Politicians and pundits have had a grand old time recently, criticizing bankers and consumers for their reckless lending and borrowing. Just as they had a grand old time tarring all businessmen with the brush of Enron back in the tech bust of 2000-01.
Remember Enron? Seems like a faraway time from the trillion dollar deficits of 2010.
But now that we are seeing the Obama myth in free fall, after the year the locusts ate, it is time for knowing analysts to give their heads a knowing shake about the Obama political bubble.
As with credit bubbles, the Democrats did it to themselves.
The US is a center-right country. You can tell that from Gallup's poll of political orientation. Right now, the US is 40 percent conservative, 21 percent liberal, and the rest moderate. So for Democrats to get into power they need a meltdown like 2008. And they need to dissemble, to represent themselves as not really as liberal as they are.
Let's face it. The Democrats are masters at the art of appearing not quite as liberal as they really are. They field good conservative candidates to run in Republican districts. They have the mainstream media to pretend that liberals are really moderate. They have the schools to fill heads full of lefty mush. And at election time they can conjure up the votes to push the odd toss-up into the Dem column. Think Maria Cantwell (D-WA), Al Franken (D-MN), and the October surprise prosecution of Ted Stevens (R-AK).
But there's a problem with being too clever by half. You end up with a president and a Congress that don't represent America. You create a political bubble that, just like the Fannie Freddie credit bubble, is going to pop some day.
With Obama and the Democrats, that day is here.
The Dems did a fantastic job of contesting the legitimacy of the 2000 election. Then they did a fantastic job of harrying President Bush over Iraq. Then they did a fantastic job of critiquing the tired and corrupt Republicans in 2005-06. Then they did a fantastic job of getting conservative candidates to run for Congress in 2006 and 2008. Then they did a fantastic job, backed up by the MSM, of selling the left-liberal Obama as a moderate.
Now look what they've done. They've given the US a president and Congress way off the center-right center of gravity.
We all know what happens when you gun the housing market with cheap credit to unsustainable heights. You get a nasty collapse, much worse than you would have got without the preceding bubble. Housing prices go into the toilet.
Same thing in political bubbles. Now all the cunning poliltical leverage that the Democrats worked into the system over the last decade is unwinding. And that means that the defeats that the Democrats will suffer in 2010 will be worse than the normal mid-term correction. Maybe much worse.
Politicians are competitive chaps, and they fight hard to win their glittering prizes. But what the American people need is a government that reflects their mood. If they want some nice new programs, as they did in the 1998-2000 period, they should get them. If they want deficits cut and spending cut, as they do right now, they should get it.
Thinking long term, it does no good to game the system. What you need to do is persuade the American people, not just in a slick election campaign, but year in, year out, on the basics of what American stands for and what the government should do and not do.
Democrats are going to pay a frightful price for their bubble politics, and you ain't seen nothing yet.