Havard Killed Wall Street

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_hassett&sid=a_ac69DqFutQ

There is an interesting hypothesis here that bears some thought -- especially with a proud Havard Grad as President. I love books, I love book knowledge -- but I also grew up on a farm, fish, hunt, shoot and have engaged in real business and investing. Bottom line; reality isn't in a book or a computer model.

A lot of what has been loosed on our nation is the idea that we are in a "post common sense world". Reaganomics was pretty much just "common sense" -- set people free to create and take risks, allow them to keep (and lose) the results of that freedom, and "on balance", things will be better.

No longer. Those simple ideas are now "incompetent" we have PHD Nobel Prize winners like Paul Krugman making pronouncements of what MUST be done and what WILL happen after it is done. Maybe. I've seen a lot of very smart and well educated people be wrong, and a lot of not so well educated but much more humble folks be right.

It's The People Stupid!

RealClearPolitics - Articles - Deconstructing Krugman

When Slick Willie was running against Bush Sr, the mantra was "it's the economy, stupid!" -- the media loved it, calling Republicans stupid is always good sport. Perhaps we have a turn about here -- BO and his economic advisors are "doing it by the numbers", but people don't always behave "by the numbers".

But why is the economy performing below capacity in the first place?
Many reasons, too many to list here. And why won't it simply recover on
its own, as it has many times in the past? Here things get a bit more
interesting. Like many economists, Krugman points to Keynes's "paradox
of thrift": in uncertain times, ordinary people defer consumption and
businesses postpone investments. The economy shrinks below capacity,
because of people's desire to save money.

It's hard to escape the sense that the best economists and the
President of the United States are blaming ordinary people for the
economic crisis. If only we'd spend our money instead of save it, we
wouldn't be in such a big mess.

This is where devotion to mathematics gets the better of those who
would do better to try to understand people. Krugman is very concerned
that the liquidity trap we're arguably in will degenerate into a sticky
and persistent deflationary spiral, with far lower output for years to
come (an American "lost decade").

People feel uncertain about the future -- and the government spending Trillions of dollars of their future money at a time that every bone in their body tells them to save makes them even MORE uncertain! So they spend even less.

The economic wizards are so intent on following their models and
ignoring the people, that they will waste tremendous resources trying
to postpone a reckoning that is fated to come. What we really should be
talking about is mortgage finance. We have to figure out how to reduce
the burden of mortgage debt on millions of people (including people
that can perfectly well afford their payments, but are unaware of the
creeping effects of deflation on their purchasing power).

Illusion Agreement

Op-Ed Columnist - Paul Krugman - Decade at Bernie’s - NYTimes.com

It isn't often I find something to agree about with Krugman, but I think he is right about the "illusion of wealth", he is just really wrong about the time period.

First of all, in this world, wealth is ALWAYS an illusion -- that has been known since the Bible came out. Is it a special illusion "the last 10 years"? Maybe, but he has the trend right -- wealth has been even ore illusionary than normal since FDR signed FICA into law. That is when we as a people started signing up for belief in a false Ponzi scheme that makes Madoff look as honest as Abe Lincoln. We has a nation have been on the path of taking money now and transferring debt to future generations since we bought into that scheme.

Once we are all in a "group scheme", the little schemes just pile on. Sub-prime loans and Fannie and Freddie are another example -- if the Government is PUSHING and taking part in serious mortgauge irregularities and "wink, wink, nod, nod" insuring them, well, then why not have some other folks making even MORE money off "the deal"??

At one level this should come as no surprise. For most of the last
decade America was a nation of borrowers and spenders, not savers. The
personal savings rate dropped from 9 percent in the 1980s to 5 percent
in the 1990s, to just 0.6 percent from 2005 to 2007, and household debt
grew much faster than personal income. Why should we have expected our
net worth to go up?

Golly, who was President in the '80s? I bet it wasn't someone that Krugman liked, but at least savings (and most everything else) was better than. What Krugman doesn't quote is that the home credit binge took off from '90 - 2007 ... $2.5 Tillion in '90 to $10.5 Trillion in credit backed by homes by 2007.

So Krugman finally decides that unless we have another WWII level of spending, it will be a "long painful slump". Lovely -- Krugman hates the idea that conservatives are optimistic when Republicans are in power, but I guess the fact is that the left is ALWAYS pessimistic, even when all their folks are pulling the levers!

