The problem is that Obama and crowd have not learned the lessons of the past. The government is not the solution -- it is the problem.

I wonder if "too big to fail" had been allowed to fail -- would be in a better position now?

That is both the banks and GM/Chrysler.

It's ironic because if Obama had concentrated his attention on the economy, I doubt that the results would have been any better. In fact, judging from the economic decisions we have seen, they might have been far worse. Obama's approach to economic problems is to subsidize politically favored industries, and punish politically unfavored ones with punitive regulation. He sees the American economy as a mechanism for political patronage, nothing more. If he had his way, we'd have a banana-republic economy, with all businesses being run by cronies of the Supreme Leader.

Obama's philosophy of government is HOPE and WE ARE THE CHANGE WE'VE BEEN WAITING FOR.

That's about it. He doesn't have a philosophy so much as a set of rhetorical tricks, and they've gotten very stale.

None of this should be so surprising. He never articulated a coherent philosophy during his campaign, and nothing in his CV suggests that he has developed a systematic, practical, set of ideas.

I honestly don't think that he has the background or discipline to grapple with the issues he's facing. He's never confronted these sorts of executive responsibilities and the solutions that are necessary don't neatly fit into his ideological preconceptions. His story and identity hold no sway. So you get this discomforting mix of bumbling and passivity. His answer to everything seems to be to throw money at and turn it over to the government - oh and express his personal disappointment.

Has any other president made such a prominent display of their disappointment? It's become comical. He's like the scolder in chief. Who gives a damn if the president is disappointed in something. He's not the frigging sun god! Obama seems to think that he was elected into a cult of personality.

What he's signaling to people, by constantly expressing his disappointment, is that he hadn't anticipated the outcome and that he's helpless to change it. But he seems to be too vain to recognize this fact, instead assuming that his disapproval, in and of itself, should motivate people to do his bidding.

Policies aside, what Obama has clearly illustrated is that he is a terrible retail politician. He lacks the ability to connect with people on a human level, a skill at which Presidents Clinton and Reagan excelled, and George W. Bush was passable. Instead of displaying understanding and empathy with others' concerns, Obama comes across as pedantic and judgmental. The Democrats' congressional leadership is, if anything, even worse than Obama at this.

I also think that Friedman is right that Obama has not communicated a clear narrative that connects his policies. Everything he has done has seemed to take the form of an isolated reaction to circumstances; there's nothing coherent about it.

I don't lay a lot of blame on Obama about the slow pace of economic recovery, however. The recession we're either in (or slowly growing out of) was a combination of two massive problems: structural job loss and a financial collapse that nearly toppled the global financial system. Structural job losses, as opposed to those that are part of a typical business cycle, are difficult to replace because they require the growth of entire new businesses and unemployed workers are often a poor fit for the new jobs that are created. The excessive leverage in our economy from the housing cash machine that fueled a huge part of our economy over the last ten years (give or take) will take years to eliminate, and housing prices still have a way to fall in most places; until people get back to a more manageable savings rate and housing stabilizes, people will feel poorer and will be less willing to spend. Faced with this reality, Obama's made the unfortunate choice not to be honest with the American people and instead conveyed a sense that a more rapid recovery was possible and that policies like the stimulus bill would significantly reduce unemployment.

Christopher the job loss that the USA has experienced is not structural. Structural losses result from shifts in demand, resources, and capacity. That's not what's happened. These losses have resulted from a fundamental contraction of asset values and economic activity.

I don't blame Obama for the onset of this situation, but he's not a competent executive w/ regards to economic matters. It's unfortunate that the USA had chosen to elect him at this moment, because he is the wrong man for the job.

You will notice that all other countries that had undergone the same contraction are now growing robustly. They had focused on stabilizing their financial markets along w/ mild stimulus. The Democrats instead spent wildly and in areas that will only entail future cost increases, such as public sector commitments. They exploited a state of emergency to rape your country for their own benefit.

I don't lay a lot of blame on Obama about the slow pace of economic recovery

I do. Small businesses - which is where job creation is - are standing pat. Why? because they want to see what's going to come down on them in terms of taxes and benefits they'll have to provide. There's no leadership in the Oval Office.

Of course not. The Won has never been an executive, he's never had to lead. All he's every really needed to do was vote present.

They exploited a state of emergency to rape your country for their own benefit.

That's because our leaders hate us.

The US is like one of those African countries where the purpose of politics is to gain power so that your tribe can dominate the other tribes.

Liberals elect Democrats to punish conservatives. Conservatives elect Republicans to protect themselves from Democrats. It's like an institutionalized vendetta.

For all of Bill Clinton's faults, he was a moderate at heart and sought practical solutions to a stagnating economy from moderates on both sides of the aisle. The result was a budget surplus by the end of his second term and a booming economy. Obama on the other hand immediately pushed ideology above practical solutions. This was also what the Bolsheviks first did with Russia when they took over and what Mao Zedong did with China (and Pol Pot in Cambodia), leading initially to economic disaster and famine. Is it any surprise then that the outcome for our economy is the same after two years of Obama and his administration? Those who ignore history are indeed doomed to repeat it.

