Obama's Dilemma -- and Ours

"Where is the strategic reserve?" Churchill urgently asked the French commander in chief, Gen. Maurice Gamelin, and then he repeated himself in French: "Ou est la masse de manoeuvre?"

"Aucune," came Gamelin's reply. "There is none."

The French had no reserves to stop the Germans from overrunning their country. The Battle of France was lost.

The Obama administration, in its grand strategy to generate a rapid and strong recovery from the Great Recession, is at a similar pass. It has drawn and played all its cards: the $800 billion stimulus bill, three straight deficits averaging $1.4 trillion, the Federal Reserve's mass purchases of bad paper from the world's banks, and QE2, the monthly purchase of $100 billion in Treasury bills that ends June 30.

Yet, from the numbers that came in from May, Obama looks to be holding a losing hand. The anemic growth of the first quarter of 2011 seems to have stalled, and the prospect of a double-dip recession looms.

Though the administration anticipated perhaps a quarter-million new jobs in May, as April produced, May generated only 55,000. The unemployment rate ticked back up to 9.1 percent.

The rise in manufacturing employment went into reverse. Five thousand manufacturing jobs were lost. Consumer confidence sank.

Today 2 million homes remain vacant in the USA, putting immense downward pressure on housing prices. A fourth of U.S. homes are not worth the mortgages being paid upon them.

Says Federal Reserve Vice Chairwoman Janet Yellen, "Looking forward, I unfortunately can envision no quick or easy solutions for the problems still afflicting the housing market." Recovery is going to be a "long, drawn-out process."

A further decline in housing prices of 10 to 25 percent over the next five years, says Robert Shiller, the economist who invented the S&P/Case-Shiller index of property values, "wouldn't surprise me at all."

The economic malaise has now begun to affect the mood of the nation and its attitude toward the president.

Almost 90 percent of Americans think the U.S. economy is terrible or poor. Sixty percent think the nation is headed in the wrong direction. Forty-eight percent expect a second Great Depression next year. Fewer than 40 percent approve of Obama's handling of the U.S. economy.

In one new poll, Mitt Romney leads the president 49-46 in a matchup in 2012.

The question Obama faces and, indeed, Congress and the nation face is: What do we do now?