In regards to a certain diary from yesterday on mob behavior.
Originally, I began this diary wondering, "what does Nouriel Roubini (long time, no see) have to say about the short-term future for the economy?" Roubini's answers changed this diary from an economic one to a political omen.
Roubini warns that the state of the economy in 2010 is "damned if you do, and damned if you don't," precisely for the reason that Republicans dividing control of Washington in 2010 will bring serious, unintended consequences for recovery.
If you've taken a Macroecon class this is pretty easy to follow, but not good news.
[@ :50] That would mean you'd have to increase taxes and reduce government spending, and mop up all this excess liquidity sooner, rather than later. But if you were to follow this exit strategy too soon, then you'll make a policy mistake. Because while the recovery of private demand is still weak, if you take away the monetary and the fiscal stimulus, the economy is going to fall back into recession and deflation.
So if it looks like there is no constraint to the deficit. And there is even a risk that Republicans are going to win the House in Novermber. So we'll have a divided government. The Republicans are going to veto tax increases. And the Democrats are going to veto tax [spending?]. And if we cannot raise taxes or cut spending. Then the path of least resistance is to keep on running the printing press. As the Fed will keep on buying treasuries, and agency debt. Like they've done in 2009. And eventually, this monetary-financing of large fiscal deficits is going to lead to an increase in expected inflation. That's going to push up long-term inflation: on government bonds, on mortgage rates, and you'll have a crowding out of this recovery. If you exit too soon you make a mistake. If you exit too late, you make another mistake.
Note Roubini's take on the politics: "Who cares if the economy goes down the tube, we [Republicans] are not going to collaborate with the Democrats."
Roughly 46% of the country happen to be Republican-leaning. It's now cool to say you're a "moderate" or "independent" on your facebook page. But for millions, that's just code for Republicans who are embarrassed to be affiliated with the racist and religiously hysterical GOP base, one decade into the 21st century.
This half believes nonsense like "when we're tightening our belts, Washington should, too." That sort of sloppy "common sense"-Sarah Palin wisdom fails Macroecon 101 and fuels the business cycle's nasty elements--including the technical literal downside of a recession. Because spending is what lifts economies out of recession.
Also, these voters fail to acknowledge actual government spending patterns. Like how Medicare & Medicaid are the largest single sources of the U.S. deficit, and how defense spending (which Republicans eagerly "surged" under Reagan, abandoning any pretense of fiscal conservatism) is not far behind. If it's old Republicans receiving it, none dare say socialism. If it's an antiquated jet plane that every major country already has, it's socialism to remove 400 government jobs which saturate the planet with needless bomb-droppers. They'd cut wildlife spending in a heartbeat, (esp. counteracting by, say, increasing timber sales) but that would do nothing to reduce the deficit or debt.
However, government spending is vital to recovery from recessions, especially when interest rates (monetary policy) can't go lower. The other hand of fiscal policy--tax cuts--Obama already continued into the nadir of the recession. There's not much else that can be done besides spending. Nonetheless, Republicans like Eric Cantor wish to cease it now.
And about that "shit-sandwich." Larry Summers and Fed Chairman Ben Bernanke and Cristina Romer--whom I oppose deeply-- at least had the ability to react and shift when even they, as New Keynesians, trusted human rationality and lacked passion for government intervention. It'll be a lot of fun if a Republican House can block everything they're trying to do because tweakers like Rush Limbaugh force their hand.
Again, probably half of the American population actually believes things that are flat out as wrong economically as you can get, and they want to win power in November and stop any intervention.
Obama's poll numbers have gone south. But I've got a hint for you, white Baby Boomer males were not Barack Obama's reason for election. It wasn't the most reliable bloc of voters--the elderly--either. These people will have more of a presence in 2010 just because they vote more regularly than blacks or youths--without whom we'd have President Palin.
President Obama's leadership and general current events are met by a weakening of support. Much of his initial approvals were granted by those who never voted for him anyway, and were more or less doomed to turn away due to the economy.
But don't take my word for it, Nate Silver explains better than any of us can:
Unfortunately, I'm not going to be able to give you any one incredibly satisfying answer here. The most basic reason for the decline in Obama's numbers, almost certainly, is that people's expectations for what he ought to have been able to accomplish on the economy have accelerated faster than his ability to do so. But beyond that, things are a little murky. The periods that represent the steepest declines in Obama's approval ratings are only loosely related to the periods that provided the most disappointing economic news. Meanwhile, while I'm sure that the health care bill hasn't helped Obama any, the trajectory of that debate isn't a great fit for the trajectory of his approval numbers.
I'm speaking of a lot of complex issues rather quickly. But that's because it's too easy for those I'm rebutting to just toss these things off without thinking about what they're writing. Like the nuances of polling and economic policy, as if they're nothing because you're mad. Mad!
The Obama Administration disappoints most of us. The expectations are so high and because President Obama made wrong decisions. Sometimes, aided by mortal progressives or wrong triangulators. They all garner blame rightfully.
But we as progressives need a mission to remain focused on. Positive outlets for action. Lest we degenerate into friendly fire and triage.
Frankly, inflation doesn't really care about our reaction to photos of Bo or our I-want-my-pony fests. We've had years of mismanaged fiscal policy. The Second Bush Administration, harkening back to the Laffer Curve days of Reagonomics, destined us for a future of high inflation. The last time that was a problem, Paul Volcker chose the lesser of the two evils and flattened 15% inflation with what was then the ugliest recession between 1940-2007. If another recession comes now, we have essentially no interest rate to cut.
Yet that's exactly our risk with the party that plays fast-and-loose with... reality.
All the whining villagers going on about partisanship don't have their brains on right. Since inception we Americans divided politically. Remember the Federalists vs. the Anti-Federalists? But back then it was Jefferson and his ilk, who didn't pander to the worst aspects of meth-fueled, xenophobia-laced folk religion. More recently, the heir to Hamiltonian markets and economic efficiency degenerates into a cage fight of racists and hysterics. Who flat out reject "egghead" education and science. That's a different kind of partisanship, there.
Yet some of you flirt with opening the cage door.
This year will prove unpleasant economically and electorally. It needn't be the beginning of another spiral and political bloodbath. The Grover Norquists of the world use violent metaphors for their politics fittingly. Their politics entail death for brown people in faraway lands, for the poor, for the uninsured, for the weak. Recessions kill people. I don't want the economy to "go down the tube."
It's easy to give up, and let divided government take away our obligation as activists. "That Obama let me down. If he didn't suck, I'd get off my tookus!"
But we're all better than that. If we're not here to fight Republicans, isn't it rather cheap and convenient to call ourselves progressives?