Since nothing like that is on the table, or seems likely to get on the
table any time soon, it will take years for families and firms to work
off the debt they ran up so blithely. The odds are that the legacy of
our time of illusion — our decade at Bernie’s — will be a long, painful
slump.

Whither Growth?

RealClearPolitics - Articles - A Lost Decade Ahead?

The article compares the current US situation with the Japanese situation circa '90, and I think does a reasonable job. The answer is pretty much in the last couple paragraphs, and I think is also correct. We can argue all we want about "stimulus / no stiumulus / socialism / etc", but the real question is "what is the engine of growth"? I'd quibble with Samuelson that the Internet, high tech and finance itself were strong engines for US growth as well as consumerism, but there is no doubt that consumption based on rising asset values was a major part of our growth strategy. Where do we grow now??

Still, the operative word is "temporarily." Hannity is correct in
that serial stimulus plans become self-defeating. The required debt is
unsustainable. At some point, the economy must generate strong growth
on its own. Japan's hasn't. Will ours?

Since the early 1980s, American economic growth has depended on a
steady rise in consumer spending supported by more debt and increasing
asset prices (stocks, homes). Just as the mid-1980s signaled the end of
Japan's export-led growth, the present U.S. slump signals the end of
upbeat consumption-led growth. But its legacy is an overbuilt and
overemployed consumption sector, from car dealers to malls. The
question is whether our system is adaptive enough to create new sources
of growth to fill the void left by retreating shoppers.

Courage Still Lives!

CNN Political Ticker: All politics, all the time Blog Archive - IL Republican: Obama only arm-twisted in public « - Blogs from CNN.com

WOW, a few more people like this, and someday we may yet see "Hope for Change" to something like having people take responsibility for their lives and expect to gain a better future for them and their children by trusting in something more than Government and in their own ability and hard work!

There is hope! Slim mind you, but slim is much better than none!

“I like the President. He’s a very good guy . . . I want him to be successful. I want to vote for a stimulus bill. I appreciated his hospitality in bringing me along on the trip. . . . But at the end of the day my responsibility is to the people who gave me this job – my constituents,” the 27-year-old said.

President Obama “could not have been more cordial” onboard Air Force One, Schock said. “He waited for the hard sell, if you will, in front of the national media. That’s when I really got both of my arms twisted there in front of hundreds of my constituents and the national media when he had me stand up and basically ask my constituents to put the pressure on me.”

Like some of his Republican colleagues in the Senate, Schock also took issue with the legislative process that resulted in the massive stimulus bill.

“Bipartisanship is not one party writes the bill and we all vote for it. Bipartisanship means you truly meld together both sides ideas and come up with a compromise bill,” Schock told King. “That didn’t happen in this case and ultimately, that’s why I voted against it.”

See, "Bipartisanship" is another one of those things that the MSM thinks differently about depending who is in power. If Republicans are in power, one is "bipartisan" when the DEMOCRATS get full involvement and are happy with all outcomes. When Democrats are in power "Bipartisan" is when they completely get their way and some Republicans "get it" and vote along with them. Simple!

Mysterious Ways of the Lord

Got this in an e-mail, it is pretty cute.

I never thought I would enjoy watching the news about an "airplane crash." But the Lord works in mysterious ways, and with a sense of humor!

First: No one died!

Second: The passengers standing on the wing appeared to be walking on water!

Third: It removed Obama from the headlines for 24 hours!

Fourth: No one in the government could take credit for the miracle!

and Fifth: It wasn't George Bush's fault!

WOW!

(well, I bet after the MSM looks into it deeply, there was SOME proposal for SOME sort of bird warning, bird scaring, or something that would have been hugely expensive and rarely effective, but was turned down by the Bush FAA -- so it may STILL be his fault!)

BO Reads

Here is a site with BO reading from his own book. One thing about BO, he really SOUNDS Presidential!!

I normally avoid profanity, but we are talking the greatest president in US history here, so it must be the right thing to do! I wonder if he can single handily bring back the "N word"? I mean if we have a President saying it, then it has gotta be OK doesn't it?

Some more very presidential reading here. 

