I made some statements in the Second Financial Crisis about a recovery in the USA, and unfortunately, events in the last week or so have really cast doubt on that. And I want to set the record straight.
Four uber uber bad things have happened in the last week:
(1) China said it was going to slow its lending and economic recovery package to fend off a real estate/financial bubble. Our economic taskmasters are deciding to slow things, which means the economy in the USA is going to get screwed.
(2) The Democrats lost in Massachusetts against a no-name Republican who posed nude for playgirl. Union and middle-class households broke for the Republican 3 to 2. This is super-big. It means health care reform in the current form is dead. What we will get is a populist bill that will have not raise taxes or extend benefits for uninsured, but will just be stealth mandates -- no denying for pre-existing condition, etc. The net effect is going to be a bigger drag than any health care would have been (that's right, the current bill would have been better). Also, because the Democrats lost, Obama now has to go populist, see # (3).
(3) The Democrats, because of the loss in Mass, are going super-populist. Soak the rich, hit the bankers. Until now, Obama has been pretty reasonable on economics. That's over. With unemployment at 10%, and independents and also middle class Dems going against Obama, the only way to win mid-terms is to go aggressive populist. Going with that theme, Obama is going to split up banks into commercial / proprietary, and institute a bank tax. This will kill lending and stifle the economy.
(4) Greece. (Sorry Pelo.) The stuff this week. Yikes.
Those four things, with (1) being the most important, are going to sink economies in the West for 2010 until November. Since this is a blog about Gor, not business, that's the last of my economics talk.