One of the certain elements of a "perfect" political storm is a bad economic climate. The Bush economy has been, to date, a nearly perfect economy from the standpoint of Bush's base: almost all of the gains from the business expansion have gone to Capital, as opposed to Labor. What meager gains Labor appears to have eked out in the statistics are, in fact, being eaten up by rising health insurance costs.
But, in truth, the Democratic takeover of Congress took place in an economy, which was performing adequately -- a very unusual context for a change of party political fortunes.
But, now, apparently, many observors see a recession in the offing. The intrepid Calculated Risk and his faithful banking companion, Tanta, have been explaining why: the great housing boom/bubble is over, and the housing sector(s) will be shedding workers over the next half-year, at least. A great vicious circle of collapse will drive this trend on, and efforts to meliorate liquidity problems in housing may well have unfortunate implications for the international exchange value of the dollar. Nouriel Roubini offers ten points, which will surely frighten. Meanwhile, manufacturing is not doing so well, either; in fact, as James Hamilton summarizes, lots of things appear poised to turn down. Paul Krugman has weighed in with some lurid speculation. Robert Reich, too, was prompted by the tumble in the stock market, to speculate about how bad things could get. Brad DeLong points to some evidence from Technorati, gathered by Menzie Chinn, about how "recession" is the now buzz.
The estimable Stirling Newberry sees where all this is heading. " . . .even if recession does not arrive, it will feel like one to large sections of the economy" and that will add a sense of -- Mr. Newberry says, "urgency" -- to the dissatisfaction people feel with Mr. Bush and his Iraq War.
The various elements of a political storm are lining up: a Democratic Congress is investigating Bush scandals, and finding plenty to investigate -- and dare I say, they have barely begun to scratch the surface. The economy is stalling and will apply to enough pain to focus the attention of people, who have not been paying enough attention.
What else? Bush has played his last card on Iraq, with the "Surge" -- the next round of deterioration there is going to have a very, very heavy price.
Bush's approval ratings are on the 30% floor, below which, is hanging territory.
What else can go wrong? War with Iran? Another hurricane or similar cataclysm of nature poorly met?
Perhaps a corpse will surface to tell its tale: Why did Libby lie? Was it to cover the V-P's role in fabricating the case for the Iraq War?
We live in interesting times.