Chronicle of the Conspiracy
Saturday, July 28, 2007OOPS! You know all that talk the last few years from pessimists on both the left and the right about the supposed "negative savings rate" in the US? About how we're spending more than we're earning, become a nation of indebted global beggars? Turns out it was all just a data error. On Friday the Bureau of Economic Analysis released a major revision of the last three years of national accounts data, and it turns out that US individuals earned, cumulatively, about $185 billion more than had been previously reported (equivalent to the entire annual GDP of Norway, oil and all). That's enough to turn the savings rate positive. So all that talk, all that hand-wringing -- it was just a data error. Poof! Any retractions forthcoming? Don't count on it. The end of the world crowd is too busy worrying about sub-prime mortgages.
Posted by Donald L. Luskin at 10:13 PM | link
"INSTANT" ECONOMIC IDIOCY Writing in BusinessWeek, law professor Lawrence Mitchell writes of a "dangerous trend within American capitalism..."
...the growing preeminence of finance over operations. It causes stock market considerations to trump those that improve the actual workings of a business. And the quicker the stock payoff can be engineered, the better...I'm really worried about this "dangerous trend" that has been happening for over 100 years -- yep, it's been all down hill in the American economy since about 1895. And it's all due to those financial manipulators who create "instant riches" -- you know, those instant riches that take decades to build, but which get crystallized to that people like this law professor can notice them, in a single "instant" in which a company sells shares to the public. He probably thinks that Blackstone, for instance, was an "instant" success when it did its IPO a couple weeks ago. Sorry professor, it wasn't that easy -- the Blackstone people had to work like dogs for many years to get that "instant" success.
Posted by Donald L. Luskin at 9:27 PM | link
ECONOMIC NONSENSE "Financial writers" often say really stupid things when they try to talk economics, adding a patina of academic authority to their arbitrary opinions. Here's Daniel Gross in Slate, supporting his claim that California's Orange County is ground-zero of the subprime market collapse, what he calls "the nation's capital of real estate folly":
It's not entirely surprising that Irvine is a center of reckless real estate lending and borrowing. It's a classic industry cluster of the type seen in areas that lack natural resources.Oh, I get it. OC has a troubled real estate market because they don't mine enough nickel there. But even in its own loony terms, Gross's analysis doesn't comport with the facts. OC is endowed with rich soil ideal for farming. Gross himself admits earlier in the same column that it all began as an "agricultural tract." This isn't the first time that Gross has just made stuff up.
Posted by Donald L. Luskin at 5:55 PM | link
Friday, July 27, 2007JOKE OF THE DAY
Posted by Donald L. Luskin at 10:00 AM | link
OUR DEMOCRATIC NEROS While financial markets burn, Democratic politicians fiddle with increasingly loony anti-growth policies and attitudes. It can't do markets or the economy any good to have to live day by day with the background drumbeat of such insanity and inanity as Elizabeth Edwards' vow to stop eating tangerines, because importing them creates too large a "carbon footprint." The Wall Street Journal edit page puts it well this morning:
More worrisome is the Beltway story, which is all pointing in the direction of hostility to growth. A bipartisan cast of Senators wants to raise taxes on "carried interest," which means on hedge funds and private equity partnerships. With this new element of political risk, no one should be surprised to see buyout deals such as the Cerberus purchase of Chrysler harder to finance. If Congress wants to dry up capital for mergers, keep it up.
Posted by Donald L. Luskin at 8:08 AM | link
Thursday, July 26, 2007A LITTLE BIT OF LIBERAL OVER-REACHING This is the kind of thing that really scares people, and re-established political equilibrium. An op-ed from today's New York Times:
...there is nothing sacrosanct about having nine justices on the Supreme Court. Roosevelt’s 1937 chicanery has given court-packing a bad name, but it is a hallowed American political tradition participated in by Republicans and Democrats alike.The author, a biographer of FDR, calls the liberal agenda "popular values" and the conservative agenda "manifestly ideological." But normal Americans are going to be terrified at the idea of stacking the court in either direction. And if court-stacking is such a great tradition, then why did the threat of it tarnish FDR's reputation?
