Obama signs stimulus, Dow plunges nearly 300

Wall Street’s doubts about the Democratic Party’s $787 billion deficit-spending economic stimulus plan crystallized today when the Dow Jones Industrial Average plunged nearly 300 points even as President Obama was signing the bill into law in Denver.

The Dow closed at 7552.60, only a fraction of a point shy of the recent low of 7552.29 Nov. 20, just after Obama was elected. The market now is down more than 2,000 points since Obama was elected, when it closed 9625.28  Nov. 4.

Saying that today “marks the beginning of the end” of the economic troubles facing the nation, Obama signed the American Recovery and Reinvestment Act of 2009.

Obama had created controversy by warning the American public and pressuring Congress that an economic “catastrophe” would occur if the stimulus package was delayed – then taking off the President Day’s weekend to Chicago with his family and dining with his wife at a trendy restaurant.

“The process that generated the legislation reflected Washington at its worst, with the dominant Democrats pushing through a package that received limited public airing and virtually no Republican support,” wrote economist John Williams, the author of the Internet website Shadow Government Statistics, in his newsletter published this week.

Williams expressed concern that the American Recovery and Reinvestment Act would not create or “save” the 4 million jobs Obama promised at his first prime time news conference Feb. 9.

“The cures being offered by the government should have only limited positive impact on the economy, but they do offer the promise of much higher inflation,” Williams wrote.

“The current crisis has developed and evolved during the last four decades, as trade and economic policies – counter to the interests of much of the U.S. citizenry – have resulted in the significant loss of high paying domestic production or technical jobs, where production operations have been lost to offshore competition, or simply moved offshore,” he explained.

WND has reported the U.S. Treasury is preparing to borrow up to $2.5 trillion in 2009 to cover the anticipated 2009 federal budget deficit, followed by borrowing another $4 trillion in 2010, with the prospect of increasing the current $10 trillion U.S. national debt by 65 percent in the first two years of the Obama administration.

WND also has reported that the true current obligations of the federal government, as determined by the U.S. Treasury using GAAP, or Generally Accepted Accounting Practice, rules, totaled $65.5 trillion in 2008, exceeding the gross domestic product of the world.

Williams predicted that the magnitude of deficit spending required by the American Recovery and Reinvestment Act of 2009 will create hyper-inflation in the United States no later than 2014.

Hyperinflation occurs when currency devaluation dramatically reduces purchasing power.

A commonly cited instance of hyperinflation occurred in the Weimar Republic in Germany after World War I, when thousands of German marks were required simply to purchase a loaf of bread or to mail a letter at the German post office.

Williams also noted that the “buy American” language in an earlier version of the Obama economic stimulus plan was circumscribed after objections from Canada and the European Union by the addition of a clause that added “buy American” would only be applicable in accordance with the requirements of existing trade agreements, such as NAFTA and World Trade Organization, the WTO.

“The anti-U.S. nature of the WTO is an example of the trade policies of recent decades that have helped to neuter a fair portion of a once much mightier U.S. industrial base,” Williams wrote.