positive outlook

No bubble yet in the economy. Private sector sort of chugging along with banks still tight on credit to home buyers. Germany doing well with 5 percent unemployment. They did worksharing. (If the U.S. had rational fiscal policy, we'd be at more like 6 percent. Toss in worksharing and we're at 5 percent.) The Fed hopefully will be headed by Yellen and they will either maintain or improve their management. Hopefully Japan's growth overcomes the sales tax and Abenomics proves so successful that even the skeptics will have to admit it worked - that or they'll twist the explanation of the mechanisms of success to fit their views.

The deficit is no longer a problem in the U.S. Any deficit cutting is merely political (actually it has been with the sequester.) Affordable Care Act takes effect. It's working according to Krugman:

Yes, there may be some negative news stories about the glitches. But Obamacare is not up for a revote. As Jonathan Bernstein says, the only thing that matters is whether it works. And today’s heavy volume is yet another sign — along with abating health costs and below-expected premiums — that it will.

From David Warsh via Thoma:

The responsibility to take care of oneself will have been joined, however loosely, to the long-established right to emergency medical care.

Something like 25 million citizens, more than half of those who are currently uninsured, will enter into a relationship with a medical practice within the next few years. They’ll join more than 250 million Americans who are currently insured in the biggest undertaking to improve public health since the days of city sanitation and the war on communicable disease more than a century ago.

In many states, collective well-being will begin to improve almost immediately (the initial enrollment period extends through the end of March). In other states, especially those in the Southeast, where Republican governors have dug in against implementation of the law, a more complicated political game will play on. Everywhere, changes within the enormous health care sector, already underway, will gather momentum.

No wonder the fuss is so great.

At first glance, the statute bears a striking resemblance to mandatory vehicle insurance in the United States. Massachusetts led the way in broadening that market, too, followed closely by Connecticut. In 1925, the Commonwealth required automobile owners to get liability insurance in order to register their automobiles. New York followed suit, in 1956, and North Carolina, in 1957; other states quickly fell in line. Today only Virginia requires no insurance; residents of the state must at least post a $500 bond instead, and an overwhelming majority purchase insurance.

It will become the norm like Medicare and Social Security and it will be improved. The American healthcare system will move toward the international norm for advanced countries with lower costs and a healthier population with more security. Health care costs are driving government debt to the extent that the debt is a problem. With the cost curve bent, health care spending won't crowd out other priorities.

Obama signed Obamacare into law in 2010 and was re-elected in 2012. Scott Brown replaced Kennedy in 2010 as a Massachusettes Senator. Then Elizabeth Warren replaced Brown. Liberal De Blasio looks likely to be the next Mayor of NYC after Giulanni and Bloomberg. Warsh:

On Tuesday the Affordable Care Act goes into effect. It was passed by the Congress and upheld by the Supreme Court. The White House holds all the cards. The Defunders, the operating arm of the Tea Party in Congress, are certain to lose if the president remains firm. He should simply state: you don’t negotiate with terrorists.

As if to underscore the point, Senator Tom Coburn (R-Oklahoma), a veteran of the government shutdowns of 1995-96, told Politico last week that if If the Republicans succeed in shutting down the government Tuesday, “they’ll fold like hotcakes” after a week or two, when constituents begin to complain about the lack of service. “You do not take a hostage you are not going to for sure shoot. And we will not for sure shoot this hostage.”

And in the longer term? My guess is that Tea Party dissidents will lose ground in the midterm elections next year; that the GOP will split in the 2016 campaign and that a Democrat will be elected president; that in 2018 the Tea Party will further fade. And by 2020, the Republican governors who are successful in implementing the Affordable Health Care Act will be running for president, strongly, on the strength of their records.

After a week or two Boehner will fold. The consituents will complain. Led by Peter King, moderates revolted and Boehner assured them he'd work it out. With the deficits, debt and Obamacare no longer on the radar and with the economy improving, the Tea Party will fade.