Economy Recovering – Republicans to Play Napoleon in this Waterloo

[stevenleser]

http://www.opednews.com/articles/Economy-Recovering--Repub-by-Steven-Leser-090724-283.html
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By Steven Leser

When someone who dislikes Obama and his policies as much as CNBC's Larry Kudlow does is forced to admit that it looks like the economy is recovering, you can bet that the recovery is going to be a barn burner. That is exactly what we have here. Kudlow's last two articles "Recovery Canaries in the Economic Coal Mine", http://www.cnbc.com/id/32105734/ and "Stocks Surge as Obamacare Implodes" http://www.cnbc.com/id/32109437 have illustrated improvements in earnings and stock prices in multiple industries, a flattening out of the four week jobless average and as he terms it, "Pre-Lehman" credit-risk spreads.

Of course, someone as anti-Obama as Kudlow can't deliver this news without snarky remarks about Obama's attempt to reform healthcare and both articles, written only six hours apart, are laced with these comments but let's ignore that for the moment. Kudlow's remarks on the economy are right on and leave little mystery about what is happening right now. He said:

Hailing from four separate corners of the U.S. economy, Apple, Caterpillar, Starbucks, and Merck all beat the street. Throw in the banks and now you're talking five corners. It's bullish - 90 percent of the American workforce and rising business may be doing some spending and risk-taking after all. I like this story a lot. (Special hat tip to blogger Douglas McIntyre.)

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But that does not erase the near 100,000 downward spike on a four-week moving average. The chart has gone from 660,000 claims to 566,000. It could well mean that businesses cut too many jobs in the first half of the year. Planned layoffs are falling, and the July jobs figure may be better than we think. The unemployment rate might actually level off.

Meanwhile, Ben Bernanke is signaling an accommodative Fed policy for as far as the eye can see. And in the money and bond markets, credit-risk spreads have now fallen back to the pre-Lehman levels of late last summer. Economist Joe LaVorgna thinks stock prices could go back to pre-Lehman levels, too, which would be about 1,250 on the S&P - nearly 30 percent higher than today's 977 level.

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Republicans have been talking in the last few weeks about "Obama's Waterloo". As my friends on Democratic Underground were remarking, I think they are right, the only problem with the Republicans' analysis is they didn't account for who would be playing Napoleon and who would be playing Wellington in that scenario.

If the recovery begins now, by this time next year, it will be the defining story of the 2010 election cycle. Obama and the Democrats will get credit for the recovery and that spells a massive election victory for congressional Democrats. If Republicans had played the last six months differently, they could have claimed partial credit for the recovery. Instead, they tried everything possible to oppose and derail the policies that will have led to the recovery. They followed the Rush Limbaugh example of hoping for (and trying to cause) Obama's failure. In gambling terms this was an "All In". Either you win decisively or you go bankrupt. The GOP is facing the latter. Continuing the Waterloo metaphor, the Republicans are Napoleon, and the Prussians are arriving to join the battle against them.

What will be one of the interesting and fun things for me as a pundit will be to watch my colleagues on the opposite side of the aisle react to the changing fortunes. They have been joyfully predicting gloom, doom and catastrophe (in fact, Dick Morris penned a book with predictions about Obama's administration called "Catastrophe", http://www.amazon.com/dp/006177104X/?tag=yahhyd-20 ) and as what is happening becomes harder and harder to deny, I wonder what they will do. Will they admit that they were wrong? Will they apologize to Democrats and to President Obama? I won't hold my breath for any of the above, but whatever conservative pundits do in the face of the Democratic recovery, it will be fun to watch. I'm stocking up on popcorn.

[quaker bill]

1. My take

is that baiting them into the attack while playing it all "bi-partisan" was part of the plan from the beginning. "Bi-partisan" allows you to step into the middle and drives the attacks to come from the extreme ideological fringe. Stating that you aren't sure how well it will work pushes your opponents to call out "catastrophe".

If you "beat the market expectations" on recovery, you opponents are hosed. This is the "all in" approach from the admin. Drive the opponents to hope for and predict abject failure, then deliver far better results. Among a great many things, this man has read Machivelli.

