This morning it was reported that the U.S. economy grew at a 5.7 pct pace for the fourth quarter of 09, which was the fastest pace since 2003. It also marked two straight quarters of growth after consistent declines up to the third quarter of 09.
There was much cheering on all the TV stations about this more than expected figure and even Obama took credit for the increase in GDP, and made mention of how his economic policies were in fact working.
Well, I will say that Mr. Obama should take credit for this increase in GDP because the one thing all these Team Obama Cheerleaders (media) are forgetting to mention is the simple fact that it was all Big government intervention that helped increase this GDP figure!
Let us not forget as so many this morning did, that GDP in this country no longer represents true production of anything, but rather consumption, as in 75% of consumer spending!
The fact that the GDP growth rate ticked up in the 3rd and 4th quarter of 2009 is all due to the fact that programs such as "Cash for Clunkers" and the rebate of 8,000 for home buyers was in full swing. The truth of the matter is that these growth numbers are all due to government intervention.
So not only did the government's GDP figure artificially rise, but so did the government's huge debt! But as long as people get the sense that the economy is growing, maybe they will be lulled back into becoming happy, spending consumers once again.
Also, according to the Associated Press, 60 percent of the 4th quarters rise in GDP came as a result of companies that had laid off workers, were merely replenishing stockpiles.
But the real question is going to be what will happen when all the government stimulus cash plans, and artificial spending incentive programs end??
With the real unemployment rate hovering between 20-22% (when you take into account those that are either part time workers, those that have been out of work for more than 26 wks, and those that have just stopped looking all together), we will see if Mr. Obama takes full credit for the future GDP numbers.
Also 2010, just like back in 2008, will be a year for millions of mortgage rate resets, and many economists are predicting millions of foreclosures, much more than even in 2008.
But it seems that media would rather cheer lead than provide the ugly truth.
Just the other day it was also reported that the Senate had just approved a 1.9 trillion spending bill, so not only is there more possible future cash for clunkers programs, but more artificial GDP figures to come in the near future, as well as possible bailouts of about 32 states that are about to go bankrupt.
But there is only one problem with all of this...Who's going to bail out the U.S.??? China???
Already countries throughout the world have stopped purchasing Treasuries which is what the U.S. sells in auction markets to fund some of their huge debt. But over the past 2 years, we have seen that some of the U.S.'s largest debt purchasers (China, India, Middle East nations) have decided to go an alternate route by not purchasing any more of these Treasuries.
In 2009, there were several Treasury debt auctions, and the biggest purchaser of these T-Bills was the U.S. Federal Reserve. In other words, the hungry snake has started to eat it's own tail to satisfy it's own hunger, which ancient cultures used as a symbol for insanity!!!
The writing is on the wall, but few in Washington see it. Some see it but ignore it, and some see it but can't do anything about it.
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