MR. GREGORY: Governor Romney, why is it that companies are not investing, that they’re not hiring?

FMR. GOV. MITT ROMNEY (R-MA): Well, companies are going to hire if there’s additional purchases that require them to, to staff up and to beef up and to start their production lines. People have to be buying things. And unfortunately, what the president created with this $780-plus billion stimulus plan was something which grew government but did not grow the private economy. In fact, in some respects, the, the work that’s been done by The Washington Post recently points that out. It shows that there’s, there’s 10 times as much spending per person in the Washington, D.C., area as there is in the nation at large. This is not going to be a jobless recovery. The economy will come back, the private sector will grow again. But it has been a jobless stimulus. And, and that’s unfortunate, because the president had an opportunity to focus on the economy, to create jobs; but instead, Nancy Pelosi and Harry Reid created something that, that stimulated government.

MR. GREGORY: You know, it’s interesting. I mean, some people would, would hear that and say that’s a partisan view, Jim Cramer. But the reality is that there are people who say, “Well, what if you got this stimulus to take effect sooner, you got more than 20 percent of the money actually paid out?” The president this week said that Republicans seem to be rooting for failure; and yet, it was Republicans who, at the outset of the stimulus debate, said, “What about a payroll tax holiday? Let’s do something to prime the economy faster.”

MR. JIM CRAMER: I don’t think that–when I talk to CEOs, and I talk to dozens of them for my show, no one has seen it. I keep asking, “Where’s the money? Have you seen any money coming from Washington?” Even companies that are involved with road building, the most elementary aspect of any sort of stimulus, are saying, “No, this is the first quarter that we may have seen a trickle.” So I agree with you, David, this–the stimulus is not helping create jobs. And that’s not Republican or Democrat. I just don’t see anything beyond municipal and state worker compensation.

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The White House is lukewarm about proposals by congressional Democrats to introduce broad legislation to create jobs, instead favoring targeted measures that would be less likely to inflate the deficit, administration officials said.

There is as yet no agreement within the White House or in Congress on how to try to curb the U.S. jobless rate. But the differences in opinion suggest that rifts could emerge among Democrats as they wrestle with how to beat back the highest unemployment rate in a generation.

The jobless rate, which hit 10.2% in October, has continued to climb despite the implementation of a $787 billion stimulus package in February.

The subheader for the article is: White House Is Unenthusiastic on Legislation That Would Raise Government Debt. To which I respond–good for them. Read it all.

While Massachusetts recipients of federal stimulus money collectively report 12,374 jobs saved or created, a Globe review shows that number is wildly exaggerated. Organizations that received stimulus money miscounted jobs, filed erroneous figures, or claimed jobs for work that has not yet started.

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The President and his economic team have claimed that the plan is working as intended, that they’re on track to save the original goal of 3.6 million jobs, but somehow, despite practically drowning in success, we’re going to have to live with high unemployment for years to come. Oh, and that everything is still Bush’s fault.

These claims have been debunked by a variety of sources, including the AP (and here), the Chicago Tribune, the Denver Post, USA Today, the Wall Street Journal, and blogs such as Political Math (H/T d3ft punk).

But forget the quantitative treatment for a moment and consider what the Obama team’s graph said on a qualitative level. The graph says that within a couple of quarters, the stimulus package will stop the increase in unemployment and reverse the employment trend. That was the real mission of the stimulus. Stop job loss. Get the private sector hiring again.

So no matter how convoluted and fanciful the “jobs created or saved” numbers get, we just have to remember what the point used to be, and realize how far short we’ve fallen. And whose fault that really is.

Read it all and look carefully at those graphs.

Yet the urgent problem now isn’t TBTF [too big to fail], or even banker bonuses. These are distractions. The urgent problem is the giant riverboat gamble that Washington can save the economy by doing what comes naturally””spending money carelessly, creating massive new entitlements without funding them, dishing out cheap credit to politically favored sectors, telling business people where and how to invest.

Mr. Feinberg is an apt symbol indeed, for this gamble is built on the conceit that Washington can hector the recipients, whether auto companies, banks or homeowners, into behaving in ways that are “responsible.” So far, however, human nature is proving a disappointment: Take the outbreak of tax fraud related to the government’s emergency home-buyer’s credit.