Real Trumps Imaginary

RealClearPolitics - Articles - Apocalypse Now? Highly Unlikely

I well remember the global cooling crisis of the mid 70's -- it was much more academic then political as global warming has been, but anyone with any brains KNEW that we were on the verge of an ice age. "Shortage" was also the major watchword -- we were "out" of oil, metal, food -- you name it. "The end was near" -- unless of course we turned to the brilliant leadership of more Democrats. I remember the Carter drumbeat on campus -- one which I listened to and proudly went out and cast my first ever Presidential vote for that great reformer from Plains!

This is especially true:

Montaigne's axiom: "Nothing is so firmly believed as what we least know."

The areas that I know the very most about are areas where I have very little to no "belief" -- I know both what I know, and what I don't know. The set of what I don't know is always painfully larger than the set of what I do, but that is the price of knowing -- it much increases dealing in probability and reduces dealing in certainty. Such is the shape of the real world.

Because of today's economy, another law -- call it the Law of Clarifying Calamities -- is being (redundantly) confirmed. On graphs tracking public opinion, two lines are moving in tandem and inversely: The sharply rising line charts public concern about the economy, the plunging line follows concern about the environment. A recent Pew Research Center poll asked which of 20 issues should be the government's top priorities. Climate change ranked 20th.

Real calamities take our minds off hypothetical ones. Besides, according to the U.N.'s World Meteorological Organization, there has been no recorded global warming for more than a decade, or one-third of the span since the global cooling scare.

Indeed.

The Feeling of What Happens

I like to read about the human brain, and especially the subject of consciousness, so this book by Antonio Damasio was interesting TO ME -- but probably not to "normal humans".

It provides essentially a lot of detail on the theory that there are two types of consciousness -- "core consciousness" and "extended consciousness". He considers core to be an artifact of the body reflecting "current state" into some key low level brain stem regions that he calls the "proto self", or the mental image of the living body. There is a lot of discussion of how one "becomes awake" -- at least which regions of the brain have to be operating and maybe what is happening in them.

"Extended consciousness" takes our whole brain -- long term memory, our "life's story". While our "core" pretty much operates in "1 min short term memory bursts", the "extended" keeps track of all we have been and our hopes of all we will be -- even the core is clearly "human" in that it is more than animal, but it is the extended consciousness that is what we see as the "highest form or life on the planet".

There are lots of detailed long names for parts of the brain that nobody but a practicioner is likely to completely remember and keep straight, and there are a lot of very interesting stories about what happens when certain parts of the brain are damaged by some sort of disease or injuury. These are often interesting as well as scary.

I liked the book, but unless one has a true interest in quite a bit of depth on the neurological underpinnings of consciousness, it will be a slog.

A Moderate Gets Worried

Op-Ed Columnist - The Worst-Case Scenario - NYTimes.com

David Brooks is the NYT "token conservative" -- he is essentially "just to the left of Olympia Snow and Susan Collins". I don't know if he ever actually came out for BO, but he was close.

Here is a bottom line that I think he essentially gets right:

The crisis was labeled an economic crisis, but it was really a
psychological crisis. It was caused by a mood of fear and uncertainty,
which led consumers to not spend, bankers to not lend and entrepreneurs
to not risk. No amount of federal spending could change this psychology
because uncertainty about the future remained acute.

Essentially, Americans had migrated from one society to another — from
a society of high trust to a society of low trust, from a society of
optimism to a society of foreboding, from a society in which certain
financial habits applied to a society in which they did not. In the new
world, investors had no basis from which to calculate risk. Families
slowly deleveraged. Bankers had no way to measure the future value of
assets.

People indeed have a lot of brain cells, but at the bottom, our emotional repertoire is likely not much different from the family pet, with fear being by far the easiest lever to pull even unwittingly. Our cognitive / rational fore-brain only gets to play when our emotional low to mid-brain is satisfied that "the crisis is over".

The lefties were constantly in accusation mode that the Bush team "played on people's fears" relative to terrorism -- as if the worst foreign attack on US soil since the revolution wasn't something that was going to engender a legitimate fear response that was best dealt with by taking action to remove as much of the potential for future attack as possible.

