Dollar and the Double Dip

Stocks are soaring, yet unemployment surges and the dollar slumps. It's a contradiction made possible by Washington's neglect of international challenges to U.S. growth.

During the recent expansion, the trade deficit swelled to more than $700 billion or 5% of GDP. Americans borrowed from abroad, mostly to pay for oil and Chinese consumer goods. They posted as collateral homes at values inflated by slap-dash appraisals and slick Wall Street financial engineering.

Ultimately, homeowners defaulted on mortgages, home prices tanked, banks failed, retail sales collapsed and layoffs soared.

President Bush and the Federal Reserve rescued the biggest banks with the TARP and nearly $2 trillion in easy loans. Sadly, the scions of Wall Street were not so generous with their debtors, jacking up credit card fees to squeeze new profits.

Enter President Obama, promising stimulus spending on infrastructure to create private sector jobs. Instead, only $100 billion of the $759 billion package is slated for brick and mortar, as the rest is shoring up bloated government agencies and funding temporary tax cuts that mostly pay down consumer debt.

Ten months into Obama's era of new hope, new unemployment claims still exceed 500,000 each week, job applicants outnumber positions 6 to 1, and unemployment stands at 10.2%.

In Congress, Speaker Pelosi is ramming through "cost-cutting" health care reforms that will require $200 billion annually in additional insurance premiums and taxes and push health care spending above 20% of GDP. In France and Germany, that figure is only 12%, indicating a worsening competitive burden to U.S. jobs creation.