Wednesday, December 28, 2011

Yearend Reading: Obama Happy, Economy Up

“the major media aren't in the news business. They're political activists abusing their power to propel Obama to re-election”

--Jed Babbin, American Spectator

“People do not believe lies because they have to, but because they want to.”

-- Malcolm Muggeridge (1903-1990)

Obama’s poll numbers are back in re-elect territory. For the first time since his “bin Laden bounce” last Spring, the RealClearPolitics average has his approval ratings at 47%, historically, the minimum level that makes re-election possible. Obama is also within about 1% of being “right-side up” in the polls, meaning his approval rating would exceed his disapproval rating.

How is this possible?

The only issue that matters is the economy. Democrats, we thought, wanted power because they believed they knew how to make the economy create jobs. Democrats have the brains. Democrats know how to pull Washington’s levers of power. Democrats are the party of Franklin Roosevelt, Kennedy, and Clinton, presidents who created jobs. And Obama is failing to create jobs, to generate growth. Surely Democrat Obama is headed for defeat, based on poor job performance. Or so one would think.

Ah, but the fight for power, not so simple. First, we have a unified national elite, a meritocracy that has fought its way to the top and will do anything to remain on top. This elite, this minority, rules through the Democratic Party, which links to millions who believe they are dependent on big government—bureaucrats, unmarried women, minorities.

Second, the national elite, anti-business, pro-big government, controls the national dialog through its media, arts, and entertainment. They lie, and talk to those who believe their lies (Muggeridge above). They are absolutely committed to Obama’s re-election (Babbin above). And, shockingly to me, they don’t really care about competence. As Rush Limbaugh perceptively noted, "the left doesn't want to be judged on the results of anything they do. They only want to be judged on their good intentions."

The deck is stacked. The game is fixed. Yes, and what’s new? You play politics with the house’s cards. That’s life.

So setting aside the stacked deck, why is Obama surging?

Answer: some good economic news. The stock market is ending the year in “healthy” territory, which according to our FOX Index, is a Dow of 12,000, an S&P of 1,300 and a NASDAQ of 2,500—total 15,800. Right now, the Index is plus 191 (see chart). The unemployment rate is down to 8.6%, after being over 9% for most of Obama’s term. Weekly unemployment claims fell by 4,000 last week to 364,000, the third straight weekly drop, bringing the four-week average of claims down for the 11th time in 13 weeks to its lowest level since June 2008.

Furthermore, the economy added at least 100,000 jobs each month from July through November, the best five-month streak since 2006. And the Conference Board's index of leading economic indicators rose strongly in November for the second straight month, with the economy on track to grow at a 4% percent annual rate in the fourth quarter, something it hasn’t done since the first quarter of 2006. And the price of gasoline is lower. Actual evidence that people are feeling better comes from increased retail sales this Christmas season.

On the other hand, government revised the GDP downward in the third quarter from 2% to 1.8%, and GDP growth for the full year will almost certainly stay below 2%. Housing prices continue to fall, with the Case-Shiller index of home prices in 20 leading markets showing a 3.4% decline over the past year. The Euro crisis remains unsettled; it's a potential threat to U.S. growth in 2012.

On next year, Robert Samuelson, in the Washington Post, quotes economist Barry Eichengreen, a leading scholar of the Great Depression:
Given low interest rates and the still-weak U.S. economy, it will be tempting for the U.S. government to continue running deficits and issuing additional debt. At some point, however, investors will recognize this behavior for the Ponzi scheme it is. ... If history is any guide, this scenario will develop not gradually but abruptly. Previously gullible investors will wake up one morning and conclude that the situation is beyond salvation. They will scramble to get out. Interest rates in the United States will shoot up. The dollar will fall. The United States will suffer the kind of crisis that Europe experienced in 2010, but magnified.
A sober warning indeed. But should the economy continue to improve, Obama, according to the New York Times, does have a narrow path to re-election:
All pretense of trying to win a majority of the white working class has been effectively jettisoned in favor of cementing a center-left coalition made up, on the one hand, of voters who have gotten ahead on the basis of educational attainment — professors, artists, designers, editors, human resources managers, lawyers, librarians, social workers, teachers and therapists — and a second, substantial constituency of lower-income voters who are disproportionately African-American and Hispanic.
The very coalition we pointed to above, except that for some unknown reason, the New York Times left out unmarried women.

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