The asset bubbles in housing and equities are maybe three-quarters deflated, and are starting to show some signs of bottoming. They both continue to descend at around 10% a month and should hit bottom around the summer. Meanwhile, there have already been a couple of $500+ billion rounds of recapitalizations of the banks, after which they shockingly discover that it wasn't enough, and return for another tranche. I would expect another one or two.If he or she is right, then President Obama will look like a genius, his big-government moves (whether or not they worked) will be eagerly and hungrily validated by journalists and historians, and the GOP comeback in the '10 midterms will be inoperative. Ain't politics grand?
Couple this with the dramatic drop in the price of oil, which acts as a far larger stimulus to the economy than any of the congressionally allocated funds, and I think a whiff of recovery will be in the air by the 2009 holidays. Considering the staggering scale of the housing bubble and the near collapse of the financial markets last year, that's just amazing.
Wednesday, March 4, 2009
Barack's Christmas Gift: Seven More Years?
One of Andrew Sullivan's readers says there may be something nice in our stocking in December: