Crappy Birthday, Barry!

On the surprisingly solemn anniversary of the second coming, it's time to take stock. Some observations:

1. Waxwingsworkwonders: The cries of failure, while warranted, are overdone. The cool thing about being Icarus is that your version of crashing corresponds with (many) other people's versions of soaring.

2. It's a Truecents World: Our skepticism (see the truecents Inauguration Special) has now become mainstream. It's very gratifying to start as a wet-blanket and morph into an oracle. Today the cheerleading Guardian asks "Where did it all go wrong?"

3. Collective responsibility: This is the first anniversary not of one person's journey, but of Clinton mark II. It should be judged accordingly.

It'd be premature to call the remaining three years on the basis of the shaky first. But thin-ice diving is the truecents way...

1. The ghost of Dick Morris: Obama now (immediately, this minute) starts triangulating. The proposed bank tax was the first sign of the teabagification of his regime. It's toodeloo to hopeandchange.

2. Rabid Blue: As everyone's observed, the Blue Dogs will enter this November's election with increased panic. Ironically though, purple state senators will go canine, running on conservative themes in order to avoid the perceived Republican wave.

3. The implosion: The inaugural dreamteam disintegrates forthwith. Geithner is a likely first candidate. Emmanuel is a natural next, but he may be saved by his tenacious refusal to be killed. Then (ironically) Clinton may follow.

4. The GOP curve: To their credit, the Republicans have carried out all four key tasks prescribed in the Inauguration Special (latino fence-mending, pragmatic economic populism, candidate selection, tech savvy). In order to maintain the momentum, they have to keep the Tea Party on board. It needs to function as a grassroots movement, not a political rival. They also need to manage the chair of the RNC.

5. The rest of us: The world will be even less tractable to American foreign policy this year, than last.

As far as healthcare "reform" goes, there are four scenarios [with probability]:

1. Pick off a Republican senator (or three) with concessions. [60%]
   
2. Adopt the Christmas-eve bill in the House. [20%]
   
3. Ram a merged bill through both houses in ten days. [15%]
   
4. Fail. [5%]
   

It's gonna be a long three years.

The death of healthcare "reform"

As I blog, the voters of Massachusetts are enacting a breathtaking irony. By voting in a Republican senator to replace Ted Kennedy, they're indicating that the hopes of healthcare reform have died along with their staunchest defender.

Shorn of their 60-seat supermajority, Democrats have little choice but to concede heavily to Blue Dogs and tractable Republicans (like Sen Snowe), producing a version of the bill that will, as several commentators have observed, be a boon to the insurance industry.

Tonight signals a slamming of the brakes on Obama's legislative agenda. This will lead to:

1. Early triangulation by a President who'll now calculate that his party's liberal faction is worth less than the cost of appeasing it.
2. Longer negotiation cycles on further reform.
3. More aggressive cost-sensitivity in the design phase of further legislation. This is a structural conservative concession, mandated by pragmatism.
4. A muted Democratic agenda for November.

The era of Change ends in Boston this evening.

3/3 isn't bad

I appreciate that it isn't New Years Eve anymore, but I've had even less interesting things to do with my time. As for the bubbles of which we spoke:

1. The US treasury. As I wrote BubbleWatch, the JP Morgan US government bond index had just notched an astonishing 14.3% annual return. A heroic response to the (momentary) implosion of international capitalism. The previous year's return was 9.2%, and the preceding years averaged in the neighbourhood of 3%. Sadly, my warning that "Americans will learn the meaning of the Afrikaans post New Year phenomenon bubble-las," was lost in translation (or perhaps the fact that not even my mother reads this blog.) As warned the bubbled popped with the JP Morgan index registering -3.8% - the first negative year in a decade, and the largest drawdown in the (short-assed) life of the index.

2. Barak Obama When we wrote a year ago, his Gallup rating cruised at 68%. I deferred specifics to the Inauguration Welcome, when I wrote that "Ratings are driven by public ennui, and his biggest worry is that the American public will tire of their gut-curdling ride on the credit-coaster. 50-something approval points signals a bursting of the Obama-bubble, and a retreat to normalcy." As I write, Obama has the second-lowest end-of-first-year rating at 49%. The only worse performer was Ronald Regan, who scraped to safety when an assassin's bullet punctured his lungs. I warned at the time that V-shapes don't occur in the Gallup curves (American voters don't fall back in love with their exes.) So unless something 911-esq happens, these are the doldrums for Barry O.

3. China. They're holding onto (and topping up) their T-bills for now, but all the noise about securitising drawing rights paints a picture. Growth has been positive, but well below the required 8% minimum. The country's been doing well politically, but it was an investment, not a strategic bubble. And this is looking terminal. I'm open to debate on this one, but my sincere reading is that we're over the euphoria stage.

When I feel a little less lazy, I may just write my ten for '10.