[stevenleser]

2. You may very well be right.

In 2017 after the administration is out of power, I'd like to ask Obama about the strategy and if this was all planned like you said. But for now, I am going to enjoy the next 18 months. ;-)


:popcorn: :popcorn: :popcorn: :popcorn: :popcorn:

:popcorn: :popcorn: :popcorn: :popcorn: :popcorn:

[Odin2005]

3. +1

[Towlie]

4. They'll just adapt their favorite global warming argument: "The economy runs in natural cycles."

[stevenleser]

5. Oh, I am sure they will try to come up with all kinds of stuff

before succumbing to the inevitable. :popcorn: ;-)

[scheming daemons]

6. And how come the "Down cycles" always seem to start when Republicans hold the Presidency?

Current recession: began Dec 2007... Bush President

Last recession: Began March 2001... Bush President

One before that: Began 1991... Bush Elder President

One before that: Began 1981... Reagan President

One before that: Began 1974... Ford President


...and so on .. and so on...

[stevenleser]

7. Yes, once the recovery becomes undeniable, I will love doing the show appearances

and pointing that out. Reality, as we here at DU know, has a well known Liberal Bias.

[quaker bill]

9. very well known indeed n/t

[Engineer4Obama]

14. Thats the response I get everytime I bring up the economy under Clinton

Oh well he just hit the high point of the sine wave. I'm sure that's true to some extent but there is data that shows that employment wise the economy does better when democrats are in charge.

[stevenleser]

8. Kick for the Friday afternoon crowd

:kick:

[eridani]

10. A jobless "recovery" is not a recovery

Most of the standard ways of talking about economics are increasingly disconnected from the real world. Either we get real jobs and start making things again, or we will continue to go straignt down the tubes, continuing the trend starting in about 1980. One financial bubble after another is not actual economic activity that matters to real peoples' live.

[stevenleser]

11. It is not going to be a jobless recovery

As Kudlow points out, we are seeing evidence of that right now. You will dee more evidence of that in the July and August job numbers.

[eridani]

13. I'm not seeing it yet.

I think we are looking at a permanent downturn based on overshooting the capacity of our planet. To tunnel vision economists, of course, the real world that most of us live in is juat an "externality."

[DrToast]

12. You're wrong on Kudlow

When someone who dislikes Obama and his policies as much as CNBC's Larry Kudlow does is forced to admit that it looks like the economy is recovering, you can bet that the recovery is going to be a barn burner.

Kudlow would cheer on the economy no matter who is running it. He likes money.

But you're right that the economy is recovering. Many people will be surprised that GDP growth will be positive this quarter and job growth will return in the first half of 2010.

[galileoreloaded]

15. Sorry, but hot money flows into equities from TARP funded bank

trading desks is not a recovery. It is government funded arbitrage. This is the mother of a dead cat, and the only hope the street has is get enough cheerleaders out and stimulate spending and MAYBE something sticks. More likely it ends up kind of like the "green energy revolution". A non-starter. As the federal incentives continue to build alt energy capacity, fossil fuels just get cheaper and cheaper. Next thing you know, we are back to buying 12 MPG SUV's. Or worse, the boats loaded with oil go past our shores and head to India/China and THEY buy SUV's. Fed's turn off the $$ tap, and we rush BACK to coal, oil, etc.

Necessity breeds invention, not policy, and there is no ECONOMIC necessity for renewables yet.

The current attempt to legislate equilibrium makes me laugh, almost as hard as the "we are in recovery" cheerleaders.




You ain't even seen deflation in homes yet. Subprime will seem like a speedbump. ALT-A and Option ARM severity is already at subprime levels.

I am very sorry to inform you that there is NO economic engine to pull our dying empire from the ditch.

EDITED TO ADD:

This is not a political problem, and it can't be solved by policy, much to the chagrin of many. Complex system destruction theory holds that exponentially larger inputs would be required to shift from the current course.

The time from politics was 30-40 years ago.