"Obviously We're Going Through the Worst Financial Crisis and Recession Since the Great Depression"
publication date: Sep 29, 2011
If there was ever any doubt that the next year of political campaigning is going to create a negative environment, President Obama quickly erased that in a recent White House roundtable discussion with a few journalists. In the short video segment below, listen very closely to the first statement from the President in which he says:
"Obviously we're going through the worst financial crisis and recession since the Great Depression..."
I had to do a double take to make sure that this was not recorded back in 2009 early in the President's first year in office! As I've discussed in many prior articles, while the current economic environment in the U.S. is far from strong and robust, we have been in a recovery and enjoying modest economic growth the past two years.
So, Mr. President, we're NOT obviously going through the worst financial crisis and recession since the Great Depression. The severe recession ended two years ago. Corporate profits and stock prices have rebounded pretty well. Employment growth and hiring in the U.S. has lagged (as I've discussed extensively in the past) due to larger corporations choosing to expand operations more overseas than domestically.
Late in the 2008 campaign and during his first year in office, Obama repeatedly said that we were going through the worst financial crisis and recession since the Great Depression. Even back then, the statement wasn't accurate. The recessions the U.S. suffered in the mid 1970s and early 1980s featured even higher unemployment rates and much, much higher inflation and interest rates (10+ percent).
President Criticizes Eurozone Response to Sovereign Debt Crisis
Obama has blamed various outside forces during his presidency for the economic ills plaguing the nation. First was the mess he inherited and for which he blamed George W. Bush and other Republicans despite the fact that both parties contributed mightily to the housing market bubble. Then, Obama blamed the Japanese earthquake and Tsunami as well as the various Middle East uprisings for harming the fledgling recovery.
Now, the President is blaming the European debt crisis and those governments handling of that crisis for harming the U.S. In this recent discussion with a few reporters he said:
"Some of the challenges that we've had over the last several months actually have to do with the fact that, in Europe, we haven't seen them deal with their banking system and their financial system as effectively as they needed to."
So what should these governments be doing instead. The President failed to specify or suggest anything in particular.
Election Year Negativity Coming
In the upcoming election, here are the main messages I think we will hear from the two major parties.
Republicans will highlight all of the negatives of the "Obama" economy and make the current economy sound as awful as can be. Their proposed solution, of course, will be to say that you should elect their candidates.
Democrats will point to their accomplishments but then say that there's still lots to do because the economy was such a mess when they took office and because congressional Republicans have blocked many of their initiatives. Their proposed solution, of course, will be to say that you should elect their candidates.
Expect plenty of mud slinging by both sides.
With this as a background, I don't see consumer and investor confidence coming back to any significant degree until perhaps the election gets closer and there's some reason for hope. The financial markets historically have preferred divided government and have some preference for Republican control of congress.