Martine, I understand structural job losses to be those that result from large macroeconomic trends that fundamentally disrupt sectors of the economy, e.g., the internet and its effects on traditional media; free trade and its effect on textiles and manufacturing; globalization and the ability to cheaply outsource many jobs to Eastern Europe, India and Asia; and so on. Jobs lost to these forces are unlikely to return unless the macroeconomic factors that cause them reverse, such as the achievement of sufficient wage parity in the developing world that it is no longer cheaper to house your IT department or call center in another country.

The structural changes I describe above were not the proximate cause of the recession, and have been affecting our economy for some time. However, their impact was blunted for a long time by the ability of people to supplement the reduced earning capacity of service sector jobs with equity they removed from their homes; that cash cow has now died, and people are left with lower real wages and a mountain of debt.

I suspect that a big part of the reason that the effects of the financial crisis have been more sustained in the U.S. than in many other countries is that no other place had anywhere near the debt-fueled housing mania that we did; individual savings rates were also much higher. There was much less of a bubble in say, Germany, than in the U.S., and they had more personal resources to cushion the fall.

I agree that Obama's economic team has not done a great job in their stewardship of the economy; at the same time, I think that there is not much our government can do to fix the problems we currently face. Its effects are on the margins; we could be doing somewhat better under better leadership, and somewhat worse under poorer leadership. But the biggest problem – the need to unwind massive amounts of consumer debt – is only fixable with time.

I do. Small businesses - which is where job creation is - are standing pat. Why? because they want to see what's going to come down on them in terms of taxes and benefits they'll have to provide.

I think this is true, but people tend to overstate its importance. The future in business is always uncertain, and you can't account for everything. I'm an exec at a small company, and when we discuss the need for new hires, taxes and regulations don't come up. Our discussions are much more focused on what skills we need, the quality of the people who are available, and how we can meet those needs. Our team is small, but we've grown by about 25% over the last year, as our business has grown and we've had the need and resources to hire people. I suspect that a lot of the reason that many other business aren't doing the same is that their businesses have not been growing and they don't need to hire people.

One thing I forgot to mention in my response about small business and uncertainty: people who own LLCs that net over 250k do face real uncertainty, because LLC earnings are treated as personal income, and personal tax rates are fairly likely to return to their Clinton-era levels for that tax bracket (there is some discussion of postponing that, however). I don't think the other organizational types (we're an S-corp) face that same uncertainty, however.

Christopher I think that you are using a more casual definition of structural.

Also I think that if the USA can achieve greater credit market liquidity, and to clear the bad assets held by your banking institutions, then you will see some real GDP growth and this will tell you whether this crash really has resulted in structural changes.

The proximate cause was most likely the mispricing of mortgage risk due to both regulatory and policy initiatives. The government, or more specifically the GSO's, were responsible for this and for creating a bubble in these assets.

This is another area of frustration for me w/ the administration. Your banks are still holding lots of toxic assets. TARP was intended to create mechanisms for clearing these assets, through direct purchases and other initiatives, but this hasn't happened. They're still on the books. Similarly the home mortgage restructuring program has been a failure w/ up to 50% redefaults and few takers. The whole thing is a mess. No one wants to make the hard choices and the failure to do so has prolonged the problem.

Martine, have you read The Big Short? Michael Lewis does a great job of explaining the absolutely breathtaking insanity of the subprime mortgage machine; what is even more insane is how much of the financial crisis was caused by CDOs that were essentially pure side bets on the fate of mortgage bonds made by people with no exposure to the underlying bonds. Because of this, the actual amount of toxic assets was substantially larger than the value of the bad mortgages they were tied to.

TARP was a fantastic bait and switch by Hank Paulson and a massive giveaway to the banks who got us into the mess in the first place. At least they've paid most of it back. Unfortunately, as you note, the problem remains.

Christopher, I lay blame on Obama for two big things. One is the "regime uncertainty" thing. I don't know what line of business you are in, but in engineering and technology, it is absolutely a killer right now. Businesses that have cash are sitting on it, and businesses that don't have cash can't get access to any. Nobody knows exactly what will happen, but everybody knows that there will be more regulation and the cost of compliance will go up. Aerospace is getting particularly worried that Obama will create an arsenal system with widescale replacement of contractors by government workers. I'm seeing this happening at a micro level where I am; government agencies are hiring like crazy while contractors are standing pat or laying off some.

The other thing that Obama has really screwed up is the Freddie's Fanny situation. By continuing to allow Dodd and Frank to use Fannie and Freddie as their personal playthings, Obama is allowing this triple whammy: (1) housing prices aren't being allowed to find their own level; (2) good taxpayer money is being thrown after bad in continuing to subsidize deadbeats; and (3) small mortgage lenders who have been forced to take haircuts are now being bought up by the TARP-subsidized banks for pennies on the dollar.

I agree that the small businesses (and a lot of the big ones) are being very careful because not only do they not know what's going to happen with the economy, they don't know what Obama's going to do next. A lot of economists say that the Cap and Trade bill that Obama's in love with could cause all kinds of economic damage.

Also, the "too big to fail", instead of bailing them out in the future, how about doing something that says if businesses get that big, they have to split up.

Also, every legal bill should only do 1 thing and should be 20 pages or less. Getting really sick of both parties trying to slip things into bills.

So is Paul now a racist for dissing Barry?