Just recently we saw one congressman after another get clobbered in angry townhall protests all over the country.
This Saturday, September 12th, masses of people gathered in Washington to protest big government. The media has, for the most part, underestimtated the significance of this event. Estimates on numbers range from $70,000 to $1.5 million. The truth probably lies somewhere in the lower middle, around $300,000. But even that number would be impressive.
Here are some impressions:
This development is of course not surprising, back in February I laid out the root cause and what I expected to follow:
[Obama’]s fundamental misunderstanding on this matter is that he believes these disagreements are nothing but political games. They are not. They reflect sincere and deep-rooted concerns of the direction where this country has headed. They represent the voices of millions of frustrated workers, businessmen, housewives, students, and retirees calling their representatives, jammed fax machines, letters, town hall meetings, and the like. The movement for liberty is not one of political expediency. Its members are not in it for personal, monetary, or political gain. They are in it for true conviction and with all their heart. But on top of that, it is a movement of substance, reason, logic, and sound understanding of historical and economic facts. There is nothing in the world that could change some one’s mind, once one has understood the true blessings of Freedom, Liberty, Peace, Prosperity, and Happiness. It is a patient movement. It is not in a rush. It isn’t going away. It will grow stronger year by year. To ignore it would be the biggest mistake Obama could make now.
If he continues doing it, the political retaliation will ensue sooner or later in the next Congressional elections and maybe in the next presidential elections. This is an unnecessary, harmful, and avoidable political gamble.
Social mood is getting more negative and frustrated by the day, as Daneric accurately points out, Social Mood Turns, Markets Follow:
The march on Washington yesterday was an obvious display of negative social mood and the crowd size was quite impressive as these pictures show. I think it caught the “authorities” off guard. What were they mad about? Obviously a wide range of topics from the health care bill to handing over tax money to crony bankers. Overall I think government intrusion in general and particulalry out-of-control government spending and the feeling people are getting screwed and not being heard.
Crowd estimates are easily in the hundreds of thousands maybe well over a million. The People are pushing back.
In the context of Elliott Wave Theory, one didn’t see these protests during the Primary wave 1 decline from October 2007 to March 2009. But now near the peak of a Primary wave 2 we see social mood starting to erupt. This will not be the last march on Washington. That you can count on. And they will grow bigger. And one can easily predict that the government and big media (they will ignore reporting them as much as possible) will not be accommodating to the concerns of these protests. In fact one can easily predict that the government will dismiss or push back at these protests and cause even greater backlashes.
We are now seeing so many foolish statements from all sides. On the anniversary of the bankruptcy of Lehman brothers (which by the way was NOT the cause but a symptom of the financial crisis), president Obama did indeed hold a “Mission Accomplished” speech. Meanwhile, every person with more than 3 brain cells knows that absolutely nothing has been fixed in the broken and overleveraged US banking system. Quite the opposite. All that the government’s interventions have accomplished is to keep leverage high, encouraged more speculation, and buy more time.
The culmination of insanity has been the “successful” cash for clunkers program where individuals were encouraged to destroy a working car and go in more debt to buy a new one. My biggest fear is that the government starts expanding this nonsense to other assets. I have said jokingly in the past that if rising home prices are such a good thing, then why don’t we send out government agents to burn half the inventory out there and make people build new homes.
Q3 numbers for the GDP will possibly indicate that GDP rose a bit. NBER may even declare an end of the recession. But as I said, all that we have done so far is buy some more time. Cash for clunkers has pulled forward future demand that will be lacking down the road. Then what? Another economic relapse is bound to occur sooner or later. The government will then try to step up its already rampant intervention once more.
Considering that we have a largely negative social mood now, with hundreds of thousands marching on Washington, how much worse do you think is it going to get once the numbers turn sour again?