Is the GOP Cooking the Books to Avoid Recession Until After Election Day?

[marmar]

via AlterNet:



Is the GOP Cooking the Books to Avoid Recession Until After Election Day?

By James Galbraith, Mother Jones. Posted July 8, 2008.

Two enormous clouds remain for whoever becomes president: the housing slump and the banking crisis. Both are far from being finished yet.



Is the worst over? Are we on the road to recovery? Will the next president take office against a backdrop of economic improvement, as Bill Clinton did in 1993? Or has something deeper and more intractable gone wrong?

Early this year, the optimists, including Citigroup chairman Bob Rubin and Treasury secretary Hank Paulson, argued that the slowdown was short-term and that a "stimulus" package should be "targeted and temporary." This with rare haste the Democratic Congress enacted. As a result, most taxpayers got one-time $600 checks in May, prefigured by bubbly messages touting "Good News!" if you filed your taxes electronically.

The rebate isn't the only little Dutch boy thrown headlong at the dike this election year. Government spending, especially for defense, will be up: Military spending as a share of gdp is expected to grow by $75 billion in fiscal 2008, enough to neutralize a 0.3 percent decline in gdp. Dick Cheney was secretary of defense for Bush 41; just before the 1992 election he engineered a big run-up in outlays, as the military restocked following the first Gulf War. (It was exposed in the first Clinton "Economic Report.") Is the Pentagon up to that trick again? I'd be astonished if it were not.

Under intense pressure from panicky bankers, Ben Bernanke cut interest rates relentlessly from August 2007 through the spring of 2008. I don't accuse Bernanke of playing politics. But it's worth noting that this is what usually happens. In presidential election years when Republicans are in office, the Fed regularly and predictably pursues a more expansionary policy than when Democrats rule -- after controlling for differences in the rates of inflation and unemployment. (I made these calculations myself; see the chart.) Maybe they just can't help themselves.

But much of the ordinary effect of interest cuts on new lending -- like a rebound in construction and automobile sales -- didn't happen this time. That's because the fall in home prices (and therefore the value of collateral) overwhelmed the benefit of cheaper money to the banks. And the banks barely cut mortgage rates, so consumers saw no benefits at all. Lower interest rates did cut the value of the dollar, however, and that promotes exports and foreign investment. (These days New York Times real estate listings come with a currency converter.) It also boosts the stock market, since multinational firms can report their (unchanged) foreign income as higher dollar earnings. .....(more)

The complete piece is at: http://www.alternet.org/workplace/90683/

[fasttense]

1. Well, of course they are.

Does anyone with half a brain really believe our unemployment rate is only 5.5%? Do you think you are only paying 4% more when you shop?

The bushes only know how to lie and con.

[KharmaTrain]

2. This Regime Is Laying Landmines All Over The Place

I've long said the most dangerous period will be between the election day and Jan 20th. Remember, it was during his lame duck time that Poppy booosh invaded Somalia and then pardoned his Whitewater buddies. And he was the "benevolent" boooosh.

We have yet to feel the ripple of these oil price hikes. Most take months to work their way through the economy. For example, all the rains and high costs in planting and re-planting fields is sure to surge food prices this fall. The crush on manufacturing also is months from seeing a bottom as less consumer spending means more cutbacks which mean more job losses which means even less money in the economy. The bills are coming due and there's precious little this regime will do to help anyone but its rich benefactors...and right now they're too busy making money in oil and food speculation.

Ya think this regime gives a shit about what happens after they're gone? All they care is to make a clean getaway and then put the blame on the Democrats for the mess they left behind. It worked to perfection in the 70's...it was Carter who got the blame for Nixon and Ford's defecit spending that led to stagflation. We're back in that same mess again...and even worse as there's a far bigger hole this regime has dug us into.

[Beausoleil]

5. Exactly right , KT

except it was the Poopster's Iran-Contra buddies that got pardoned, so that they couldn't testify against him or Raygun.

[KharmaTrain]

6. And We Need To Be Careful Here

This is the shit sandwich...any indictment of an existing regime official is sure to be pardoned, thus IMHO why Conyers and Waxman are not pushing harder...they'll see their chance later. That is, if this regime doesn't find a backdoor way to "executive order" pardons or try to push through more crap like FISA.

It frustrates me no end to see all the corruption and not seeing any accountability, but history has shown this regime will do all it can to obstruct to the bitter end. If the Libby pardon didn't show that, nothing will.

Cheers and thank-you!

:hi:

[TheCowsCameHome]

3. Cooking what books? It's a plain as the nose on your face.

Sweet Jesus, everyone know the mess we're in...............

[dembotoz]

4. bush lies about everything--you are expecting the truth???

[eShirl]

7. I think they've already failed

like most everything else they try to do

[Phred42]

8. Batten down the hatches - . Greenspans Fraud is about to be exposed.

The answer is YES. and the Rest of the World knows it. The Fed is about to be Audited for the first time ever.

Batten down the hatches - here it comes. Greenspan's Fraud is about to be exposed.

IMF finally knocks on Uncle Sam's door
http://business.theage.com.au/imf-finally-knocks-on-uncle-sams-door-20080629-2yui.html?page=fullpage

Der Spiegel wrote that the IMF had "informed" Federal Reserve chairman Ben Bernanke of plans that would have been unheard of in the past: a general examination of the US financial system.

The IMF's board of directors has ruled that a so-called Financial Sector Assessment Program is to be carried out in the US. This, Der Spiegel wrote, "is nothing less than an X-ray of the entire US financial system", adding that "no Fed chief in US history has been forced to submit to the kind of humiliation that Ben Bernanke is facing". The fact that the IMF is knocking on the very doors of its parents and waving legal papers about who lost the house, the car and the kids will, if the past is anything to go by, be buried in the US by pom-pom waving on CNBC telling all what a great time it is to buy. But the news that the US Fed has now lost its last vestige of credibility did not end with the German report. The Telegraph from London weighed in, following the Royal Bank of Scotland's statement last week (also lost on the US public) that it was time to head for the crags, and reported Barclays Capital's closely watched Global Outlook analysis that said US headline inflation would hit 5.5% by August and the Fed would have to raise interest rates six times by the end of next year to prevent a wage spiral. If the Fed hesitates, the bond markets will take matters into their own hands.