Shutters are closed up & down Main Street but Wall Street is in the money.

Shutters are closed up and down Main Street but Wall Street is in the money. How could that be? The bull market in stocks has gone farther for longer than I thought possible.

Just surveying the salient points of the economic situation in 2009 led me to a more bearish view. The anti-business party controls the presidency and both houses of Congress, and they are turning the bad US fiscal situation disastrous. They are in love with budget-busting, price-increasing government solutions: stimulus programs that are really giveaways to Democrat constituencies, universal health care, a cap-and-trade energy regime. But in the hard-pressed profit-seeking sector, labor faces an employment outlook as bad as any time in the last twenty-five years, and the government's response is make-work schemes that waste money and; management is unable to plan in the rapidly changing tax and regulatory environment.

So again, what possible reason is there for the stock market to rally this hard? It must be discounting a much better day ahead, a day that according to a strict economic accounting is not easy to see. I said in July:

Some of this bounce is almost certainly due to the business and investment interests of this country re-assessing President Obama's grand and ambitious schemes and concluding that they represent impossible over-reach. Rightly or wrongly, they came around to the view that most of this stuff will never come to pass. On this view, Obama has expressed extreme initial positions just as a negotiating tactic to get more than he could with conventional bipartisanship, but less than he asks. Republicans and responsible Democrats in Congress will push back on the crazier ideas. The American people will not go along, will resist with mute passive aggressiveness and loud argumentation, once the full implications are clear. And if it is not just a tactic, if Obama really insists on every bit of what he says, Republicans will gain enough seats in 2010 to apply the brakes, if not an outright majority. One way or another, the entire Obama agenda can and will be resisted.

As the popularity of Barack Obama, congressional Democrats, their radical leftist economic schemes and unconstitutional power grabs plumb new depths, this is seeming more and more likely. They have mounted a counter-revolution to the American Revolution, and Americans are not standing for it.

Without doing anything to deserve it, the nominally pro-business, nominally loyal opposition Republicans stand to benefit from the ass-whipping American voters are fixing to administer to Democrats in November. To really capitalize, the Republican leadership needs to learn from the Tea Party movement, which has emerged over their heads as the true opposition to the schemes of the left. If the leadership gets smart and understands that the American people demand a response to fiscal sanity, national security, and constitutional government, their recovery can be remarkable and enduring.

Of course the poet WB Yeats used the language better than I can when he told his political opponents in the Seanad Éireann:

You victory will be short, and your defeat final, and when it comes this country will be transformed.

Ardently to be wished.

Mao nostalgia in China

On October 1, the People's Republic of China marked its 60th anniversary with an impressive military parade, musical performances and portraits of Sun Yat-sen, Deng Xiaoping, and Mao Zedong.

It's the occasion for a boomlet for Mao nostalgia in China. This, one can kind of understand. He was the founder of the PRC. After liquidating his rivals, he was the maximum leader of the Chinese Communist Party.

Here's today's article on the nostalgia for Mao in China: Mao presides again in China as nostalgia runs high. It's fun stuff. Young people who don't know more about him than his name and image are taking the commercial opportunity to sell T-shirts, hats, badges and snow globes.

In the US, within the Obama administration, Mao Zedong is also enjoying a revival. Communications Director Anita Dunn commends him as a political philosopher to the graduating class of a parochial school. Manufacturing Czar Ron Bloom cites with approval Mao's saying that "Political power grows out of the barrel of a gun" ["Problems of War and Strategy" (November 6, 1938), Selected Works, Vol. II, p. 224].

The thing is this. In China, it is not Mao's Communism that is being celebrated; the country has spent the last thirty years correcting the leftist errors of the previous thirty. Apart from the retail opportunity, Mao's real reputation in China is as a nationalist (not a Nationalist, which in China is a different thing):

1 Mao would work with anyone, anywhere to resist Japanese aggression, including the Nationalists or the Americans, even to the extent of putting the Red Army under their command.

2 Mao unified the war-torn Chinese mainland under Chinese rule for the first time since 1644.

3 In its first five years, the PRC under Mao was drawn into superpower conflict with the US in Korea, and managed to stay in the fight with the nuclear-armed US to secure a draw on the peninsula.

4 When Mao fell out with Khruschev, the PRC found itself surrounded by enemies: the USSR to the north, Taiwan with its US backing to the east, India with its designs on Tibet and implicit backing of the UK, US, and USSR to the south. Mao prosecuted a war in the Himalayas and backed them all down, sustaining the country's independence through a dangerous time.

5 Forty-five years ago this week, the PRC got the bomb; if any of the other powers thought attacking China would be easy, after that it meant mutually assured destruction.

6 When the time came for a new way forward, Mao came to terms with Richard Nixon, and it was easy for the two cold warriors, as if getting reacquainted with old friends. This upset the balance of power in the far east, putting the USSR on the defensive. As much as the US played the China card, China played the America card.

Seek truth from facts, as Deng Xiaoping always said. Mao Zedong's reputation in his homeland has very little to do with his Communism at this stage, and everything to do with his nationalism. Which is fine -- it is his homeland after all.

But like many others, I would like to know just what it is that his highly-placed admirers in the US Obama administration are getting out of Mao Zedong at this time.