Monday, August 17, 2009

Comments on The Belmont Club,
"The cloudy crystal ball"


Many years ago my undone thesis foundered on my disinclination to cobble together a story based on numbers reported by the Chinese government. How big a threat will China become? The counsel of our fears tells us to expect the worst. There could be blue water fleets with red flags sweeping South and East in a replay of the Japanese effort of almost seventy years ago. Faced with the hollow shell of Russia to the North and the resource pools weakly controlled by barbarians to the South-West the Chinese could send forth million man armies in vast columns to grab in a replay of the Mongol conquests of almost a thousand years ago. But a small voice made me hesitate to tell a story based on numbers that are unreliable.

How big is the chinese economy? The truth is that no one knows. Mao constructed a system in which everyone had a powerful incentive to lie about how many eggs the chickens were laying. On a previous thread it was noted that Solzhenitsyn in One Day in the Life of Ivan Denisovich showed how communism made it more rational to lie then to tell the truth to authority. We have problems with our Generally Accepted Accounting Principles based business model in America but on a basic level we can believe that real numbers are available for judging the state of a firm or of the economy. In the case of China the picture is much murkier. We can get information on resources consumed as a rough guide to what is going on in there. The authorities themselves are probably facing the same problem. What, they must ask themselves, if they are in the same fix that Saddam was in? They could end up giving orders to move nonexistent divisions and fire inoperable missiles that their own agents had fooled both the Americans and them into believing in.

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The good news is that under Obama's leadership the American economy will become as corrupt and opaque as the Chinese. We can hope that the resulting uncertainty about conditions here will cause foreign adversaries to hesitate before challenging us. The American, Russian and Chinese governments will have to devote CIA sized resources to teasing out what will really be happening in the new socialist America. What a brilliant stroke on Obama's part. That should keep us safe for years.

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I was just looking at the latest Daily Presidential Tracking Poll from Rasmussen Reports. http://tinyurl.com/5tnd2b
It looks to me like there is a story in those lines that someone who uses technical analysis on the stock market could get into. Personally I think that much of that is Voodoo because the Easter Bunny told me so. If I had the money to invest I would try one of two radical decision making systems instead. One is rarely used but has been known to work, it is called doing your homework. The other with a distinguished pedigree is called darts.

Now getting back to the fortunes of BHO. Currently the spread, called the "Approval Index" is at minus 7 and it has varied between minus 3 and minus 11 over the last month. It appears that over the last 6 months about 10% of the electorate has withdrawn their previously highly favorable opinion of the current occupant of the White House. During the same period twice as many voters, fully an additional 20%, have shifted to expressing a strongly negative view of Obama. While there are constant perturbations in the daily polls these shifts appear to be permanent. That means that the moderate middle is shrinking and turning against the present administration. Excuse the use of allusions but I do not want to say President, the word under present circumstances sticks in my craw. Another possibly interesting point is that while the general trend of the rise in the strong negatives is fairly constant the pattern over time of the decline in his strong favorable rating is more complex. The line appears to descend in a series of sudden breaks of 3 to 5 points, followed by a partial recovery and then by another drop. This step function quality shows that response is being effected by the White House's efforts to fight back and spin the story after each shock but that those efforts are ultimately unavailing.

To me it looks like each downward step represents another segment of the cobbled together Democratic coalition of 2008 that has peeled off. The more linear path of the rise of the strong negatives to me shows that the forces moving against the administration are broad based and are not the result of astroturfing or the controlled manipulation of discreet constituencies. If these trends continue then it looks like that by November to January another 5 points will have peeled of of his high favorables and another 7 to 10 points will have shifted into the strong negative camp.

All of this is happening before the second wave of economic contraction that I fear will be triggered by the bad debt run up by the deficits. As our genial host has pointed out here, we can not count on China to fund Obama's binge.

Aug 17, 2009 - 10:50 am

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