Posted by Donald L. Luskin at 12:05 PM | link
"IN THE LONG RUN, WE ARE ALL DEBT" It's a clever title for a new study by Standard & Poors, projecting the current bankrupt social entitlement policies of the major world economies, and forecasting that all of them will eventually become junk-status debtors. Here's a horrifying picture that summarizes the situation:
Jim Glass has more, and he writes to me "At least the French go off the cliff first."
Posted by Donald L. Luskin at 12:11 AM | link
COULDN'T HAPPEN TO A NICER A**HOLE I'm savoring Eliot Spitzer's very public self-destruction, as he discovers that he can't quite bully other politicians the same way he bullied helpless businessmen with fiduciary duties to perform. Our old friend Jim Glass points to some delicious commentary. Here's John Podhoretz:
There's no middle ground here. He's either a) clean or b) toast.And with Spitzer down, there are no shortage of people who used to fear him who are only too happy to finally be able to kick him. Here's Michael Goodwin in the Daily News:
In the fall of 1998, Eliot Spitzer was winning the race for attorney general. I was the Daily News Editorial Page editor, and my colleagues and I had pressed Spitzer about the source of millions of dollars he was spending on the race.
Posted by Donald L. Luskin at 12:00 AM | link
Wednesday, July 25, 2007ACADEMICS SHOULD RUN THE WORLD But no, politicians are already doing that, based on the phony "studies" that academics cook up. From the Detroit News:
On Tuesday, the University of Michigan Transportation Research Institute issued a report that suggested the Detroit automakers could earn $14.4 billion by 2017 by hiking efficiency to 35 miles per gallon by 2017 -- as required on a bill that passed the Senate. They stand to make more profit gains because they will be making improvements that have higher market value and higher profit margins, the study said.My DC-insider pal "Mick Danger" says,
Wow. What a huge turnaround that would be! So why didn’t these brain-iacs at University of Michigan Transportation Research Institute buy Chrysler? Maybe because it’s harder to actually do it than to put words on paper.
Posted by Donald L. Luskin at 11:57 PM | link
IS DR. ATLAS SHRUGGING? Health care is "free" now in Massachusetts -- except there isn't any.
BOSTON -- Tamar Lewis runs a makeshift hair salon out of her one-bedroom apartment in Roxbury, a low-income neighborhood here. She's 24 years old and has been cutting hair since she dropped out of high school in 2002. Until recently, she never had health insurance.Thanks to David Duval for the link.
Posted by Donald L. Luskin at 11:45 PM | link
WHY THE PROHIBITION, THEN WHY REPEAL? Don Boudreaux has a theory that like so many other government decisions, it was all about taxes:
Prior to the creation in 1913 of the national income tax, about a third of Uncle Sam's annual revenue came from liquor taxes. (The bulk of Uncle Sam's revenues came from customs duties.) Not so after 1913. Especially after the income tax surprised politicians during World War I with its incredible ability to rake in tax revenue, the importance of liquor taxation fell precipitously.With the Social Security surplus startting to dry up in coming years, let's see -- what can we legalize and tax? How abour marijuana? Crack? Sure, why not. It's a place where libertarians and big-governments types can (seem to) find common cause.
Posted by Donald L. Luskin at 7:29 PM | link
Tuesday, July 24, 2007IT'S OVER The human race can hang up the phone. Checkers has been solved. Thanks to reader Mark Spahn.
Update [7/25/2007]... Reader Andrei Porumbrica says:
I believe it might be too presumptuous to consider the Checkers solved. If I’m not mistaken, the solution announced in the Science was based entirely on the English version of droughts. I can think of at least two other versions [International (played on a 10×10 board) and Russian] that are probably much more sophisticated than the version tested. There is still hope.
Posted by Donald L. Luskin at 12:53 PM | link
AN FCC COMMISSIONER TEACHES KRUGMAN A THING OR TWO ABOUT BROADBAND FCC Commissioner Robert M. McDowell responds to Paul Krugman's critique of America's broadband policy. Here's Krugman from Monday's New York Times:
...the United States that has fallen behind.Here's McDowell in this morning's Wall Street Journal:
Exhibit A for the alarmists are statistics from the Organization for Economic Cooperation and Development. The OECD says the U.S. has dropped from 12th in the world in broadband subscribers per 100 residents to 15th.