When the new President gets up and tells us that if we don't throw $800 Billion + of pork fat to the beauracrats in DC, "the recession will turn into something we can't recover from", and then his Treasury Secretary gets up and says he is going to throw $1.2 Trillion around with no plan and all, while the President's appointees are dropping or backing out like Mormons at a Gay Bar, the scent of fear overcomes even the scent of BO.

The Rubicon has been crossed, the die has been cast -- at some deep level, even BO seems to now realize that he doesn't know what he and his troops are doing and that we may in fact head to some place that is "not recoverable". I'd argue that as long as he doesn't start down the path of the "Fairness Doctrine", and radical gun control, America WILL recover -- but it could be a very long time with an awful lot of pain.

Deja Vu

RealClearPolitics - Articles - Runaway Stimulus

As Will points out, we have been here before -- many times. How far will we fall and how fast? Nobody knows that. Will we recover? Nobody really knows that either. Unless our descent is total and "complete" -- say terrorist attack with Smallpox that takes out 70% of the population or so, there will likely be some sort of "tomorrow" that some living today will be around to recognize, but from this vantage, it is looking to me like the likely aftermath of this "change" may exceed any pain in the history of the US.

Lincoln is good for magnitude -- but maybe consider Jefferson Davis, or what would have ensued if Lincoln had LOST the Civil War? Think of the Post BO US as maybe Atlanta after Sherman.

Forget FDR, think Hitler. The  blind cheering crowds for "Change", "Hope", "Yes We Can" and the speed of the drive to the politicization of all while claiming "all is beyond politics" is so reminiscent of the Third Reich that one has to be willfully ignorant of history to fail to see the parallel. Think Berlin after WWII.

Will points out one that I would not have come up with:

Not yet a third of the way through the president's "first 100 days," he
and we should remember that it was not FDR's initial burst of activity
in 1933 that put the phrase "100 days" into the Western lexicon. It was
Napoleon's frenetic trajectory in 1815 that began with his escape from
Elba and ended near the Belgian village of Waterloo.

This last quote makes the same point I've made a number of times -- the parallel to the period of '65 to '82. My current prayer is that we can sneak by somehow with ONLY that level of despair and destruction -- my reason tells me that we may likely end up wishing for something as "mild" as the '30s or even the Civil War. BO as Lincoln indeed.

In December 1965, John Maynard Keynes, although 19 years dead, was,
as today, enjoying one of his recurring resurrections as vindicator of
government management of the economy by manipulating "aggregate
demand." Keynes' visage was on Time magazine's cover and the
accompanying story said that happy days were here again and here to
stay.

President Lyndon Johnson was embarked on building the Great
Society, assisted by policymakers who, wrote Time, "have used Keynesian
principles" to smooth the moderate business cycles and achieve price
stability: "Washington's economic managers scaled these heights by
their adherence to Keynes' central theme" that a modern economy can
operate at "top efficiency" only with government "intervention and
influence." So, "economists have descended in force from their ivory
towers and now sit confidently at the elbow of almost every important
leader in government and business, where they are increasingly called
upon to forecast, plan and decide." Ten years later, the "misery index"
-- the unemployment rate plus the inflation rate -- was 19.9, heading
for 22 percent in 1980.

Not Likely

Commentary: Obama should have told us the whole sad truth - CNN.com

The concepts of "Democrat" and "Truth" are pretty much like "Prostitute" and "Fidelity" -- they make for odd sentences.

To be to the left means that "you are special" -- not only you individually, but your party, your group, your race, your "whatever". You have carefully achieved being "in the mainstream" -- from 1865-1965, that meant "Jim Crowe, overt racism against blacks, big corrupt unions, ties with the mafia, etc". Things changed SOME since, now all Democrats LOVE all minorities -- except for actual practicing Christians of course, but much is the same.

"Democrat truth" is how they "see/feel" about whatever they are talking about TODAY!!! They have NO "truth that lasts". So maybe he OUGHT to have been truthful, but that is an expectation that one really never ought have about a Democrat, let alone BO.

Over The Ledge

RealClearPolitics - Articles - Obama Stimulates Fear, Doom & Gloom

NPR was in full chortle mode this AM as they discussed the huge victory for BO, a COMPROMISE PACKAGE brought about by those 3 courageous Republicans -- the RINO Twins (Collins and Snowe), and the "Spectre" -- of destriction, despair and death.

