This should be a pretty clear indication that the underlying problems with the recovery is different this time around. It keeps coming back to spending across the board everywhere. Although I think Keynesian stimulus has its role in fiscal policies, it is not the universal solution for all circumstances. When debt appears to be the true root cause to the problems, stimulus via deficit spending is probably not the best approach. Also, the Obama stimulus was not a true Keynesian stimulus in the first place considering a large percentage of the stimulus went to unemployment benefits and the preservation of gov't jobs as opposed to going to actual spending projects that create jobs that directly affect GDP - but I digress...

http://online.wsj.com/article/SB10001424...TopStories

Quote:Banks are less able or willing to lend than before the recession. Since the recovery started, banks have reduced money they make available through credit card lines from $3.04 trillion to $2.69 trillion and have reduced home equity credit lines from $1.33 trillion to $1.15 trillion, according to the Federal Reserve Bank of New York.

Policy makers, meanwhile, are reluctant to do more to stimulate economic growth. The Federal Reserve has already pushed short-term interest rates to near zero. Two rounds of quantitative easing that including purchasing $1.425 trillion in mortgage bonds and $900 billion in Treasury debt helped to stabilize the economy but failed to spur a vigorous recovery.

Likewise, fiscal stimulus, either in the form of tax cuts favored by Republicans or spending increases favored by Democrats, looks unlikely given large federal deficits and the disappointing results of earlier efforts, including President Obama's $830 billion stimulus program of 2009.

The biggest problem may be household indebtedness. At the peak of the economic boom in the third quarter of 2007, U.S. households collectively had borrowed the equivalent of 127% of their annual incomes to fund purchases of homes, cars and other goods, up from an average of 84% in the 1990s. The money used to pay off that debt means less available for new spending. Households had worked their debt-to-income levels down to 112% by the first quarter, in part because banks have written off some debt as uncollectible.

The White House admitted today that the stimulus created or saved jobs cost taxpayers $270,000 each. Some analyst say it could be closer to $1.4 million each. Hud announced that by July 22, it will give $1 billion in debt relief to 1 to 2,000 homeowners in foreclosure.( More than 1.5 million have lost their homes already. and of course, politically connected is a must) There is still no 2011 budget. The $14.4 trillion debt crisis is still unsolved. ObabbaCare is set to take $500 billion out of Medicare. So where is the recovery? The summer of recovery part deux is a fantasy.

I knew the Republicans would screw up Obama's recovery plans. I wish he would stop letting them add their dumb ideas to his perfect solutions.