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Economy Recovering – Republicans to Play Napoleon in this Waterloo

By   Follow Me on Twitter     Message Steven Leser       (Page 1 of 1 pages)     Permalink

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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 [the weekly jobless figure which rose by 30,000] 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.

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A political blogger for the International Business Times, Steve Leser is a hot national political pundit. He has appeared on MSNBC's Coundown with Keith Olbermann, Comedy Central's Daily Show with Jon Stewart and Russia Today's (RT) Crosstalk with (more...)

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