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Jewish World Review April 19, 2011 / 15 Nissan, 5771 Darn right, it's time to worry! By Jack Kelly
http://www.JewishWorldReview.com |
So many bad things are happening all at once that it's hard to decide what to worry about most.
INFLATION. In February, we had the highest monthly increase in the price of food since 1974. In March the price of corn set a record high. The price of gasoline has doubled since Barack Obama became president, and is expected to reach its record high by Memorial Day.
The government says the risk of inflation is low, but it doesn't count the cost of food and fuel -- the stuff we have to buy -- in its measure of "core" inflation. Under the old method of calculating inflation, the annualized rate for February was 9.6 percent.
With wages flat, those who have jobs will lose ground. And for those poor souls without jobs…
UNEMPLOYMENT. The government says the unemployment rate declined to 8.8 percent in March, which would be good news if it's true. But this happened only because the work force declined by an astounding 2.33 million year over year. More baby boomers are retiring, but that number seems fishy. Gallup's survey for March put the unemployment rate at 10 percent, the underemployment rate at 19.3 percent.
ECONOMIC GROWTH. JP Morgan Chase has downgraded its forecast for economic growth this year to a tepid 1.4 percent. At the beginning of the year, Macroeconomic Advisers estimated the economy would grow 4 percent in 2011. The firm recently downgraded its forecast to 1.7 percent.
Every recovery since World War II has been led by the housing industry. But housing starts are 20 percent lower this year than last, and home prices continue to fall. They could lose a quarter of their real value over the next four years.
DEBT. The national debt is now equivalent to the value of all the goods and services produced in America last year. The projected deficit for the current fiscal year is $1.6 trillion. Neither President Barack Obama nor the Democrats in Congress seem willing to do anything about it.
The debt outlook is so bad the world's largest bond fund, PIMCO, is shorting Treasury securities, betting the U.S. will lose its AAA bond rating.
"We are smelling $1 trillion deficits as far as the nose can sniff," Bill Gross, PIMCO's co-chief investment officer, said in an April newsletter.
Our economic troubles are interrelated. If the bond rating agencies downgrade Treasuries, interest rates will rise and the dollar will fall in value. That'll increase both inflation (we'll have to pay more for goods we import, such as oil) and the deficit, because the government will have to spend more to service its debt.
Higher inflation and bigger deficits would clobber our meager economic recovery. Unemployment will rise again. Tax revenues will fall, which would widen the deficit still further, which would…you get the picture.
Our troubles don't stop at the water's edge. Our military intervention in Libya could be described as a comedy of errors, if anyone were laughing. We had no security interests at stake when President Obama chose to intervene. But if Libyan dictator Muammar Ghadafy remains in power, we'll suffer a major blow.
The Arab Spring has not yet turned to winter, but there is frost on the ground. The whole Middle East is in turmoil, but an ominous pattern is developing. Pro-American autocrats in Egypt and Yemen have been toppled, and are likely to be replaced by Islamists. But anti-American despots in Syria and Libya hang on, because they are willing ruthlessly to kill.
With so many things going wrong at once, it's easy to feel overwhelmed, to passively await the outcome of events. And those who know they must engage can be confused about where they should focus their attention.
Some liken our predicament today to the 1970s, when President Jimmy Carter presided over stagflation at home and weakness abroad.
There's an important difference. Mr. Carter's policies were all that was wrong with America in the 1970s. Once he was replaced by Ronald Reagan, things got better fast. Our problems today are much worse. There is a very real prospect of catastrophic collapse.
But the solution is the same. Barack Obama has made all of our problems much worse, and he is the principal barrier to reform. There can be no significant improvement until he is removed from office. All of our energies should be focused on this.
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JWR contributor Jack Kelly, a former Marine and Green Beret, was a deputy assistant secretary of the Air Force in the Reagan administration.
© 2009, Jack Kelly |
Arnold Ahlert | |||||||||||