Nor is the larger gamble looking so good either. Banks continue to fail at an alarming rate, the dollar is under assault, and Washington is looking at a future of trillion-dollar deficits. One might have guessed it would take a decade of Obamanomics to produce European welfare state levels of youth unemployment, but at 18.5% we’re there.

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The inherent contradiction in the term “jobless recovery” continues to cast a shadow on overdue good economic news. The Dow Jones Industrial average closed above 10,000 Wednesday for the first time in more than a year. But the national unemployment rate of 9.8 percent in September was the highest in more than a quarter century.

As The Associated Press reported Thursday, though the economic recovery apparently has begun, it “is widely expected to be weak, particularly when it comes to employment.”

And as The Wall Street Journal reported Thursday, about 30,000 jobs “have been directly created or saved by contractors who received money” from the $787 billion federal stimulus package that President Barack Obama signed into law eight months ago. That’s far fewer than the 1 million jobs promised by the White House — and not nearly enough to make a dent in those ominous unemployment figures.

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With unemployment expected to rise well into next year even as the economy slowly recovers, the Obama administration and Democratic leaders in Congress are discussing extending several safety net programs as well as proposing new tax incentives for businesses to renew hiring.

President Obama’s economic team discussed a wide range of ideas at a meeting on Monday, following his Saturday radio address in which he said it would “explore additional options to promote job creation.” But officials emphasized that a decision was still far off and that in any event the effort would not add up to a second economic stimulus package, only an extension of the first.

“We’re thinking through all additional potential strategies for accelerating job creation,” said Mr. Obama’s senior adviser, David Axelrod.

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IN THE political dictionary he first published in 1968, William Safire, who died on September 27th, devoted an entry to the word “normalcy”. The term was made popular by Warren Harding, campaigning for America’s presidency in the wake of the first world war. It was inescapable after the terrorist attacks of September 11th 2001. Normalcy is what people call normality when they no longer take it for granted. No surprise, then, that the word reappeared in the communiqué released by the leaders of the G20 group of big economies after their Pittsburgh summit on September 24th-25th. After the wrenching economic crisis of the past year, people crave stability and predictability””in short, normalcy. But how far off is it? And what will a “normal” world economy look like after the biggest financial bust since the Depression?

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Employers cut another 263,000 jobs in September and the unemployment rate rose to a 26-year high of 9.8%, raising worries that the persistently weak labor market could undermine a nascent economic recovery from the worst U.S. recession since the Great Depression.

The economy, by most accounts, has begun to grow again. But Friday’s Labor Department report underscored the risk that without jobs, consumers won’t have income to spend and that will restrain growth and give employers little reason to resume hiring after 21 consecutive months of job losses.

The bleak report comes amid continuing talks between the White House and Congress on extending of some parts of the stimulus package enacted in February, such as unemployment benefits and health-insurance subsidies.

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The American economy shed another 263,000 jobs in September and the unemployment rate rose to 9.8 percent, reinforcing a broad assumption that many more months of lean times lie ahead for working people.

The latest snapshot of the nation’s job market released by the Labor Department on Friday amplified the notion that the recession has probably ended, as a technical matter. Though the job market continued to worsen, the pace of deterioration remained markedly slower than earlier in the year, when roughly 700,000 jobs a month were disappearing.

Yet the report added to the sentiment that the economic expansion, which is probably under way, will be weak and tentative, with scarce paychecks and anxiety remaining prominent features of American life well into next year.

“This is a weak report,” said Stuart G. Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. “The rate of job loss has tapered off, but we still haven’t reached the point where businesses are willing to hire.”

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Barack Obama is committing the same mistakes made by policymakers during the Great Depression, according to a new study endorsed by Nobel laureate James Buchanan.

His policies even have the potential to consign the US to a similar fate as Argentina, which suffered a painful and humiliating slide from first to Third World status last century, the paper says.

There are “troubling similarities” between the US President’s actions since taking office and those which in the 1930s sent the US and much of the world spiralling into the worst economic collapse in recorded history, says the new pamphlet, published by the Institute of Economic Affairs.

