Despite well-spoken pres­i­den­tial speeches, the fren­zied activ­i­ties of 100s of cheer-leading lib­eral and left­ist blogs, and the dreams and prayers for “a new New Deal,” it’s prob­a­bly already game over for the new “hope and change” lib­eral agenda.

This is because the “hope and change” lib­eral agenda requires a huge growth in what’s already an unprece­dent­edly large U.S. Gov­ern­ment. The cost of the new lib­eral agenda’s pro­grams will run into the 100s of bil­lions if not sev­eral trillions.

There’s only place the gov­ern­ment can find such monies to fund these pro­grams — the U.S. econ­omy and, more specif­i­cally, the U.S. con­sumer.

The finan­cial real­ity that Obama will not acknowledge

Chris Whalen, co-founder of Insti­tu­tional Risk Ana­lyt­ics, throws frigid water on the “hope and change” lib­eral agenda:

One year since the col­lapse of Lehman Broth­ers and Wash­ing­ton Mutual, the sit­u­a­tion on Wall Street and the global finan­cial mar­kets remains prob­lem­atic, albeit with­out the ele­ment of sur­prise that almost turned last year’s finan­cial cri­sis into a global melt­down. Yet this cri­sis is still far more seri­ous than most observers want to admit.

Amer­i­can banks expe­ri­enced a short-term bounce in terms of equity mar­ket val­u­a­tions ear­lier this year, but the fun­da­men­tals of these insti­tu­tions con­tinue to deteriorate.

While peak losses in this credit cycle will likely not reach the dread­ful lev­els seen in the 1930s, losses for US banks are likely to be two times the rates seen in 1990–91.

More impor­tant, the global bank­ing indus­try is shrink­ing as banks con­serve cash, mean­ing that the pool of avail­able credit to fuel eco­nomic recov­ery also con­tin­ues to shrink. This cash drought is illus­trated by the four largest US banks, which have been with­draw­ing credit lines from all man­ner of cus­tomers for months.

One indi­ca­tor that Amer­i­can author­i­ties are grow­ing increas­ingly wor­ried about the sound­ness of US banks is the lat­est offi­cial num­ber of trou­bled banks, more than 400 as of the end of the sec­ond quar­ter of 2009. My firm’s stress-test sur­vey of the 8,300 US banks ranks roughly 2,200 insti­tu­tions “F”. About half of these insti­tu­tions will fail.

OK, the banks are still in a lot a trou­ble and — worse — their fun­da­men­tals con­tinue to dete­ri­o­rate. What does that have to do with the unprece­dent­edly costly “hope and change” lib­eral agenda? Whalen continues:

America’s polit­i­cal lead­ers have con­vinced them­selves that a recov­ery is around the cor­ner, but more prob­a­bly, the coun­try faces years of stag­na­tion [because] the ulti­mate cost of fund­ing the clean-up [of toxic assists] will fall on the bank­ing indus­try, thus future earn­ings by US banks could be bur­dened for much of the next decade.

And how does the midterm elec­tions for lib­eral democ­rats look 2010? Not good:

while the imme­di­ate cri­sis after the col­lapse of Lehman Broth­ers and other large finan­cial firms in 2008 has passed, the very real credit crunch con­tin­ues to grow and in a very men­ac­ing way. With the non-bank sec­tor for all types of con­sumer and busi­ness finance in the United States stalled, and with the banks them­selves con­serv­ing cash as the worst stage of the credit cycle looms directly ahead, the out­look for a robust eco­nomic recov­ery in the US next year is poor to none.

And how does the prospect of fund­ing the new “hope and change” lib­eral agenda look going for­ward into the next decade. Again, not good:

The after­math of the US real estate bub­ble could be at least a decade of sub-par growth, rais­ing con­cerns about both the eco­nomic and polit­i­cal impli­ca­tions of a pro­tracted slump. It is worth recall­ing that Amer­i­cans are still pay­ing inter­est on the debt that funded the bank bailouts of the late 1980s. The far larger cost of this cri­sis will be borne by gen­er­a­tions of Amer­i­cans for many decades to come. That is the harsh finan­cial real­ity that nei­ther Pres­i­dent Obama nor his Cab­i­net seem will­ing to acknowl­edge.(Source: The finan­cial real­ity that Obama will not acknowl­edge).