drbio,
The 6% GDP growth might not be all that it is cracked up to be. We will need further confirmation.
I don't know where you get the crazy notion that the people around Obama are to the Left of him. Volcker (not exactly the same man that he was when he was Reagan's Fed Chairman) and Goolsbee are much to the Left of Geithner/Summers. Romer and Warren are also to the Left of Geithner/Summers. And Axelrod is far more of a populist than Emanuel. In fact the whole progressive critique of Obama is based on the fact that he has surrounded himself with DLC/Clintonista types who are far to the Right of where he (Obama) ran. (This is what makes the critique of "Obama as Socialist" so utterly stupid, not to mention, racist.)) Basically, his whole leading economic team are disciples, in one way or the other, of Robert Rubin. (Notice that Hank Paulson admitted today that he was much more comfortable with Obama as President than he would have been with McCain as President!!! Could anything be plainer than that?)
But Obama's hands are largely tied now with Brown's victory in Massachusetts and the Republicans ready to sweep the 2010 elections. This means we won't be able to get anything done on the stimulus side (Repubs will oppose it) and Cato Institute type tax cutting is out as well (Dems will oppose it), nor will we be able to do anything about the deficit, because Repubs will oppose new taxes on the rich and Dems will oppose cuts in entitlements. Washington will remain paralyzed, IMO, for quite a while.
I guess we'll continue to muddle along with an anemic recovery--assuming that the double whammy of collapsing commerical real estate and continued foreclosures with the possibility of sovereign foreign debt defaults doesn't derail the fragile recovery--while we have ever-increasing deficits, rising healthcare costs and continued high unemployment accompanied by continued pressure on state and local governments to stay afloat.
My own view is that we are still in a deflationary environment with massive de-leveraging taking a long time to unfold. The dollar may continue to strengthen as part of a "flight to safety." This will help keep interest rates low for a long period of time, but I doubt that the above scenario will be good for equities. The most speculative parts of the Market like small-cap biotech may suffer in this environment.
Actually, I hope I'm wrong about my take on the economy, because I would hope the recovery endures (no double-dip recession) and strengthens, and the Market responds accordingly. My heart (and wallet) hopes this happens, but my mind tells me that we are in for some rough times ahead.
Good luck.
Bladerunner