In particular, the authors, economists Charles Rowley of George Mason University and Nathanael Smith of the Locke Institute, claim that the White House’s plans to pour hundreds of billions of dollars of cash into the economy will undermine it in the long run. They say that by employing deficit spending and increased state intervention President Obama will ultimately hamper the long-term growth potential of the US economy and may risk delaying full economic recovery by several years.

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A sleepy Montana checkpoint along the Canadian border that sees about three travelers a day will get $15 million under President Barack Obama’s economic stimulus plan. A government priority list ranked the project as marginal, but two powerful Democratic senators persuaded the administration to make it happen.

Despite Obama’s promises that the stimulus plan would be transparent and free of politics, the government is handing out $720 million for border upgrades under a process that is both secretive and susceptible to political influence. This allowed low-priority projects such as the checkpoint in Whitetail, Mont., to skip ahead of more pressing concerns, according to documents revealed to The Associated Press.

A House oversight committee has added the checkpoint projects to its investigation into how the stimulus money is being spent. The top Republican on that committee, California’s Rep. Darrell Issa, sent a letter to Homeland Security Secretary Janet Napolitano on Wednesday, questioning why some projects leapfrogged others.

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The United States economy is now out of the emergency room and appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and, before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.

To understand this threat, we need to look at where we stand historically. If we leave aside the war-impacted years of 1942 to 1946, the largest annual deficit the United States has incurred since 1920 was 6 percent of gross domestic product. This fiscal year, though, the deficit will rise to about 13 percent of G.D.P., more than twice the non-wartime record. In dollars, that equates to a staggering $1.8 trillion. Fiscally, we are in uncharted territory.

Because of this gigantic deficit, our country’s “net debt” (that is, the amount held publicly) is mushrooming. During this fiscal year, it will increase more than one percentage point per month, climbing to about 56 percent of G.D.P. from 41 percent. Admittedly, other countries, like Japan and Italy, have far higher ratios and no one can know the precise level of net debt to G.D.P. at which the United States will lose its reputation for financial integrity. But a few more years like this one and we will find out.

An increase in federal debt can be financed in three ways: borrowing from foreigners, borrowing from our own citizens or, through a roundabout process, printing money….

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Six months after President Obama launched a $787 billion plan to right the nation’s economy, a majority of Americans think the avalanche of new federal aid has cost too much and done too little to end the recession.

A USA TODAY/Gallup Poll found 57% of adults say the stimulus package is having no impact on the economy or making it worse. Even more ””60% ”” doubt that the stimulus plan will help the economy in the years ahead, and only 18% say it has done anything to help improve their personal situation.

That skepticism underscores the challenge Obama faces in trying to convince the public that the stimulus has helped turn the economy around. It also could complicate the administration’s plans to overhaul the nation’s health care system.

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Looking back, a key domestic moment in this presidency occurred only eight days after his inauguration, when Mr. Obama won House passage of his stimulus bill. It was a bad bill””off point, porky and philosophically incoherent. He won 244-188, a rousing victory for a new president. But he won without a single Republican vote. That was the moment the new division took hold. The Democrats of the House pushed it through, and not one Republican, even those from swing districts, even those eager to work with the administration, could support it.

This, of course, was politics as usual. But in 2008 people voted against politics as usual.

It was a real lost opportunity. It marked the moment congressional Republicans felt free to be in full opposition. It gave congressional Democrats the impression that they were in full control, that no one could stop their train. And it was the moment the president, looking at the lay of the land, seemed to reveal he would not govern in a vaguely center-left way, as a unifying figure even if a beset one being beaten ’round the head by the left, but in a left way, without the modifying “center.” Or at least as one who happily cedes to the left in Congress each day.

Things got all too vividly divided. It was a harbinger of the health-care debate.

I always now think of a good president as sitting at the big desk and reaching out with his long arms and holding on to the left, and holding on to the right, and trying mightily to hold it together, letting neither spin out of control, holding on for dear life. I wish we were seeing that. I don’t think we are.

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Like the United States, Canada adopted a stimulus plan. But while the U.S. plan amounted to 5 percent of GDP over three years, Canada’s plan gave a jolt of 2.5 percent, in only a little more than one year. So Canada got more bang for less buck. If both country’s projections prove accurate, Canadians in 2015 will shoulder only about one-third as much debt per person as Americans.

