It is widely regarded that every politician running for re-election must remember one thing: “It’s The Economy, stupid!”.

For voters, the economy (and how they are fairing in it) is usually the number one item on their priority list. For President Obama and the Democrats, the stubbornly slow US economy will likely be an important deciding factor for voters in the upcoming midterm elections.

The cartoon above paints us a picture of the dilemma facing the President. Obama inherited a devastated economy from George Bush but the voters will likely hold him responsible for its sorry state … is this fair? (cartoon by KAL)

Courtesty Good.is

Moan! Moan! Moan!

It seems everyone is in bad mood about everything these days.

People seem to be especially grumpy about the state of the economy. Just mention President Obama’s $700 million economic stimulus package to “Tea Party” supporters and you will get an earful.

But is the stimulus working?

Infographic-centric and well-designed blog Good says: IT IS TOO EARLY TO TELL!

Politicians up for election have been quick to complain about the ill effects of Obama’s stimulus plan, arguing that jobs haven’t been created .

However, Good makes an important point – “the jury (and by “jury” I mean $278 billion in tax cuts and spending) is still out.”

Obviously, complaining about the economy (especially as it relates to the perception of Obama’s mishaps) is popular before an election cycle, especially by the minority party.

But is it really fair to bash the stimulus package before 35% of it has not yet been spent? It is a “package” for a reason. Or does it not matter at all? After all, shouldn’t the stimulus have shown some indication of it working with roughly 65% of it already out there?

Or maybe it has shown some signs of working. One publication in South Carolina looks at the new stimulus-funded advanced battery plant in Michigan that is now open as one indication of a success. What are your thoughts? Leave us a comment!

Thanks to Wikicommons.

There are many folks out there asking the big question… (editor: when does the pizza arrive?)

No… the question about the sluggish US economy :  When will the country get back to normal?

Well the good news is the US economy has been recovering over the last year… but that recovery may slow in the near future.

Economic indicators seem to show that we’re not fully out of the woods.  In an Editorial the San Francisco Chronicle points out that more than just the unemployment rate has shown problems:

Home sales and new construction both declined precipitously in May. The service sector contracted. Manufacturing declined by 3.5 points in June. On Wall Street, Treasury notes keep rising, which suggests that investors are preparing themselves for a period of slow growth.

Feeling this vibe the White House does not want to declare “Mission Accomplished” just yet.

They have called for more economic stimulating actions to be taken by Congress.  However, they admit that there isn’t much support for it.

Don’t expect a big fight to get to grow that support.  Steve Benen, for the Washington Monthly, comments that:

President Obama really hates — and actively avoids — picking fights he fully expects to lose. Based on his public comments and proposals, I’d say the president really does endorse his economists’ approach and wants additional stimulus, but doesn’t want to go the mat to fight for spending he’s not going to get.

Paul Krugman, writing for the New York Times, sees this as a problem:

From a strictly economic point of view, we could still fix this: a second big stimulus, plus much more aggressive Fed policy. But politically, we’re stuck: even if the Democrats hold the House in November, they won’t have the votes to do anything major.

Others are agreeing with Krugman that governments reining in funding could have problems.

In a rush to keep debt in control governments may risk hurting economic recovery.  That’s at least what Tyler Durden, of Zero Hedge, says explaining expert Jan Hatzius views:

the push for de-leveraging in the private sector, the rush to ramp up exports, and the imminent Age of Austerity all signal an upcoming unprecedented “demand shortfall for the economy as a whole”

So maybe the Government needs to shovel more money into the economic furnace.  Or maybe they don’t (our debt does have a fair amount of heft).  We really don’t have an answer so why don’t you chime in.

Thanks to Wikicommons.

It’s spring again!  Flowers are blooming, the sky is blue, the birds are out singing, and the US Democrazy staff is stuck inside attempting to win next years Pulitzer Prize (since we failed to this year).

Sadly, the economy isn’t matching the weather; or is it?  Perhaps economic “green shoots” are starting to blossom?

With the Dow Jones Industrial average closing above 11,000 yesterday, the first time in 18 months, many voices are coming out declaring we’ve defeated the economic collapse.

Leading the charge Daniel Gross, writing for Slate and also Newsweek, proudly trumpeted that

America is coming back stronger, better, and faster than nearly anyone expected—and faster than most of its international rivals.

He continues to describe that the recession has changed America’s economy meaning

There will likely be fewer McMansions with four-car garages and more well-insulated homes, fewer Hummers and more Chevy Volts, less proprietary trading and more productivity-enhancing software, less debt and more capital, more exported goods and less imported energy.

Over at the New York Times, Floyd Norris agrees noting that we’re not out of the woods yet but

many Americans — both individuals and businesses — who cut back sharply when fear was at a peak a year ago are now finding that they overreacted.

