As we experienced the full tilt run-up to our Presidential election at the end of last year, everyone was hoping that anointing Obama, our country’s savior in waiting, would cure our financial market woes as far as confidence was concerned. On Obama’s first day as our newly minted President, the Dow Jones Industrial Average stood at 9,616.60 at the opening bell. While it was below the 10,000 watermark, it was nothing to be worried about as being a catastrophic situation. In just 16 days, on November 21, the DJIA had fallen to 7,552.37… an almost 22% decline.
Now, we have passed the initial 50 days of Obama’s term and the DJIA stands at 6,595.16 as we prepare to enter an even more tumultuous economic period. As of right now, the DJIA has had nearly 32% of its value sheared off. Since November, over 2.5 million workers have lost their job… since the beginning of the recession (officially started December 2007) 4.4 million jobs have been lost. It’s fairly obvious that electing our “saving grace” did nothing to cure the confidence in our markets.
These declines have occurred even with Obama pushing massive spending bills through Congress in an effort to stimulate our economy. Bush injected over $750 billion into the economy before he left office along with untold billions of dollars in ancillary stimulus money. Obama has trumped that bill by handing out nearly $800 billion and writing into the federal budget, another $750 billion for 2009. On top of that, Obama has agreed to spend over $400 billion in “health care reform.” Obama’s stimulus plan was pushed upon society as the great job saving machine that would generate 3.5 million jobs… over the next 2 years.
Looking at the analyst’s forecast for the next 2 years, they predict that unemployment will reach 9% this year… it’s at 8.1% as of this article. Next year, they are predicting well over 10% unemployment. These are estimates that were made AFTER Obama’s stimulus plans… wrap your mind around that, or better yet, your wallet… People are unrealistically focused on the unemployment rate when they should be watching the under-employment rate. The under-employment rate takes into account people who have completely given up looking for work and also includes people who are working part time jobs who need full time jobs but cannot find one. This number represents the true state of our job market.
So where does that number stand at today? Try 14.8% on for size. 8.1% unemployment supposedly equals 12.5 million people according to the government stats. 14.8% equals nearly 23 million people either out of work, given up on finding work, or involuntarily working part time jobs. These numbers are based on the idea that 155 million or so Americans work for a living.
Right now, let’s just round off the spending that we know of to $3 trillion. That means that our government has spent almost $20,000 per working American in an effort to stop the bleeding. Have you seen this 20k in your bank account? Have you seen your taxes reduced by 20k this year? Have you seen your house value go up 20k or lose multiple times that in value? Has your stock portfolio increased by 20k or dropped even more? Where is this money going? If the money was going to those who “create” jobs, then why is the economy shedding our jobs at a much faster pace since the money was injected than before?
Common sense would make you think that the injection of these massive amounts of money should have at least given us a plateau in job losses. I understand that the Democrats in the house say that the current economic hardships are the results of the Bush administration’s legacy. Let’s put some rationale to that ideology. The Democrats were in charge of both the House and Senate and also controlled almost 75% of state governorships since 2006. The recession started in December 2007. The Bush administration’s legacy from 2000-2006 was far from a recession. In those years, the Republican Party controlled the majority of political power seats. Sure, the effects of everything takes time to truly pan out, but the turning point was the date the Democrats took control of our country and their inability to curtail their partisanship and hatred of Bush. They allowed their political feelings affect how they governed our country and now we are all paying the price for their failings.
Where did our Presidential placebo go? The bounce we were so focused upon receiving did not happen. Rather than an uptick in our financial markets, a curtailing of our job losses, and a wealthier nation, we are now at a point where we are just entering the deepest valleys of this recession. I am convinced that we are going to see even worse times as we search for the rock bottom of our economic downturn. Millions more Americans will lose their jobs, billions more American taxpayer dollars will be spent without our agreement, and our stocks will continue to fall while we watch the foreclosure signs weather in our yards and our bank accounts shrink into penny savings. The placebo didn’t work and neither is spending money we don’t have. Placebo… we need the real deal.