WASHINGTON -- A deepening pessimism is taking root in the American economy as joblessness rises inexorably toward 9 percent, businesses are failing, U.S. exports have tanked, and Wall Street is in a depression.
Billionaire investor Warren Buffet declares the economy has "fallen off a cliff," and sees recovery further off than ever. Economists talk gloomily of a long recession followed by years of anemic growth as the once-mighty global economy shrinks for the first time since World War II.
The administration's plans to bail out failing banks, buy worthless toxic assets, and "jump start" a listless economy now seem tame in the face of a dawning realization that the fierce financial infection is far more systemic than first imagined.
Global economic analysts here now talk of bank failures in the trillions of dollars, dwarfing the rapidly depleting $350 billion in TARP rescue funds that the Treasury has at its disposal. The Federal Deposit Insurance Corp. is raising its premiums on the nation's banks to replenish its shrinking fund at a time when many banks are too weak to pony up more money.
President Obama's honeymoon, if he ever really had one, is being cut short by new criticism from Wall Street, Republicans and Democrats in Congress, and, increasingly, the business community.
Investment strategists complain that Obama dismisses Wall Street's pivotal role in the economy's recovery as he plans to raise taxes on the very investors the country needs to boost stock prices and unlock risk capital to refinance a cash-starved economy.
"The result has been a capital strike and the return of the fear from last year that we could face a far deeper downturn," the Wall Street Journal said in an editorial aptly titled "The Obama Economy."
Leading Wall Street analysts, fearful of criticizing the administration this early, have now begun to speak out more brazenly.
I asked David Wyss, chief economist at Standard & Poor's, the influential Wall Street research and forecasting firm, whether the market's plunge was a sign of no confidence in the White House's recovery plans. He quickly replied, "Yeah, I would say.
"Part of it is they (Wall Street) feel there's no there there," Wyss told me. "They don't have (fully worked-out) plans. They are still in the formation stage. These guys have been there 45 days, but he promised to hit the ground running, and it's more like they landed up to their knees in cement. A lot of the cement was left there by the previous administration, but I don't think Obama has done the greatest job."
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