The 2010 election reflected the anger of the American voters towards the Obama Administration, Congress, the Fed, Washington lobbyists, Wall Street, and Fannie and Freddie—just about everybody except Jack Bauer. The People have spoken and they are pissed—and they want Washington to know it. Now Washington does know it. But is anything important going to happen to make businesses hire and banks lend? Probably—but it will have only a little to do with the election.
Business is getting better now. Retail had a good “back to school” season, and it’s predicted that Christmas will be fine. Cars are selling decently in the U.S. at the new normal of 11-12 million units. Industrial is doing nicely, thank you, just look at Grainger’s stock price. Inflation has evaporated. McDonald’s, Panera Bread and Chipotle’s Mexican chain are thriving. The stock market is up 80 percent from the bottom—yet everyone’s still pissed.
And they should be, because unemployment is 9.5 percent, shadow unemployment is 15 percent, and three million people will soon see their weekly safety net checks expire. Housing is a pit because of unemployment, banking paralysis and a gaping oversupply.
But the situation will be getting better in 2011 and 2012 because businesses will be able to show healing statements to whipsawed lenders. They will start to loan money for expansion, which may actually lead to additional hiring.
Individuals will have money in their 401(k)s and savings accounts, which will make cars and houses buyable again. The economy will start growing briskly, and the politicians will take the credit—which they do not deserve.
I believe Barack Obama watched the election returns with ambivalence. They showed that the voters repudiated his policies, but they gave him political cover to move to the center, like Bill Clinton did in 1994. I think he must feel a lot like Brer Rabbit in the Uncle Remus stories.
For Obama, getting shellacked was being thrown into the briar patch. As loudly as he moaned, legislative gridlock and a recovering economy are putting him in a fortuitous position going into 2012, and ready for a dream one-on-one matchup with the feisty lady point guard from Alaska.
Question: Do you think Obama will have a similar political fate as Bill Clinton in 1994?