More and more, the $800 billion stimulus plan is looking like a great mistake — too much long-term debt for too little immediate benefit, all of it too closely tied to the Democratic party’s political imperatives in the 2010 election cycle.

The result: an unemployment rate in the United States fully one point higher than in Canada. To paraphrase a television commercial familiar to Canadians of a certain age, “Only in Canada? What a pity.”

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President Barack Obama said his $787 billion stimulus bill “has worked as intended” as he pushed back against Republican criticism that his recovery program has failed to rescue the economy.

“It has already extended unemployment insurance and health insurance to those who have lost their jobs in this recession,” Obama, who is traveling today in Ghana, said in his weekly Saturday radio and Web address. “It has delivered $43 billion in tax relief to American working families and business.”

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“America is six months behind; it has wasted a lot of time,” said Patrick Devedjian, the minister in charge of the French relance, or stimulus. By the time Washington gets around to doling out most of its money, Mr. Devedjian sniffed, “the crisis could be over.”

Gallic pride aside, Mr. Devedjian has a point. While he plans to spend 75 percent of France’s stimulus money this year, the White House is giving itself until fall 2010 to lay out that big a share of the American expenditure. And many experts predict that Washington will fall short of that goal.

As it turns out, France’s more centralized, state-directed economy ”” so often criticized in good times for smothering entrepreneurship and holding back growth ”” is proving remarkably effective at deploying funds quickly and efficiently in bad times.

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In concrete terms, the difference between the situation that the Obama advisers predicted and the one that has come to pass is about 2.5 million jobs. It’s as if every worker in the city of Los Angeles received an unexpected layoff notice.

Read it carefully and read it all.

Why hasn’t President Obama insisted on public hearings over what happened during this financial crisis?

Not a single top executive of a Wall Street securities firm responsible for causing the financial crisis has had the courage or the decency to step forward in front of the cameras and explain to the American people in his own words exactly how and why he allowed his firm to cause the crisis. Both Mr. Fuld and Alan Schwartz, the chief executive of Bear Stearns at the end, in their Congressional testimony blamed the proverbial once-in-a-century financial tsunami. Do they or any of their peers really think this is true?

There may be a way to find out. There is much talk nowadays coming from top bankers ”” Lloyd Blankfein of Goldman Sachs, Jamie Dimon of JPMorganChase, John Mack of Morgan Stanley and even Ken Lewis of Bank of America ”” about seeing how quickly they can repay to the Treasury the TARP money Mr. Paulson forced on them. One precondition of their being allowed to repay the funds should be a requirement that each gives a public deposition and explains, under oath, what truly happened and why.

This piece was given an astonishing full page on yesterday’s New York Times op-ed page. Read it all.

Many of Mr. Obama’s supporters surely thought this young, dynamic generation of public leaders would elevate the hip, cutting edge of the U.S. economy — nanotechnology, genomics, robotics, even health and medicine technology. Instead, we’ve gotten the Old Economy on dialysis. General Motors has been commanded to restart aging UAW factories to output product on behalf of the administration’s hybrid-car obsession. Where’s the New Economy in any of this?

Or ObamaCare. How will a build-out of Medicare (b. 1965) to cover everyone and costing $1.2 trillion over 10 years not kill innovation in medical and health technology by siphoning away growth capital and its potential financial rewards?
All of this seems so out of sync with the persona and promise Barack Obama conveyed in the campaign. A lot of his Web-based supporters probably thought Mr. Obama was going to be about promoting young guns with new ideas seeking risk capital for the next big thing. Instead, it looks as if the Obama years will be about managing soft landings for mature industries and old unions in the American autumn.

Congress is talking about a “bad behavior” tax on beer and soda pop to reduce obesity and fund mega-Medicare. How about a bad-behavior tax on government? Slim as the president looks, Uncle Sam is looking like quite the fat boy.

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Such government micromanagement of the economy is everywhere. The Post recently reported that Richard Wagoner, the former CEO of General Motors who was removed by the government, remains on GM’s payroll “because senior Treasury officials have yet to decide whether he should get the $20 million severance package that the company had promised him.” His 2009 compensation — $1 — is payable Dec. 31. The $20 million promised to him includes contractual awards, deferred compensation and pension benefits accrued over 32 years with the company. Promise-keeping, including honoring contracts, is the default position of a lawful society. But suddenly, many citizens’ legal claims are merely starting points for negotiations with an overbearing government.