Posted by Donald L. Luskin at 8:14 AM | link
Monday, July 23, 2007THREE STRIKES, YET HE'S NOT OUT He's French. He's a tax official. He has no brain. Yet he lives!
Something that many people secretly believed has been confirmed: You don't actually need a brain to work in a tax office. A French civil servant has been found to have a huge cavity filled with fluid in his head -- yet lives a completely normal life...Thanks to the Wine Commonsewer, via David Duval.
Posted by Donald L. Luskin at 2:33 PM | link
ARE THE DEMOCRATS SORRY THEY ACTIVATED THE CINDY SHEEHAN CELL? From a San Francisco Chronicle op-ed by the anti-war activist, so warmly embraced by Democrats in 2004 -- and now threatening to oppose Nancy Pelosi in the 2008 election:
The Democrats are the party of slavery and were the party that started every war in the 20th century, except the other Bush debacle. The Federal Reserve, permanent federal income taxes, not one but two World Wars, Japanese concentration camps, and not one but two atom bombs dropped on the innocent citizens of Japan -- all brought to us via the Democrats.Update... Reader Brian Hart notes,
At least she opposes the Federal Reserve.Yes, and I can't believe I didn't make note of that myself when I posted this -- not only the Fed, but the permanent income tax, too. Where does that come from? Maybe I've gotten Sheehan wrong all this time, just because of the way she's been used by the Democrats. Is she some kind of libertarian? In this, she's sounding a lot like Ron Paul.
Posted by Donald L. Luskin at 1:16 PM | link
I THOUGHT DEMOCRATS WANTED TO PAY MORE TAXES From a Washington Post story on the funeral of Lady Bird Johnson:
Lynda Johnson Robb...the wife of former Virginia governor and U.S. senator Charles Robb, drew appreciative laughs when she spoke of her mother's frugality. "She wanted to hold on until 2010, so we wouldn't have to pay any estate taxes," Robb said. "Oh, durn!"
Posted by Donald L. Luskin at 1:13 PM | link
JOKE OF THE DAY 2
Posted by Donald L. Luskin at 10:53 AM | link
AH, YES, DEMOCRACY... ...who is it who defined it as "three wolves and a sheep voting on what's for lunch"? This graphic from the Financial Times says it all. Oy -- in the US, 30% of think that government ought to cap businessmen's pay; twice as many think globalization is a negative as think it's a positive. The only good thing I can say about this is: it could be worse.
Thanks to reader David Duval.
Posted by Donald L. Luskin at 10:45 AM | link
JOKE OF THE DAY
Posted by Donald L. Luskin at 10:43 AM | link
SO MUCH FOR A DEM TRADE DEAL From this morning's Wall Street Journal:
Souring relations between the White House and Capitol Hill are threatening one of the few modest accomplishments that once seemed possible this year: passage of free-trade pacts with a handful of neighboring countries.My DC-insider friend "Mick Danger" comments,
Today's lesson: why Democtats are like bad puppies -- no matter what deal you thought you had, your fulfilling your part still resultds in the puppy peeing on the new rug.
Posted by Donald L. Luskin at 8:35 AM | link
RAWLS Good piece in this morning's Journal on an malign influence of the late philosopher John Rawls, who build an intellectual superstructure to support the politics of class warfare:
What Rawls contributed to the political education of American intellectuals was not any sort of rigorous analysis, but an overall spirit or outlook detrimental to freedom. He coined a doctrine of what he called "excusable envy," according to which it is rational to envy people whose superiority in wealth exceeds certain (unspecified) limits, and to act on that passion. He cancelled out his ostensible prioritization of liberty by holding that liberty must first be given its "fair value," meaning that political liberties, including freedom of the press, may need to be restricted so as to ensure that the political process yields legislation that is "fair" to the poor. In his later writings, increasingly deferential to the Marxist critique of liberalism, Rawls wrote that securing people's equal rights and liberties must be preceded by government's first having ensured that their "basic needs" for economic goods were met -- thus sanctioning the alibis offered by assorted despots for violating their subjects' elemental rights to free speech, the freedom from arbitrary arrest, and the security of individual life and property.
Posted by Donald L. Luskin at 8:31 AM | link