During a Friday press conference at the White House, President Obama discussed the state of the economy in the US, job growth, and the European currency crisis, but all that has been discussed this weekend by every major news outlet is his comment about the private sector doing well. While this is noteworthy, the media failed to focus on the entire press conference and what it means. The following excerpts from the transcript deserve our attention:
"Right now, one concern is Europe, which faces a threat of renewed recession as countries deal with a financial crisis. Obviously this matters to us because Europe is our largest economic trading partner. If there’s less demand for our products in places like Paris or Madrid it could mean less businesses -- or less business for manufacturers in places like Pittsburgh or Milwaukee."
The president is correct that Europe, more specifically France and Spain, are customers of US. Just take a look at some of the absurd regulations that companies with over 50 employees face if they operate within the borders of France. A company that has over 50 employees must set up a council to which the owner must submit plans before firing anyone for economic reasons. In addition they must set up a profit sharing plan. This and other labor codes that prevent firing and force employers to live with mistakes in hiring due to the near impossible hurdles to layoff and fire employees makes it costly to hire anyone. This is a huge contributor to the record unemployment in France which stands at 10.2%, higher than our unemployment rate by 2%. This is a lesson of what not to do in the US.
The president also said during his press conference, Friday:
"In the short term, they’ve got to stabilize their financial system. And part of that is taking clear action as soon as possible to inject capital into weak banks. Just as important, leaders can lay out a framework and a vision for a stronger eurozone, including deeper collaboration on budgets and banking policy."
These weak banks are the Central Banks of countries such as Spain, France, Greece and Italy. The problem is that they can not print their way out like the Federal Reserve does in the US as they are all under the Euro, which is printed by the European Central Bank. These countries are being asked by this President along with Germany to sign on to a plan in Europe in which the people pay more in taxes to reduce debt. In addition the countries have to put up collateral and in some cases have already paid up to get more fiat money printed out of thin air from the European Central Bank.
During the financial crisis, the United States gave bailout money to banks such as JP Morgan, CitiGroup, and many more "too big to fail banks." The Federal Reserve also swapped US dollars for foreign currencies with European banks. This was essentially giving money to European countries that could not bring themselves to do the right thing economically and placing the burden on the American people.Finally, the president also said:
"Last September, I sent Congress a detailed jobs plan full of the kind of bipartisan ideas that would have put more Americans back to work. It had broad support from the American people. It was fully paid for. If Congress had passed it in full, we’d be on track to have a million more Americans working this year. The unemployment rate would be lower. Our economy would be stronger."The bill Obama is referring to is the American Jobs Act, which essentially focuses on rehiring laid-off teachers as well as hiring brand new teachers and education employees at a cost of $30 Billion. While it is sad that some teachers have been laid off as states struggle with their finances, if history is any indicator, more federal money for education does not necessarily mean better education. Just take a look at test scores since passage of the costly "No Child Left Behind Act" advanced by President Bush.So while the mainstream media focused exclusively on President Obama's private sector remarks as revealing an out-of-touch attitude toward the economy, there were several other statements throughout the press conference that merit our attention and reveal a disconcerting lack of fundamental economic principles in the president's understanding of the crisis Americans and the world face today.