Tuesday, October 28, 2008

Prediction for the Economy, Near-Term

Obama is going to win. People are going to be relieved. He is a level-headed guy, and there is going to be a sense that he just might be able to pull it off -- that, somehow, he can lead Americans back to the road that leads to the road to the promised land. The stock market will shoot up, and then fall down, and shoot up, and trend upwards for a while. Then Obama will make a mistake. There will be some flaw or imperfection. Biden will say the wrong thing. Something funky will happen, anyway, or if nothing else Obama will become old news, long before the financial crisis has leveled out. People will look ahead and see that the sky is cloudy all the way to the horizon. There will be a return to a sense of gloom. Obama will be giving Churchillian speeches: blood, toil, sweat, and tears. Spring will come, and there will be a sense that it is going to be OK, this altered vision of the future of America. It's not going to be pretty, but it will be less fearful. We will have looked into the abyss; it will have looked into us; and there will be stalemate. Obama will be locked in mortal combat with the beast, giving and taking victory and defeat by the inch -- no, by the millimeter. Obama will become old news. The late-night comics will have latched onto his foibles. By the time reruns appear on our tubes next summer, the foibles will be established in the popular understanding. Unknowns about the values of things in the financial world will be unwinding and clarifying themselves. Some things that Obama said and believed will turn out to be unaffordable. Our expectations will be on a long, steady march downward, to join forces with the fiscal realities trying to climb from the valley floor.