Bloomberg writes ” Obama Focuses on Risk of New Bubble Undermining Broad Recovery”
President Barack Obama, who took office amid the collapse of the last financial bubble, wants to make sure his economic recovery doesn’t generate the next one.
Obama this month spoke four times in five days of the need to avoid what he called “artificial bubbles,” even in an economy that’s growing at just a 1.7 percent rate and where employment and factory usage remain below pre-recession highs.
“We have to turn the page on the bubble-and-bust mentality that created this mess,” he said in his Aug. 10 weekly radio address.
Obama’s cautionary notes call attention to the risk that the lessons of the financial crisis, which was spawned by a speculator-driven surge in asset values, will be forgotten, widening the income gap and undermining a broad-based recovery.
“Clearly, this is a growing concern both in the administration and at the Fed,” said Adam Posen, a former member of the Bank of England’s monetary policy committee.
Not Imminent
That may explain why six years after the housing meltdown ignited the worst recession since the 1930s and vaporized $16 trillion in household wealth, bubble reminders are intruding on Obama’s speeches.
“It’s a legitimate concern from an economic perspective,” says Roberto Perli, a partner in Cornerstone Macro, a Washington economic-research firm, and a former Fed official. “But I don’t think it’s motivated by consideration of imminent risk.”
The U.S. recovery, outpacing Europe and Japan, has created 6.7 million jobs since February 2010. Claims (INJCJC) for jobless benefits fell last week to their lowest level in almost six years. And after a two-decade-long borrowing binge, households have pared their debt burden to mid-1980s levels.
Still, growth has been below historical trend for the past four quarters, according to the ChicagoFederal Reserve Bank’s National Activity Index, a blend of 85 indicators measuring employment, production, housing and consumption.
Are you F$&*% kidding me? He “wants to make sure his economic recovery doesn’t generate the next bubble”
I don’t know if I should cry or laugh. I am sorry to break it to you Mr. Obama, but as we stand today, as of August of 2013 we are in the biggest financial bubble of all time. EVER. Bigger than 1929, bigger than 2000 and bigger than 2007/8.
That’s what happens when instead of letting defaults and previous imbalances (credit collapse and real estate) work through the system, you put the pedal to the metal and paper everything over with more money created out of thin air.
The imbalances are so massive at this point in time, that pain is simply unavoidable. We have never seen anything like that. The result? Stagnated and a significant US Stock Market Decline into 2016-2018 bottom. Inflation thereafter.