But don’t get too excited. Although hope is often a good thing for growing economy (more investing and less hoarding) The Economist’s blog, Free Exchange, reminds us,

optimism could be dangerous if it leads the country to underestimate its continued vulnerabilities—to new financial shocks, to new shocks to household budgets (as from rising resource costs), to new deterioration in housing markets, to continued drag from an unemployment problem that remains very serious.

To help us keep our feet on the ground Mother Jones’ Kevin Drum has ten reasons why the economic misfortune may not be done yet (see the link for the full list).

2. In fact, there won’t be any further stimulus from lower interest rates. They’re already at zero, and (Fed Chief) Ben Bernanke has made it clear that he doesn’t plan to effectively lower them further by setting a higher inflation target.

…

4. The financial sector remains fragile and there could still be another serious shock somewhere in the world.

…

10. Unemployment and long-term unemployment continue to look terrible. Yes, these are lagging indicators, but still.

Now one thing is for sure.  Even the gloomiest bloggers are far cheerer then we’ve seen in the last couple months, so maybe the worst is over?  Or maybe we’re in for a double dip recession.

Thanks to Wikicommons.

Candles, cake, and intense political debate, what else would anyone want for their first birthday?  Especially if that special someone is the Federal economic stimulus bill!

Now, like most birthday celebrations (except for ours which you forgot) a variety of “gifts” and “wishes” have been flying in.

Led by President Obama, folks are trumpeting the stimulus as a success.

But for all the birthday cheer, there was also a load of Bronx cheers.

Some are questioning whether the bill actually helped the economy, particularly Republicans (who didn’t approve of the stimulus from day one).

Considering the mixed bag of gifts (including one ugly sweater) lets take a look at only a couple of them.

At Slate, Daniel Gross, comments that the stimulus bill has helped this year

there’s still $515 billion worth of tax cuts, contracts and loans, and aids to entitlement programs set to enter the economy in the next two years.

Republican Congressman Tom Price, for Red State, however, reminds us

The number of jobs our economy has lost in just the last year is approaching 4 million, and the unemployment rate has hung around 10% for the past 6 months. And then there’s the 6.1 million unemployed Americans who want to work but aren’t included in the oft-quoted unemployment rate.

Supporting the stimulus, despite the current unemployment, David Leonhardt of the New York Times, notes

Since February, aggregate wages and salaries have fallen, while consumer spending has risen. The difference between the two — some $100 billion — has essentially come from stimulus checks.

Over at the Atlantic, Meghan McArdle, makes a very interesting point that although the stimulus has been good for America’s economy

the main reason we didn’t have the Great Depression is that the Treasury intervened to prop up financial institutions, while the Federal Reserve pumped money into the economy with a fire hose.

With so many people giving so many opinions about the same issue we’re having trouble reaching a conclusion about the stimulus.  Now in a couple of year’s we’ll most likely be able to look back and reach a consensus.

However, we hate to wait.  So why don’t you, our loyal readers, chime in with your thoughts.

Thanks to the AP and Philly.com

We at US Democrazy partied hard this weekend. No, we weren’t indulging in festive Halloween high-jinx! We learned  THE RECESSION IS OVER! Yeah BABY!

Just check out these headlines:

• Ford Posts an Unexpected Profit of $997 Million (New York Times)
• 3 strong economic reports lift recovery hopes (The Associated Press)
• Manufacturing boosts global recovery (The Financial Times)

Everything is looking great, right?  Time to Party!

But, then today… we woke up with a pounding headache.  It wasn’t a hangover, it was some gloomy economists who ruined our party mood.

Take Paul Krugman, Nobel Laureate and NY Times Columnist. He says: GOOD NEWS! The recovery is due to Obama’s stimulus package!

But that’s also the bad news — because the same textbook analysis says that the stimulus was far too small … Unless something changes drastically, we’re looking at many years of high unemployment.

That is one big BUT ! (no pun intended)

Free exchange, a blog at our friends at The Economist magazine, agrees with the frightening view that

Essentially, we are looking at a situation in which, … American unemployment will remain near 10% through the end of 2010, at least.

Ouch! That’s a kick in the BUT!

Even the current economic growth is not helping the worst off areas of the country.  Just take a look at the image above.

Now we’re not sure how to feel… is the economy going up or going down?

Either way, this economic roller coaster hasn’t come to a stop.    There’s even a rumor of a second stimulus plan…but don’t celebrate too soon!

In that case you can follow suit with us at US Democrazy and PANIC!!!!!!

New job data for the US show that unemployment has hit a staggering 9.5%.

Rest assured President Obama is taking note.  He said the new number is “sobering” but reminded folks that fewer jobs were lost in June than earlier in the year.

Republicans have jumped on the rise in unemployment to target Obama’s earlier stimulus.  As reported by the Wall Street Journal, RNC Chairman Michael Steele remarked,

With the unemployment rate now at 9.5% and continuing to rise, Americans need real solutions that help them find work – not bigger government, higher taxes, increased federal spending and an unsustainable national debt.

