At the time of the carrier strut, I noted that between then and the aught four election was just over a year and a half - conveniently divisible into three six month periods. The first of these three, May Day to Halloween, periods has now passed. So let's look at the change in the twin determinants (IMO) of GWB's reelection bid - Iraq and the economy.
At the beginning of May, from Rove's perspective, Iraq looked great, while the economy was more problematical. Now the positions of these two determinants have reversed. The economy is roaring and Iraq has become "a thorn in the side". Six months ago, much of the change could be predicted. With the continuing liquidity flotation act from the Fed (plus, in the opinion of some, aided by direct market manipulation) and the tax rebates, the economy has been "juiced" to (at least temporarily) an intoxicated high. Meanwhile, the predictions of those familiar with ME history, that any occupation force would have bull's eyes painted on their backs, has sadly proven true. Moreover, the predictions that "sowing the wind" with an arrogant go-it-alone attitude would "reap a whirlwind" of "you made your bed, now lie in it" when the inevitable crunch came, have also proven true.
Is past prologue? Will the twin determinants reverse again before the next dance around the May pole? For me, the crystal ball is more clouded than last May. The economy is churning, but is this sustainable for another year - even with the Fed's overt (and perhaps covert) help? It is my personal belief that we have not destroyed the Great Bear that slew the Secular Bull in 2000. Rather, I believe that an ephemeral, unstable reprieve in the decline to a valuation low, has been engineered. The key word in the previous sentence is unstable. Without "touch up" efforts, I suspect the economy/market will quickly collapse. So will the Fed et al be able to Houdini the current recovery into lasting for another year? From a demographic perspective, the possibility exists. The spending of the boomers won't precipitously decline until the aught six - aught seven timeframe. OTOH, the "pump priming" has produced such an overvalued market and over extended consumer, that it will be increasingly difficult to maintain these elevated levels (see moneycentral.msn.com )
Iraq is not completely clear either. If the occupation resistance remains largely confined to the Sunni triangle, improved intelligence may slowly attrite the perpetrators. All GWB (read Rove) needs is for the rate (and severity) of the attacks to stop escalating. A lessening of the attacks, coupled with “progress” on formation of an Iraqi government (e.g. a pending vote on a constitution) will be spun into “Mission Accomplished”. OTOH, a spread of the violent resistance would preclude a rosy Rove scenario. In this regard, the recent US- PKK battle in the north and the bombing of the Italians in the south, may be portents.
When everything is going well, you don’t make changes. Bremer’s sudden Washington “command performance” indicates the need for a change. We know what the plan was, but the Iraqis can’t seem to follow the script. The Governing Council was supposed to have a plan to expedite a constitution by December 15. Instead, they put the kybosh on the Turkish troops – which jeopardizes the plan to draw down American troops prior to the election. The CIA report highlights the erosional effect the resistance is having on Iraqi cooperation. So now we have a Washington confab to formulate a new policy. Remember this is after the “mid-course correction”, we had last August. Will this new policy be sufficient for Bush to finesse his Iraqi dilemma without alienating his right wing? We’ll know by May Day.
lurqer |
