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Sunday, August 28, 2005

The Gathering Storm

Over the past few days, all eyes have been on the Gulf of Mexico as the elements have come to together to create a dreadfully perfect storm.  As I write, Katrina is lurking ominously off shore and forecasters are using adjectives like catastrophic and calamitous to describe the events soon to take place at the beautiful beach communities that line the Gulf Coast.

Recently, I have been sensing the brewing of another perfect storm, where elements of economics and politics converge to create electoral winds strong enough to wreak catastrophic damage upon the shoreline of the political establishment.  Early warning signs have been the poll numbers for the president and congress that have fallen like temperatures from an oncoming Canadian high-pressure system in October.  This initial discontent lays the groundwork upon which the economic realities America will soon face will play out.   The early warning signals should have the administration worried.  The early warning signals should have the Republican congress worried. I'm certain they do, but is there anything they can do to avoid the damage of this category five social storm that is about to hit?

What is the storm of which I speak?  To begin with, the American public is finally waking up to unavoidable reality, and what a harsh awakening it is and will continue to be for quite some time.  Let's take a look at the gathering economic and political perfect storm that is brewing on the horizon that, eventually, may make the public wish they were still sound asleep.  But they won't be asleep; they will be very angry and borderline desperate.

The Iraqi War

Cindy Sheehan has burst the Iraqi bubble, which had been inflated and held aloft for so long by an obfuscating administration and its allies. She has asked a question so simple and clear, and it's a question for which the war makers and apologists have no compelling answer.  "What is the noble cause...?" After the president has offered so many ever-changing answers to that question for the past two years, this is the political equivalent to the little boy finally exclaiming that the emperor has no clothes.  And there stands the president, naked, stripped of all his fabrications and America doesn't like what it sees.

The public is finally sensing that this expensive and increasingly unjustifiable situation is a mistake we should have avoided.  To add to the frustration and anger, they also sense that there is no easy solution to the mistake.  It's going to cost more of everything we have already spent: Lives, money, credibility, safety and confidence.


Rising fuel prices have created the equivalent of a tax increase for American families far greater than any threatened Democratic induced tax hike imagined by the Republicans during last year's election cycle.  The irony is that the administration has taken pains to point out their corporate and energy experience as strong reasons for our trust in their leadership.

Another splash of cold reality; gas prices will never be this low again.

Act two of this play: home heating oil prices should make an entrance just as the perfect storm is picking up strength this winter.

The October Surprise

As has been reported, another aspect of the great awakening will arrive in mailboxes this November in the form of credit card bills.  Many families are already economically so stretched to the snapping point by gas prices and rising healthcare costs that they have been minimally surviving by remitting minimum payments.  Come November, those payments will double as part of rule changes allowed by congress.  If that's the forehand slap to the face, the backhand follow up is the bankruptcy bill, which makes it more difficult for families to find a way out from under massive debt.   This bill "conveniently" takes effect just weeks after the credit card minimum payment rule changes.

Real Estate

Recently, the economy has ridden along on the backs of a public who has cashed in on the increasing value of their homes.  Second mortgages, home equity loans, interest only schemes have all been handed out like cotton candy at a county fair.  But with pressure from the energy and debt sectors, this source is about to dry up.  It's not a question of when, but how.  The real estate bubble may slowly deflate or burst like a balloon jarring all within earshot.  The point being, it cannot be sustained, and the final source of income for many families will evaporate at a time when wages from their jobs are dropping in real world value.


It is well known that consumer spending has been the economy's engine.  Christmas is historically the largest orgasm of consumer spending during the year. It's not a large leap to see that 2005's holiday season has the potential to be especially bleak.  With less money to spend because of gas/heating oil prices, the reduced ability to pay credit card expenses and Iraqi War doubt,  January's economic chill may match the outdoor temperature.

Jobs and Inflation

With all these pieces in place, businesses will be left with no other choice than to raise prices to cover rising fuel expenses and slower sales. As a result, the cycle of inflation may take hold quicker than Mr. Greenspan's interest rate hikes can be implemented.  With rising production costs and poor sales, companies will begin to cut labor costs, a euphemism for firing people.


Under normal circumstances, there may be ways to mitigate or avoid some of these problems, but this is where the political element gives the storm strength.  The lawmakers presently in charge do not react to real problems with real solutions.  It has been their history, a history that has led us to this point, to ignore a problem's solution. They, rather, embrace a problem as an opportunity for political gain.  Therefore, none of the foundation for real solutions has been laid to counteract these hurricane force economic winds that are about to hit.

I'm no economist or political scientist, but I know that I'm seeing clouds forming on the horizon, and am not at all happy about how we, as a nation, have prepared.

I know I have painted a gloomy picture, but it's one that, I feel, reflects the world America will face very soon.  This is going to lead to massive political unrest in this country.  The natives will be looking to throw the bums out as quickly as they can.

This is seemingly good news for the Democrats, who can point to the fact that all this has happened on the Republican's watch, but they should avoid the temptation to gloat.  You see the Republican agenda couldn't have gotten as far along as it has without Democratic help.

There was and remains wide spread support among Democrats in congress for the war.  If the party's leaders refuse to review their position on this issue, events will quickly overtake them and they will find it difficult to gain traction.  A desperate population doesn't have the patience to split hairs and parse sentences.  You were either for it or against it.

In terms of energy policy, many Democrats were among those who lined up at the troth earlier this summer to pass the pork slop filled energy bill, thereby missing an opportunity to address the public's real concerns about gas prices and alternative fuel sources.

The bankruptcy bill passed with support from Democrats.  16 Democratic senators voted for the bill.  For many, that is going to be unforgivable.

In short, for an opposition party to survive the impending political and economic storm it must oppose the all ways.  It won't be enough to pick and choose their issues and appease here and there.  In order to be effective in the raging storm, the Democrats need to review and overhaul their role in the process that created the storm, or risk being swept overboard by the tidal wave of backlash that is certain to come.

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