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Loretta Lynn had a song about this once

It was called "When the Tingle Becomes a Chill".

I can hardly believe what I'm watching on MSNBC right now. Chris Matthews is almost critical — no, not even almost, he's flat-out critical of President Obama on the economic front. He mentions an earlier conversation with CNBC's manic stock analyst Jim Cramer and a University of Maryland professor (Peter Morici?) knocking Obama for several economic decisions — that the stimulus bill needed more real infrastructure and less pork, that the housing bill isn't inspiring confidence and doesn't look like it will work, and that no one has faith in Tim Geithner's solution for the banks.


Now that's a shocker.

I've heard some folks speculate that a real bad economy could ultimately actually help team Obama, by lowering expectations in the long run and getting people willing to accept just about anything....even a command economy.

I don't think that and I'm betting neither do many (if any) in the Obama administration.

First, we are now an incredibly spoiled nation.

We're crying about "A Depression" NOW, when the economy's still far better than it when Carter punted off to Reagan.

2008's Misery Index came in around 9.6, with a 7.5% unemployment rate and a 2.1% inflation rate and a prime lending rate at around 4%!

In January of 1981 we had a RECORD (post-WW II) Misery Index of 22, with double digit inflation and unemployment rate and the prime lending rate at a staggering 23%!

In short, we have quite a ways to go before we get there.

Even so, Reagan's Supply Side revolution turned things around immediately. he Misery Index dropped EVERY year until 1985 when it hit single digits and stayed there throughout the rest of Reagan's tenure.

Here, we are addressing the problems brought on by a Keynesian President with more Keynesianism.

G W Bush spent wildly (the NCLB Act, the prescription drug boondoggle) and motivated by the Kempian "ownership society" sought to expand home ownership to more people, especially minoroties (a laudable goal, and indeed minority home ownership increased under Clinton and exploded even more under G W Bush) helped create the environment for the self- cannibalizing private sector feeding frenzy that's resulted in the ongoing global credit freeze.

As of as of 2008, Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac) owned or guaranteed about half of the U.S.'s $12 trillion mortgage market and over 90% of the new (high-risk) mortgages, where they'd traditionally owned/backed around 1/3 of the nation's mortgages!

The debt nearly doubled under G W Bush, BUT it exploded over the last two years!

I've said for awhile, that I fear this downturn will be felt in places most downturns haven't been, most notably in the PUBLIC sector.

More Americans are now exposed to the stock market via pension plans, 457s, 401-Ks, IRAs, etc.

Local governments are also heavily tied to the market, with most Municipal pension plans woefully undervalued.

Should the credit freeze not lift and things stay bad into 2010, many, many Municipalities are going to see police, fire and teachers laid off in droves. Public pension plans could go bust, and the incentive for states to use this crisis to amend or jettison such plans for pennies on the dollar will be great.

No, there's no way that an economic downturn helps this administration at all.

In fact, if they don't get something very much like Reaganesque results, they're probably in real trouble.

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