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They’re back. We refer to the global investors once known as the bond vigilantes, who demanded higher Treasury bond yields from the late 1970s through the 1990s whenever inflation fears popped up, and as a result disciplined U.S. policy makers. The vigilantes vanished earlier this decade amid the credit mania, but they appear to be returning with a vengeance now that Congress and the Federal Reserve have flooded the world with dollars to beat the recession.

Treasury yields leapt again yesterday at the long end, with the 10-year note climbing above 3.7%, its highest close since November. Treasury yields had stayed low, and the dollar had remained strong, as long as investors were looking for the safest financial port amid the post-September panic. But as risk aversion subsides, and investors return to corporate bonds and other assets, investors are now calculating the risks of renewed dollar inflation.

They have cause to be worried, given Washington’s astonishing bet on fiscal and monetary reflation. The Obama Administration’s epic spending spree means the Treasury will have to float trillions of dollars in new debt in the next two or three years alone….

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[BARRY] RITHOLTZ: Most of Wall Street is furious at what happened. Most of Wall Street aren’t involved in mortgage securitization or derivatives or any of the other bad assets that have been blowing up. The average guy — you know Wall Street is a meritocracy, eat what you kill, as much as you can earn in profits you get to take as a bonus — and I know a lot of guys, everywhere from Merrill Lynch to Bear Stearns to Lehman, that actually were really profitable. But because this one division was run by rogue pirate traders and reckless derivatives salesmen, they wiped up the entire bonus pool for the entire firm, and then some, all the while engaging in really reckless behavior.

[Kai] Ryssdal: Do you figure we’re stuck now as a bailout nation? We’re going to be subsidizing banks and car companies and insurance companies for some time to come.

RITHOLTZ: You know we’ve already seen the trucking industry make hints they want stuff. And we’ve seen the homebuilders who are key players in this, who just overbuilt everything. They’ve been asking for a bailout. That’s the slippery slope. Once you reward people for their worst behavior, for speculative, irresponsible investing and punish the prudent and the people who are careful with that money. Everybody seems to think it’s a free for all. Hey, you’ve got yours. How do I get mine?

Ryssdal: What’s the alternative to these bailouts? I mean should we have just done nothing?

RITHOLTZ: What you do is what the FDIC does when a bank is found to be insolvent. Look what happened with Washington Mutual….

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The U.S. Treasury auction of long-term bonds on Thursday was “terrible”, in the words of one Wall Street economist, with the rate on the 30 year bond jumping from 4.1 to 4.3 percent. This is just the first sign that the debt-based Obama economic stimulus plan is about to become a major drag on the recovery, just as expected.

The economic news is not all bad. We are seeing signs the rate of contraction is abating quickly, promising a bottom to the recession sometime this summer as many forecasters have expected. But therein lies another piece of the interest rate puzzle, and the trouble ahead.

There are two critical consequences to the economy stabilizing. The first is that the massive liquidity injected into credit markets by the Federal Reserve and central banks around the world transforms from economic medicine to inflationary heroin. Central banks are going to face a difficult task of extracting the excess liquidity before inflation soars and without causing another recession. Doubt about the fight against soaring inflation means higher inflation premiums in interest rates.

The second dangerous consequence is that President Obama is on course to double the national debt in just four years….

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Still, the tea parties are not based on the cold wonkery of budget data. They are based on an “ethical populism.” The protesters are homeowners who didn’t walk away from their mortgages, small business owners who don’t want corporate welfare and bankers who kept their heads during the frenzy and don’t need bailouts. They were the people who were doing the important things right — and who are now watching elected politicians reward those who did the important things wrong.

Voices in the media, academia, and the government will dismiss this ethical populism as a fringe movement — maybe even dangerous extremism. In truth, free markets, limited government, and entrepreneurship are still a majoritarian taste. In March 2009, the Pew Research Center asked people if we are better off “in a free market economy even though there may be severe ups and downs from time to time.” Fully 70% agreed, versus 20% who disagreed.

