It's stupid, the economy.
I continue to be amazed that nobody is connecting the dots on the purchases of toxic assets and figuring out where the bottom is--we're headed straight for it at ninety miles an hour.
I believe that our National Buggy has passed the inflection point: the angle of descent into the Great Crater has passed its maximum. Soon we will be on the long, gentle slope that leads into the depressed plain, and drag will cause our velocity to slow down--the real-life economic manifestation of this physical analogy will be a reduction in volatility of markets, and this will signal an end to the hysterical tone, which is the all-important first step towards regaining our balance. Right now we're just riding in the cart, taking the bumps which are coming at us too fast to dodge.
The sad flatline zone of the plain at the bottom of the Crater has to be traversed, and it ideally should be crossed directly opposite to the orientation we came down upon. If we try shortcuts off to the side, we will run up partway and slide or roll back down--this is what happened in the '30's. I will grade performance by how well Obama finds the right answers from the outset and sticks to them, not how well he improvises when he goes astray.
Obama described the path he wants to take across, which means the path out of here, as being based upon initiatives in energy, health care, and education which will transform the core of the country's economy. Are they the right ones? I'd say yes. Course corrections will be required, no doubt, but we've got the right azimuth, in general terms.
Beyond that, I don't know what anyone can expect. One thing we don't know is how far across the moonscape-like plain it will be. I say that, then rashly predict: I think the timing will be such that a nascent recovery will not be evident by the 2010 midterm elections, even with the course being maintained properly.
This will translate into a tough, but not impossible, fight to hold onto the safe margins the Democrats enjoy in both Houses of Congress. I would say the midpoint of expectations would be the loss of 20-30 seats by the Democrats in the House, which will keep them in the majority, but less securely. I think the Senate will stay more or less the same in 2010, regardless, and thus Obama will retain a Congress sufficiently compliant to complete his first-term program.
The rest, as they say, will become history.