Popularity vs. reality

Ben Smith in the Politico:

Obama's approval rating remains well above 60 percent in tracking polls. A range of state pollsters said they'd seen no diminution in the president's sky-high approval ratings, and no improvement in congressional Republicans' dismal numbers. And that's before the stimulus creates billions of dollars in spending on popular programs, which could, at least temporarily, further boost Obama’s popularity.
"It's eerie -- I read the news from the Beltway, and there's this disconnect with the polls from the Midwest that I see all around me," said Ann Seltzer, the authoritative Iowa pollster who works throughout the Midwest.

Prompting Jonathan Singer to exult:

Perhaps more than ever, there is a real divide between what the chattering class inside the Beltway is saying and what the people of this country are saying. . . . [T]he establishment media focuses on the less meaningful back and forth while at the same time overlooking the larger picture being grasped by the public -- that is that President Obama is succeeding, in terms of both moving forward his policy agenda and bringing two-thirds of the country along with him in his effort.

Idiots. Economics is not public relations. Don't you people understand that it doesn't matter how "popular" you and your policies are, if what you are doing is the wrong thing to do? And that it doesn't matter how clever and persuasive your arguments are, if your policies bring disaster?

Think back to late 2002/early 2003, when Bush was soaring in popularity and even Democrats like Hillary Clinton were publicly insisting that military action against Iraq was an urgent national necessity. As even David Frum now admits, however popular Bush and his policy were, it was still a bad policy. And the result of bad policy . . . well, here we are, eh?

Idiots. And here's another one -- Daniel Gross playing armchair economic psychologist:

Psychology plays a big role in all sorts of economic decisions. And at times like these, when people are gripped with fear, it plays an even larger role.

Gross seems to assume that the public's economic mood is so divorced from economic reality that all we need is an injection of economic self-esteem and -- no matter what the underlying reality -- this "all must have prizes" approach will assure recovery.

Well, I'm sorry, sir: It Won't Work. Economics doesn't operate that way. People can't spend money they don't have -- unless they can borrow it, and they can't borrow it when they're already overleveraged and the financial industry is collapsing.

So, you say, "We'll rescue the financial industry with TARP." Fine. What's the price-tag and where will you get that money? Oh, you'll borrow that, too. Fine. Go talk to some people who know a bit about the bond market, and see how they think the global investor class -- U.S. debt is a commodity traded globally -- will react to the prospect of still more deficit spending piled on top of all the deficit spending for the $152 billion "stimulus" in May, $350 billion for TARP I, and now $789 billion for more "stimulus." Another $350 billion for TARP II? Oh, they're going to love that.

If the world's investor class believes that your Keynesian pump-priming will work, they'll be happy to buy up all those Treasury notes, just like they'll be happy to buy stock in U.S.-based corporations. Do you think those people are stupid, sir?

Hell, no. They'll be putting in more "sell" orders on Monday, and at least one analyst expects the Dow Jones Industrial Average to sink to 6,000 soon. As bad as the stock market is, God help us if the bond market goes wobbly. (And they're starting to sound a bit skittish to me.) And never mind that, at some point, the debt holders will expect repayment. Seriously, we could be on the brink of Weimar America.

What none of you "progressives" seem able to get through your thick skulls is that this recession -- the massive losses in the Dow, the massive losses of home values in the collapse of the "bubble" -- represents a loss of capital. The American economy doesn't need psychological confidence, or a few dribs and drabs of pork-barrel programs and tiny "tax credits" to favored constituencies. It needs fat chunks of cash -- investment capital. And the disastrous policies being enacted will only serve to drive capital out of the U.S. economy.

If you start walking in the wrong direction, every step you take leads you farther from where you're supposed to be. U.S. economic policy has been going in the wrong direction, and every additional step in this direction only compounds the damage. Poll numbers and public relations cannot trump the forces of the market. The law of supply and demand cannot be repealed.

You idiots can talk about poll numbers until you're blue in the face and try to blame Bush for everything bad that happens, but like it or not, you own this one, and it's going to be a millstone around your necks.

UPDATE: The fiscal trap of Hope.