda even if it means that the American people have to suffer needlessly.
Regrettably, President Obama was re-elected before the consequences of his dismal first term performance became obvious to average Americans, but the day is rapidly approaching when they will feel the effects of his ineptitude in dramatic ways. From energy policy to foreign policy to environmental policy to fiscal policy to social policy, Obama has set our nation on a collision course with reality.
Economic principles don't change because an ideologue is in the Oval Office. History teaches that the laws governing how economies work prevail in the long-run and that nations ignoring them pay the price. Even so, President Obama is a master at the art of misdirection and he is a world-class dissembler and placer of blame. That's why died-in-the-wool Obama supporters may never understand the truth. I hope that doesn't include most Americans, but given the results of the 2012 presidential election, I fear that it might.
Despite what the president may say when the Day of Reckoning finally arrives, he is ultimately responsible for what is likely to take place. I can't predict exactly when it will happen and I can't tell you how quickly the effects of his policies will devastate our economy when it's time to pay the fiddler, but I can say this: the U.S. economy is floundering at this pivotal moment and it's Obama's fault. Keep these things in mind as we move to the current crisis point -- sequestration, and rest assured that others will follow, probably in rapid succession. Buckle your seatbelts because we don't have four more years to fritter away.
Neil Snyder is the Ralph A. Beeton Professor Emeritus at the University of Virginia.
#3 Feb 26, 2013
Heard new housing starts are doing great. Maybe we can make that somehow scary. I got it. The government is building them to house people like prisoners.
That ought to give teabaggers a boner.
#4 Feb 26, 2013
Check out the sequestration on March 1, gotta love Bluegrass Boondoggies ;)
#5 Feb 26, 2013
Sequestration...isn't that the half human half ape that does the Jack's Links commercials?
#6 Feb 26, 2013
Neil Snyder, only fools take this guy seriously.
#7 Feb 26, 2013
Chimps will be eating smaller watermelon this summer
#8 Feb 26, 2013
Opps, I just read hie article. Honestly thee guy is spot on. Guess I am the fool.
#9 Feb 26, 2013
Wow, that sure is great economic news. Man you are an absolute idiot. Keep your head firmly tucked up your butt. You look so natural that way.
#10 Feb 26, 2013
Guess you heard wrong dickbreath.
Housing starts fell 8.5% in January after surging 15.7% the month before, the Commerce Department said Wednesday.
The government's report suggests home builders began work at a slower pace in 2013 than expected though the level was still the third highest since 2008. And new-home starts are likely to pick up in coming months. The number of houses built in 2012 was the most in four years.
The number disappointed analysts who had been expecting January to add on to several months of evidence the housing market rebound is gaining momentum.
The Commerce report said new-home construction totaled a seasonally adjusted annual rate of 890,000 last month after jumping to an annual rate of 973,000 in December, the best month for new-home starts since June 2008.
#11 Feb 26, 2013
Simple question. Does demand drive the economy of which appx. 70% is consumer spending or not?
#12 Feb 26, 2013
You're right. It wasn't housing starts that was up it was permits for future construction that jumped to it's highest level since 2008. I'll take it.
#13 Feb 26, 2013
Man you are a total inbred liberal retard. What demand moron?
#14 Feb 26, 2013
Obviously I men cats demanding products and services. What demand do you think? Consumer.
BTW whatever happened to us giving the rich tax breaks and they would then be demanding more workers left and right?
#15 Feb 26, 2013
Consumer demand. You know. Like when gun nuts get on a scare jag, gun manufacturers rake in tons of dough.
#16 Feb 26, 2013
Define " doing great".
Better than collapsing is not "Doing great"!
Ha ha ha
#17 Feb 26, 2013
Ha ha ha
#18 Feb 26, 2013
Even going down is considered "not collapsing". I'd say a rise in permits for future construction going up the most in 5 years is great news.
But even if housing starts went up 300% that wouldn't be great news to you because Obama is a black Democrat.
#19 Feb 26, 2013
No stupid, it is because Obammy is a lying Marxist. You black morons need to get over the race card and look how this Marxist is butt f-ing your race.
#20 Feb 27, 2013
Chimps are to stupid to realize how stupid their leader is. That is right, their leader. I didn't vote for the sock monkey and I don't view him as my "leader". It is a fact that neighborhoods go downhill when chimps move in. It is happeneing on a national level since the chimps moved in the whitehouse. Obama can be credited with the increase in racism.
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