This article co-authored by Dave Johnson.
Think long and hard about Bush and the announcements made the day of the Democratic victory Wednesday of last week. Rumsfeld's firing had the "take no prisoners" demeanor of a Titan of industry cutting the fat from his earnings loss. Could this action presage a continued corporate approach to handling the Democratic takeover of the House and Senate?
CEOs, knowing they are going to report a bad quarter, often throw all the "bad news" they can into that quarter. They write down all the losses they can dig up, and instead of reporting a bad quarter they report a really bad quarter and take it all in the shorts at the same time. This clears the books, and they can start fresh the next quarter to the applause of Wall Street.
Is this an analogy for what Bush is planning to do to the Democrats? There
is a lot of "bad news" that has been saving up for the last six years ...
massive deficits, a huge trade deficit year-after-year with its resulting
highest-in-history current accounts imbalance, the housing bubble, the
deteriorating Iraq war -- all individually damaging, but grouped together
enough to drag the whole country down. And now the administration has the
Democrats in both Houses to blame for the consequences of the (lack of)
policies of this lame duck President and his band of buffoons.
Earlier this year Bush suspended oil purchases for the Strategic Petroleum
Reserve, which brought down the price of a barrel of oil for the elections.
Now the price will begin to escalate again and the price of gas will top
$3.00 again soon. The Chinese and other central banks are diversifying away
from the dollar and the dollar is falling. The nation's savings rate has
been negative for five quarters and the GDP last quarter was an anemic 1.6%.
The stage is set.
Rumsfeld's firing and the Baker commission only address Iraq and "the
market's" perception of that business unit. Undoubtedly, Iraq was the straw
that broke this election and in business terms -- the market's rejection of
the company's stock price. It is when one pulls back the curtain and the
economic framework of the country is revealed in all its global fragility
that the dirty little secrets of this administration will spin out of
control. As we said, there is a LOT of bad news saved up for Bush to dump
on the Democrats - and the country. The Democrats will need to have a
coherent long term plan and powerful leadership to withstand these assaults.