When the Republicans were in charge, they NEVER had more than 54 Senators, so they ALWAYS had to get 6 votes in the Senate -- yet when they would pass legislation, it was "partisan politics" and "party lines" -- with Harry Reid able to point out how "The Bush Administration and Republicans refused all the attempts of the wonderful Democrats to make this bill better" -- and meantime, 6 of them voted to avoid filibuster and no doubt got more than their pound of flesh, of which we will never know.

Why is that important? Because even this AM, while seemingly giving strong thanks to the 3 Republicans that broke ranks, the seeds were being sold of "how much worse they made the bill". David Obey of WI hedged the bets sniff of "it isn't big enough". As is always the case with the MSM and Democrats, they lack the conviction of what they do, since they have no firm conviction of anything -- freedom, the abilites of the American people, the rightness of the Constitution, or a faith in God for that matter.

So they "hedge" -- and they would STILL hedge if they had all seats in both houses of congress, because the essence of liberalism is NEVER taking responsibility and NEVER staking yourself to a consistent position. Every business person and investor, not to mention soldier on the line, knows that it is ONLY putting yourself in a spot where you can succeed, fail and KNOW THE DIFFERENCE do you even begin to really exist. All else is a form of self negation -- by never taking responsibility for who you are, what you do, or the outcomes of same, you have effectively denied your own existence. Your life isn't even a life -- typically, it is only a "complaint".

800+ Billion Other Ways

Commentary: Republican strategy of deny, delay and do nothing - CNN.com

Begala and James Carvelle were Slick Willie's combination spinmeisters and attack dogs. It seems that they have come back to town to help shore up BO. Here Begala picks up a thread from BO himself prior to the press conference. It is a good study in how the sheep are fleeced.

The core is to act much like a magician with misdirection -- BO insinuated that it was either "His way or NOTHING" relative to the "stimulous". A slightly better mathamatician may point out right away that just numerically alone there are over $800 Billion answers between his and "nothing".

While not a direct lie (I'm sure there is SOME Republican, SOMEWHERE that wants to do NOTHING), it awfully hard to find the space to call it "misleading". I think that any fair minded person would realize that if it was Bush making the claim, it would be called "A LIE!!!!" by Begala himself and most all of the MSM. So BO's statement is mathamatically false by $800 Billion+, and rhetorically as close to out and out lying as one can get even with a massive benefit of the doubt.

Do some Republicans think that there should be some thought put in before $800+ Billion is spent? Well, yes indeed -- I guess that is "delay", but if one thinks about it for more than one hyperpartisan second, I think most of us would at least give some passing thought before we plunked down $800 Billion -- especially on what won't be spent until 2010 and 2011 -- exactly where IS the fire on that? Oh, yes -- it is of course $800 Billion that we don't have. I guess he is "honest" on "Delay", but is that not potentially a GOOD thing?

"Deny". I think most folks in business, fianance and the markets feel that the constant "this is another depression", "capitalism has failed", "this is the worst economy since the depression", etc is not, shall we say, "helpful". In much the same vein as "$800 Billion or nothing", there are some finer points between a GDP boom of 6% and absolute economic zero -- 100% unemployment and 0 output, everyone starves. Although firmly in charge of both houses of congress and busily spinning economic woes from those posts for two years prior to the election, Democrats (and the MSM) felt that the economy needed to be strongly talked down. I must admit, they did one heck of a job and folks are pretty well demoralized. Good job!

I'm thinking though, that one fine day they may wake up and realize that those reins of power are ALL firmly in their hands. They only need a couple Republican RINO votes to get around the filibuster rule, and they need no others. The only reason that they need "Bi-partisanship" is political cover -- as BO so succinctly put it, "they won". At some point, I suspect that Americans will tire of "the failed policies" rhetoric and ask the question "what have you Democrats done for us lately?". Something tells me that "Deny" will be raised to a whole new level!

Dow Votes No on Porkulous

Senate Passes $838 Billion Economic Stimulus Bill - washingtonpost.com

Well, BO managed to get the gigantic $838 hunk of lard through Congress, and the Republicans managed to hold together well enough so only 3 RINOs supported it.

The Dow cast it's vote with a 4% 382 point drop.