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. Asked about the tea parties, President Barack Obama responded that he was not aware of them. As Marie Antoinette said, “Let them drink Lapsang Souchong.” His Imperial Majesty at Barackingham Palace having declined to acknowledge the tea parties, his courtiers at the Globe and elsewhere fell into line. Talk-show host Michael Graham spoke to one attendee at the 2009 Boston Tea Party who remarked of the press embargo: “If Obama had been the king of England, the Globe wouldn’t have covered the American Revolution.”

The American media, having run their own business into the ground, are certainly qualified to run everybody else’s into the same abyss. Which is why they’ve decided that hundreds of thousands of citizens protesting taxes and out-of-control spending and government vaporization of Americans’ wealth and their children’s future is no story. Nothing to see here. As Nancy Pelosi says, it’s AstroTurf ”“ fake grass-roots, not the real thing.

Besides, what are these whiners so uptight about? CNN’s Susan Roesgen interviewed a guy in the crowd and asked why he was here:

“Because,” said the Tea Partier, “I hear a president say that he believed in what Lincoln stood for. Lincoln’s primary thing was he believed that people had the right to liberty, and had the right ”¦”

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Mr. Obama is betting that the totality of economic policies his team and the Federal Reserve have put in place will act, like radiation therapy, to halt the spread and reduce the size of the cancerous tumors eating away at our financial system ”” and stimulate enough new growth and optimism so that Phase II will be small enough to get past Congress and the public.

As Treasury Secretary Timothy Geithner told ABC News, “If we get to that point” ”” where more funds are needed ”” “we’ll go to the Congress and make the strongest case possible and help them understand why this will be cheaper over the long run to move aggressively.”

Have no doubt, Phase II is coming. At best, it will require hundreds of billions of dollars more, at worst more than a trillion, to deal with more bad loans and toxic assets weakening the economy ”” problems that Phase I can’t fully absorb. Because unemployment is still rising ”” ensuring that the initial spate of mortgage defaults, which came from loans to people who could never repay, will be followed by another spate of defaults from those who could repay but now can’t because the deteriorating economy has stripped them of their jobs, their businesses or their credit lines.

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Rather than continue to play political games with $700 million in federal stimulus funding for schools, Gov. Mark Sanford should have simply agreed to use the money as intended. The drama grows wearisome, and public schools and colleges need the assistance.

On Friday, the governor’s office insisted that it had met the deadline for stimulus funding by filing paperwork with the White House. Maybe so, but Mr. Sanford continues to maintain that the money won’t go to schools, as Congress intended. State Education Superintendent Jim Rex rightly questions whether the governor’s latest gambit will pass White House review.

“The White House has made it clear, on two separate occasions, that federal stabilization funds can’t be used to retire state debt,” Dr. Rex said. “These funds are aimed at creating jobs and saving jobs. For the governor to get his way, the General Assembly would be forced to create some sort of bookkeeping sleight-of-hand that, believe me, the federal government isn’t going to permit because the law approved by Congress doesn’t permit it.”

Nevertheless, Gov. Sanford continues to insist that restoring school budgets with stimulus funds would be a dangerous precedent for the state. In a column on our Commentary page, he essentially declares that the budget problem doesn’t exist.

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After experiencing a few emerging-market crises, I get the sense of watching the same movie over and over. All too often, a tragic part of that movie is the failure of the countries’ policymakers to hear the loud cries of canaries in the coal mine. Before running up further outsized budget deficits, should we not heed the markets that now see a 10 percent probability that the U.S. government will default on its sovereign debt in the next five years? And should we not be paying close attention to the Chinese central bank governor’s musings that he does not feel comfortable with the $1 trillion of U.S. government debt that the Chinese central bank already owns, let alone adding to those holdings?

In the twilight of my career, when I am hopefully wiser than before, I have come to regret how the IMF and the U.S. Treasury all too often lectured leaders in emerging markets on how to “get their house in order” — without the slightest thought that the United States might fare no better when facing a major economic crisis. Now, I fear time is running out for our own policymakers to mend their ways and offer real leadership to extricate the United States from its worst economic calamity since the 1930s. If we insist on improvising and not facing our real problems, we might soon lose our status as a country to be emulated and join the ranks of those nations we have patronized for so long.

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