The ultimate counter-cyclical asset: A prudent politician's popularity
They're rare but they do exist.
Consider Michelle Bachelet, President of Chile. Her government steadfastly grew a "rainy day fund" throughout the latest commodity boom and her popularity took a huge hit. Now though, the rainy day has arrived, Concertación is putting up a giant umbrella and Michelle is in tall cotton:
"For Chile's governing Concertación coalition, prudence is providing a belated political boost. The government is more popular today during the global recession than it ever was during the copper boom years. President Michelle Bachelet has a 67% approval rating, up 25 points since last August."
I know that the linked article and others have given Finance Minister Andres Velasco a lot of credit for the prudent policies, but it was Bachelet's butt on the line. She appointed him, she gave him cover, and she stuck with him when people were burning him in effigy. To me, she is the hero of the story, not Velasco.
This is not to say that Velasco had it easy. According to the article:
Mr. Velasco's policies came under fire from within his own coalition, which feared being voted out of office. "Are we going to hand over to the Right a government with $20 billion or $30 billion in the till?" said Sen. Frei, who served one term as president in the 1990s. "That is crazy."
Bloggers mocked the handsome and well-groomed finance minister as el metrosexual. Some politicians saw Mr. Velasco as an out-of-touch, Ivy League technocrat. "I was a friend of Velasco's father, but the son is arrogant and would not listen," says Sen. Adolfo Zaldívar, who was drummed out of the Concertación partly because of his attacks on Mr. Velasco.
But again, the clear hero is Bachelet. She stood up to Frei (who currently is running a hideously bad campaign to be the next Concertación President) and booted Zaldívar. All Velasco had to do was cry his eyes out at home each night. After all, his fallback position was to go back to Harvard.
Hat Tip to the redoubtable Mrs. Angus.