Monday, December 13, 2010

Obama team versus Krugman

Generally in an economic debate, I choose Paul Krugman over the White House or the rest of the msm. I remember during the 2008 election, I waw comforted and informed by Krugman's views on the Obama-Clinton debates. But Krugman's column today about the economy is wrong.

He is arguing that the economy has structural damage from overleveraged borrowers, and is not on the verge of a self-sustaining recovery.

Paul Krugman is wrong because he is underestimating two things:

1. The Republicans hate Obama so bad that they have been "biting their nose" (not investing) to "spite their face" (to hurt Obama's economy).

This had to come to an end soon. As much as the business community is against the President, they aren't going to keep passing on good deals. They were holding out for the midterms, playing politics with the Republicans, and they won big. Now that's over. Magically, the trillions on the sidelines will come into play.

2. Average Americans are tired of being in a depressed economy. Remember this downturn was psychological and not necessary. Contrast our recession with a Tsunami overseas, or a terrorist attack that shut down major parts of the country and imperiled the rest in fear.

Democrats want Obama to win in 2012. Republicans want the GOP to keep the House and win the Senate. Whether it's the conscious and mundane, to the professional politicians, there is incentive to have America work again. Republicans can't win again by having America fail. They are apart of governing.

This all adds up to a good economy where the sides argue over the credit. The losers in this will be the Congressional Democrats. I expect the President to cut a deal to cut the deficit with the Republicans, leaving them in the cold once again. Then I expect the Republicans and the President to win re-election. With a Republican Senate coming along.

All in all. It's good for America that Republicans are in the game. They were ginning up some ugly things on the sidelines.

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