Thursday, October 29, 2009

New American Economic Winds Of Change Are Growing - President Obama Sees Worst Approval Rating Drop In 50 Years

As we have discussed, one needs to focus on psychology, sociology and human behavior to glean the future of economics in times such as this. There are very, very substantial social changes that are going to impact the future economy.

A perfect example is that the U.S. has generally relied on trickle down economics for the past thirty plus years. In order to keep this scheme going, it was mandatory for the banking system to extend credit to lower and middle-class Americans as the economy continually lost more and more vibrancy due to this ideology. This extension of credit coupled with lost economic opportunity ultimately translated into wealth being continually sucked out of the vast majority of American households. This is the reason why we have such concentration of wealth in the U.S.. Not because the wealthy are brilliant. Not because they invented new sources of capital creation. But because they took it. Obviously there are exceptions to this rule as legitimate capital forming businesses continued to operate and to be created. Remember Ross Perot's famous remark from the early 90's. A cassandra ahead of his time. The Republican and Democratic stooges running the Bush and Clinton camps marginalized Perot as a crackpot. The reality is quite different.

Conversely, the Wall Street Journal reported a few days ago that this extension of credit to middle class and underprivileged Americans as the "Democratization of Credit". That's really quite hilarious were it not so utterly vile and a complete lie. This dynamic did not serve democracy at all. It served the policies which concentrated wealth in the hands of a very few. What they called the democratization of credit is nothing more than wholesale usury and corruption of the American economy. The Wall Street Journal's article, were it accurate, should have read "The Slow Decay of the American Economy Required Access to Easy Credit By Underprivileged Americans". More lies, damn lies and statistics from the mainstream media.

This and other substantial social dynamics are going to drive future economics in the United States. Period. In the end, I could really care less about capacity utilization or jobless claims. They are truly irrelevant. Instead I really watch for validation of the social dynamics that are building beneath the radar of the mainstream media and our Washington overlords. This drop in Presidential approval ratings indeed is one of those data points. Curiously, I wonder how many people polled would respond that we have a Constitutional representative government? Do you feel like Washington generally represents you? Your family? Your country?

This economy is not coming back regardless of Wall Street and political cheerleading to the contrary. Restarting the credit engine to pile more debt onto a broken economic model is not a recovery. It's a lie in both morality and truth that will reveal itself in due time. We are going to see a new economic model unfold. And the people of the United States will drive it. Not politicians. Not the President. Not business. Not Wall Street. These pawns will all play a role in fulfilling the will of the people either constructively or destructively but the driver for change will be society. The sovereign. It will be the janitor, the bus driver, the construction worker, the doctor, the engineer, the teacher, the mothers and fathers of children. It will not be the Washington elites who created this mess. Politicians and Wall Street still don't get it. They are spending billions upon billions of dollars in a propaganda barrage in an attempt to drown out change but all of the money in the world can't save Washington from change. A first sign of this social change was that neither Obama nor McCain were the big money favorites of either political engine - a point we have highlighted before. Regardless of the countless dollars spent to prop up the party-favored stooges, they lost. Now the tremendous enthusiasm for a new President seeking change has seen unprecedented drops. Not statistical anomalies or generally cyclical approval ratings seen during a President's four year term.

A President with high unemployment numbers doesn't have any other problem. Period. And I think we can be assured that even higher unemployment is around the corner. Possibly substantially higher. Counting those who have already been marginalized or who are just scraping by and you have a very substantial amount of the American population that is very unsettled. And very unhappy with the status quo. Some studies show more than one out of three people either are underemployed or unemployed or have a close relative who is. Watching Washington dither is not an option for most Americans. (Let me insert a remark here. I chose dither last week while outlining this post before Dick Cheney accused President Obama of dither. And while I personally have a high disdain for Dick, I am not changing my use of dither to accommodate him.) And dithering is the normal in Washington. Anyone attracted to politics for power or acceptance, as are many, are almost always psychologically predisposed to never make a decision. Why? Any decision threatens a potential constituency, their re-election and ultimately the emotional acceptance they so crave by seeking public office in the first place. Ah, but a leader understands times such as this and that making bold decisions actually leads to acceptance.

Because of these psychological dynamics, Washington is by definition a leaderless vacuum. We need virtuous leadership. Someone to institute sound policy on behalf of the people. And fast. President Obama may be a virtuous person but he has shown no desire or ability to be a great leader.

This drop in the President's approval rating was easily anticipated - earlier this year the President's approval rating dropped from about sixty percent to the mid thirties in a few of the Midwestern states. An unprecedented drop in such a short period of time. This drop isn't about health care reform, right wing radicals planting lies about the President or racially driven as some would have us believe. That's preposterous. A racist does not approve of a President then six months later determine they don't approve of his leadership. The press and supporters of this administration are having a field day attempting to marginalize dissent. Dissent that is so necessary to a functioning democracy. There may be radical or racially-motivated elements out there, and there may be many of them, but comparatively they are a very small measurement of the electorate. To label those who are concerned about the obvious Washington corruption, the loss of jobs, our national sovereignty and a government that doesn't serve the will of the people serves only the purpose of the elite and those wishing to maintain political power. This political finger pointing and labeling is utterly offensive on every level. It denigrates the intelligence and virtues of most Americans. Americans of all walks of life, race, creed and beliefs share similar virtues and concerns. People who want economic opportunity, want corruption cleaned up and want a government reflecting core human virtues. And they don't want to hear excuses about why a President who has been in office for close to a year hasn't done a thing to address any major issues but instead is perpetuating the same behavior. If this President were to embrace a virtuous populist agenda, his approval ratings would soar.

This dynamic adds more validation to post earlier this year comparing President Obama to President Hoover. Intellectually brilliant men but failed leaders who don't grasp the concept that great Presidents empower society to do great things and provide the enablement for this to happen. Both men are beholden to the status quo in economic ideology, the entrenched political stooges and failed policy. Given my voluminous posts on empowerment, I obviously don't believe we need government-run jobs programs. Or that the government must step in and spend because the private sector won't. These are lies. And we'll flatten them like a pancake in the future.

Finally, even if government wants to play a larger role in the economy, big business should be excluded from any economic stimulus. That is, unless it represents systemic risks. And even then involvement of the people should be limited and protected by government. To date, all stimulus has gone to big business. All of it. Large corporations employ many people but they have been a net destroyer of jobs for forty years. Why would they change that forty year trend and start hiring Americans after receiving our money as stimulus? An absurdity. Additionally, allowing them to run roughshod over the economy kills new business investment and innovation. And it kills debate in Washington where they spend money to marginalize dissent or new ideas of governance. Big business kills the proper functioning of a democracy. Purchasing favors from politicians is killing our economy and our democracy.

The winds of change are in the air. And the future is going to be substantially different than any of the Wall Street or Washington elite believe.

Link here.
posted by TimingLogic at 1:23 PM