US politics out of sync with rest of world.

Politics for President Obama is going badly and is going to get worse. His ratings are low and the US media love to talk about ratings. For Americans, ratings are stats, stats means sports and sports means fun. It will be anything but, for Mr Obama.

In my opinion a major part of Mr Obama's problem is that his political timetable is now badly out of sync with European events and politics. Europe and GB are in full - we must be seen to be doing things mode. While Obama needs the exact opposite.

Just yesterday Geithner tried to tell Europe and Germany inparticular what it HAD to do. Today Merkel told him to run along home. Why, she asked, should Germany cut its export winning companies in order to suit the US? Why should Germany or Europe go into debt to spur consumerism to suit US exporters? Why indeed. This argument will build at and after the G20.

Mr Obama does not need arguments. What he needs is compliance and to keep things smoothed, out of sight, out of the headlines and put off until after the Mid Term Elections in November.

Mr Obama and the Democrats have already tried to make sure there will be no published budget from the House until after the elections. But it is going to be increasingly difficult to keep financial events from making news and perhaps even forcing some decisions.

For example Long Term Unemployment. More and more people are disappearing from the long term unemployed figures. Either they are getting hired by some as yet unknown business that specifically needs people with experience of 99 weeks of unemployment, or they are simply falling off the end of benefits into destitution. For now they are either too ashamed or too demoralized to make themselves heard

And there are going to be more of these people. A lot more, as the weeks and months roll on through summer to winter. Unemployment is NOT going down. The very best that can be said is that the rate at which new jobs are being lost is not accelerating. As good news goes I'd rate that as anaemic.

So far the unemployed have found no voice in the US. One political party and its adherent finds it very hard not to see all unemployed people as feckless, vagrants sponging off decent, hard working Americans. It is their knee-jerk reaction. Despite the fact that many of the unemployed, millions of them, in fact, untill recently, were themselves, those very hard working decent Americans. The other party and its supporters find the unemployed an embarrassment they don't want to be seen being 'soft' on.

Unemployment is felt as personal shame in the US. And while this can be seen as admirable on the one hand, on the other it means the unemployed find it hard to speak up for themselves and their children. To many Americans, militant unemployed sounds like armed beggars demanding that you pay-up under some vague threat of future violence.

But Obama may soon start wondering what would happen in the US if, by winter, ordinary, decent, but by then thoroughly impoverished and hopeless Americans, do get angry and militant. And do find themselves a voice.

Mr Obama cannot point to any sort of recovery AT ALL. There is no rebound or increase in exports. There isn't any growth in trade of any kind. All the indices that track international trade, such as the dry good Baltic, and Greek shipping indexes are ALL down. Goods shipping within the US is down. Purchses of durable goods in the US are down.

House building, house buying and house prices and rents are all down.

Without growth, all these liabilities will fall on tax or government borrowing. As the US rolls towards a new school year all these problems will congeal together into one big weeping sore. And the problem is, that trhis will happen before the Mid Terms. Right in the run up to elections that could leave him a lame duck without party majority, it all kicks off. State funding for schools, teachers, police, firemen, unemployment benefits and health will all gain the focus that comes when schools re-open - or not - as may be the case this year.

Mr Obama does not want to have to talk about bailing out the States and that such money might have to be printed up, or from whom it would have to be begged - sorry borrowed.

Neither does he want such questions to pile up behind others, such as the relentless and, I suspect, soon to accelaerate rate of regional bank failures. The FDIC cannot contain these bankrupcies much longer. Just to add insult to injury the FDIC just announced it is now NOT going to order/ask/beg (delete as appropriate) the banks to pay increased rates to cover the increased costs of bank collpases. Why? Because, so the press release says, they think they should not stress the banks too much at the moment until we all see what kind of new regulatory regime is going to be adopted. The banks themselves, poor, (though at the same time very much in profit and in recovery - oh yes siree!) fragile dears, WERE able to pay out bonuses which amounted to the very same billions that they can't afford to pay into the FDIC fund. Hmm. Nothing in the main stream media about that one. And guess who owns US media?

Talking of financial regulation. That too is coming to ahead at a bad time for Mr Obama. The Bank lobbiest are going to earn their millions in the next few days as they try like hell to cut off the balls of any reforms. What they all want is the form of 'reform' without any real substance. So, for example, a consumer protections office, to protect consumer is against banks, but housed in the Fed where it can be told to shut up, pipe down and pass all its reports and ideas upstairs to the big boys for 'review'. Expect little so that it will be less of a shock when you get nothing!

I don't think Mr Obama can keep the lid on all this until after November. Certainly events in Europe are not going to wait. Bank lending and debts in Europe are heading towards another blow out much sooner than that.

China too is having a liquidity and lending crunch right now. Central Bank of China will inject another 200 billion Yuan this week to keep its banks from seizing up. What if it works as well as the same action taken a few weeks ago in Europe? The same Central Bank of China is also about to buy back up to 1.3 Trillion yuan in bad and irredeemably putrid loans that it took off its banks the last time they collpased back in 1999 and has hidden ever since in now comletely failed 'Asset Management Firms'.

By the way do you know the name of the bank whose loans the Chinese government is now saddled with, that are still so toxic and worthless that they are never ever going to recover even after 10 years of waiting? Agricultural Bank of China (ABC). The very bank which is now - minus all those worthless loans its staff made last time they had money to burn - preparing for the world's largest IPO.

Imagine that!.