I swore I heard that right. Did the President say this is our “Sputter and Nicked Up” moment? Was this the first time that he decided to finally come clean with the American people? I thought to myself, well at least he was being honest in his State of the Union speech. He’s finally breaking it to everyone that after his first two years in office he’s set the economy up for another dip… and a bad one. Yes I know that the stock market has been going up for the last couple months and other economic indicators have had minor upticks. This temporary uptick has been due to the FED pumping liquidity into the financial markets at a level nearly matching 90% of our current GDP.
But Obama has decided to come clean. He’s telling us when the FED’s stimulus runs out again, the economy is going to sputter, fall back into recession, and we’re all going to get nicked up. The latest stimulus by the FED is known as QE2 (Quantitative Easing 2). Why is it called QE2? Because QE1 didn’t work. Yes Obama was able to leverage QE1 to trigger a rebound in the stock market but that happens when the FED pours cash into the financial market. The impact of Quantitative Easing 1 stopped working in late April 2010, and the stock market swooned. The business community knew that the FED just ran out of “happy pills”, and the economy was about to feel the pain again. We were going to drift back into another recession. As a result, the stock market retreated, and the economic indicators started to decline. However, the President couldn’t let that happen right in the middle of the Fall 2010 elections. So Obama and Fed Chair Bernanke came riding to the rescue. Let’s do QE2. Yea, that’s the ticket.
All legitimate economists and business people know quantitative easing doesn’t work. It’s just like heroin. It’s a temporary escape from the reality of life. A junkie feels bad so he takes heroin to feel better for a while. When he comes down off his high, he feels worse than he did before. Then the junkie needs another hit and the cycle continues. Meanwhile his body and soul are deteriorating, and his problems aren’t getting any better. Welcome to the Obama economy. Obama’s stimulus and quantitative easing programs are his heroin to cover up the real issues. These programs are designed to make us feel better but they do nothing to address our core economic problems. In the meantime, our body (the economy) and soul (our initiative) rot.
As my mind stopped racing and “tuned” back into the State of the Union, I caught a different word… Sputnik. Wait a minute. Obama isn’t coming clean. He’s talking about the Russian launch of Sputnik as a comparison to our current situation. Obama is using Sputnik as a ruse to cover another change of terminology. Since the voters said in November that they didn’t want any more reckless “stimulus” spending, Obama now needs a new word… “investment”. Yeah, that’s it, investment. We need more “investment” to turn the country around. However fortunately the voters have already solved that equation: “investment” = “stimulus” = “more debt” = “bad economy”.
Oh well. I really thought Obama was using the State of the Union to come clean. However an honest speech would have been too short for all the pageantry around the State of the Union. After all, he really could have just said two words… You’re screwed.