With the collapse of the Berlin Wall and the Soviet Union, followed by the successful Persian Gulf War, the poll numbers for G. H. W. Bush (41), aka Read. My. Lips. No. New. Taxes. reached a high of 89%. However by 1992, his poll numbers had dipped as low as 29% and he lost the 1992 presidential election to Bill Clinton; 370 electoral votes to 168, losing the general election by more than 6 million votes. A significant factor in 41’s 1992 loss was the lingering effects of the 1980’s economic recession.
There are questions in 2008 about whether or not the US is in, or headed to, another recession. As all political pundits will tell you, a recession is anathema to the election chances of the party in power, even though presidents have little to do with the health of the economy. And while the president and vice president are not running for re-election in 2008, John McBushy has attached himself at the hip of the current president, including an endorsement by Chimpy today.
Chris Thornberg has said: "We got a major real estate bubble...we got consumers due for some major retrenchment, we have a falling dollar, making U.S. assets look that much less desirable, a massive trade deficit."
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He said that in December 2004.
Chris Thornberg was right in 2004, he was just three years early. So what is he saying today?
Last week, at a dinner in San Diego, Thornberg gave his current forecast. He say the worst is yet to come.
With the peak of loan resets coming in the third quarter this year, this is "the year of the walk-away." When I asked him if a lot of lenders may end up not resetting, he said, "It doesn’t matter." Thornberg says we are entering a recession and it’s "hard to believe" anyone would say otherwise. Unlike the recession of 2001, consumer spending is now slowing after a 16-year run. As consumer spending slows, business spending will follow. In housing, we should have seen this coming. He claims that between 2004-2006, .75 new homes were build per new adult, while .6 is the norm. He says for the past two years, four million new units were built, while there were only two million new families.
He predicts we will see a 35 percent decline in home values from the peak, and a third of that has already occurred. He predicts a 2 percent decline in GDP this year, with only minimal help from the tax rebate stimulus package.
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So, when do things get better. Ever? The good news about the recession is they do eventually end, he says. He thinks the economy will start to improve at the beginning of 2009, and that housing will bottom by the end of 2009 into the beginning of 2010.
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He says the Florida housing market won’t improve for eight years.
Does the phrase "It's the economy, stupid" ring a bell?
With McCain running for Bush's third term, and the majority of voters in the U.S. already believing we are in a recession, "Straight Talk" is, as 41 said, in deep doodoo. If Thornberg is right, either Clinton or Obama will be able to hammer at Bush's recession, and by extension, at McCain, for wanting to continue the failed policies of the current administration.
Even though the U.S. is currently deep in the doo, why am I smelling roses in November?