So hold on tight because this wild ride has not finished.  Any wagers on what the next unemployment graph will look like?

Thanks to Wikicommons

Canada is angry at the US again (and its not due to USDemocrazy this time).  Instead our neighbor to the north is spitting mad at American lawmakers’ newest policies.

Congress is currently hammering out a bill to tackle the threat of climate change.  As part of that bill,  congress is putting money aside to help promote Green (ie, fuel efficient) cars. The catch is… they want only to fund cars made and developed in America (not cars from our Canadian friends  acquaintances)

This is not the first time US policymakers have promoted buying US stuff.  In that HUGE $800 Billion stimulus bill passed a while back a ‘Buy American’ clause was included.

Canadian cities have decided that they have had enough.  The Federation of Canadian Municipalities (FCM) has endorsed a “we’re ticked off at you Americans” proposal. If a country (read USA) puts trade restrictions on Canada,  the FCM will support any Canadian town that retaliates with a boycott of goods from that country ( read USA).

Some Canadians think this is not enough.  In a Toronto Star editorial, the paper called  the FCM nonbinding resolution too soft and instead

They [America] would be more impressed by the introduction of a Buy Canada Act in Parliament.

So…Who cares what the Canadians think, as long as ‘Buy American’ helps America?

Well it seems that the provision is causing a fair amount of confusion south of the border as

the Buy American rules were being interpreted in a way that barred even some US-based manufacturers from bidding on projects.

Many US manufacturers rely on global production chains that integrate components from US and foreign sources but are finding it difficult to comply with these new Buy American rules.

So should we ‘Buy America’?  The NY Times has great collection of opinions, but I’d bet yours is better so post it up.

Thanks to Wikicommons.

***UPDATE: Here are the Official Results***

Treasury Secretary Timothy Geithner has been under a lot of stress lately. (We at USDemocrazy thinks it has something to do with fixing the tanking economy.)  Now it seems he has been passing this stress onto others.

The US Treasury has required major banks to undergo “Stress Tests” (like waiting in line at the DMV) to see if they are financially sturdy enough (i.e. have enough money) to stand on their own two feet without government crutches.

The results are in… sort of…

The Feds will not be releasing the official results until later today. Luckily, there have been a number of leaks to the press.

Geithner has announced the results will be “reassuring” … although anythingother than total disaster might seem reassuring in this economic climate.

Bank of America, Citigroup, Wells Fargo, Citigroup, Regional Financial, Sun Trust, KeyCorp,  Morgan Stanley, Fifth Third, P.N.C. and GMAC need more money. No surprises here.

Among those banks tough enough to survive are Goldman Sachs, Morgan Stanley, MetLife, JPMorgan Chase, Bank of New York Mellon, and American Express. (You can now open the champagne and charge it to your AmEx card.)

What happens to those stressed out banks? Does the government issue Valium?

Well, it seems the banks get one month to put a plan together for raising cash.

Once the banks get their stress report cards, the pundit class will weigh in with their interpretation of the grades.  The NY Times has a great collection of experts giving their two cents worth.  Arianna Huffington is as vocal as ever with her opinion,

“The fact that the stress test results to be released on Thursday are unlikely to show the full extent of the sickness of our financial system is one more symptom that Obama’s economic team needs to be put in quarantine…”

We’ll see down the road how accurate these tests were.  So what do y’all think? Are you and the banks stressed enough?

Have you ever submitted a project and been told to try again? We writers at USDemocrazy sure have (apparently my editor felt “Why I HATE Broccoli” is not worthy of a newsblog like ours).

Chrysler and General Motors are now facing that sting. Their plans for restructuring their failling companies have been roundly rejected by the Obama administration for not going far enough to cut costs.

When we say rejected we really mean it. Rick Wagoner, the Chairman and CEO of GM, was asked (read: ordered) to step down by the White House (no fat bonuses available for this dude) .

This means that GM has 60 days and Chrysler 30 days to come up with new ideas. No new plans, no new money.

So if their plans were not good enough, what does Obama want?

One solution that has been thrown around is is to invoke the dreaded Chapter 11, better known as bankruptcy.

WHAT? BANKRUPTCY!?! Isn’t that what Washington is trying to avoid?

In fact, no. Bankruptcy does of course mean the company closes shop. But bankruptcy is also a powerful legal tool that allows companies to avoid many contractual obligations (such as pesky union agreements).The hope is while in a temporary state of bankrutcy the floundering company can reorganize and resurrect itself.

So why has Detroit avoided the B-word like the plague? Quite simply… Who wants to buy a car from a bankrupt company (a five year warranty means nothing if the Chrysler is gone in two)?

The White House has a solution. Obama supports a plan for federal funds to cover GM and Chrysler warranties in the events the companies should go under.

Let’s hope Detroit’s next plan makes the grade. Otherwise we’ll need to change Detroit’s nickname from Motown to No Town.