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Chronicle of the Conspiracy
Join us as we discover, document, expose and challenge the bad people, the bad institutions and the bad ideas that stand in the way of wealth creation -- and show you how to fight back!

Saturday, November 24, 2007

KUDLOW REPLAY   Here's the YouTube video, in which -- be afraid, be very afraid! -- Michael Panzner actually says something bullish!


Posted by Donald L. Luskin at 6:22 PM | link  


Thursday, November 22, 2007

HERE'S TWO FOR THE TRIAL LAWYERS   First, Mattel should sue the extreme leftist group Campaign for America's Future for expropriating the image and trademark of Barbie, in this Internet-only ad.

ABC News reports,

...a Barbie doll calls a Ken doll to complain she has contracted lead poisoning from a late-night, alcohol-induced, post-breakup (and off-camera) rendezvous with her dashing plastic boy-toy.

"It's hard to talk about, Ken," Barbie says into a cell phone glued to her head. "But I've contracted something."

"Oh, no!" Ken replies into his phone. "Barbie, I'm so sorry. What is it?"

"It's -- it's lead poisoning!" Barbie says.

"Barbie accessories containing toxic levels of lead were some of the 25 million products recalled this year," the group explains in a press release announcing its campaign.

The Washington, D.C.-based nonpartisan watchdog is using the video to call for the resignation of Nancy Nord, acting director of the Consumer Product Safety Commission, for declining to push for better funding of her agency despite recent problems with unsafe products being imported to the United States.

A "nonpartisan watchdog," eh? My DC-insider friend "Mick Danger" as always, has the true story:
"Campaign for America's Future" is a union-funded, far left-wing (wing-tip?) group. In their version of our future, America becomes quite different, something like a Euro-Socialist, trial lawyer-dominated, totally unionized, income-equality PC-police state. Yummy! Time to face east and worship Hillary.

CAF makes a clever ad, urging a hapless Bush appointee to resign over the lead painted toy scandal. Blame all around, of course. Two things to note: look how ABC spins it, as if the ad alleges that Barbie's lead poisoning was the result of a drunken tryst with Ken. (Hmm, is this latent anti-male bias? Assuming this version of Ken is male.) Second, the truth -- as almost always in Washington -- is boring and not-suitable-for-TV dramas: The Bush Adminisration opposes new legislation pending in the Senate because it radically tilts the litigation field towards the trial bar, creating liabilities into the hundreds of millions, for ambiguous "failures to report." The Bush Administration has its own program to increase toy safety and appears to be leaning towards a more moderate, bipartisan House bill.


Posted by Donald L. Luskin at 12:00 PM | link  


Wednesday, November 21, 2007

KRUGMAN SKEWERED IN THE POST   Ruth Marcus in the Washington Post:
"Inside the Beltway, doomsaying about Social Security -- declaring that the program as we know it can't survive the onslaught of retiring baby boomers -- is regarded as a sort of badge of seriousness, a way of showing how statesmanlike and tough-minded you are," Krugman wrote last week. "In fact, the whole Beltway obsession with the fiscal burden of an aging population is misguided."

Somebody should introduce Paul Krugman to . . . Paul Krugman.

"[A] decade from now the population served by those programs [Social Security and Medicare] will explode. . . . Because of those facts, merely balancing the federal budget would be a deeply irresponsible policy -- because that would leave us unprepared for the demographic deluge, with no alternative once it arrives except to raise taxes and slash benefits." (July 11, 2001)

"Broadly speaking, the next administration . . . will face two big economic tests. One . . . is whether it can stick to a fiscal policy, including a policy toward Social Security, that prepares this country for the demographic deluge." (Nov. 12, 2000)

"The reason Social Security is in trouble is that the system has a large 'hole' -- basically a hidden debt -- because previous generations of retirees were paid benefits out of the contributions of younger workers . . . a multitrillion-dollar debt that somebody has to pay." (Oct. 1, 2000)

"[B]ecause the baby boomers' contributions were used to provide generous benefits to earlier generations, there isn't enough money in the system to pay the benefits promised to the boomers themselves." (June 21, 2000)

In addition to this fiscal amnesia, Krugman misrepresents responsible voices in the debate.

First, he quoted a new paper by Congressional Budget Office Director Peter Orszag and CBO analyst Philip Ellis. Notwithstanding "all the attention paid to demographic challenges," they conclude, "our country's financial health will in fact be determined primarily by the growth rate of per capita health care costs."

True, but Krugman omits any mention of Orszag's latest book, inconveniently titled "Saving Social Security." Orszag and co-author Peter Diamond wrote that "Social Security's projected financial difficulties are real and that addressing those difficulties sooner rather than later would make sensible reforms easier and more likely."

Krugman then takes on The Post for an October editorial that, in his skewed retelling, castigated Hillary Clinton"for, um, not being panicky about Social Security."

I write for the Post editorial page, including sometimes on Social Security, and, um, the editorial said nothing about panicking. It quoted one Bill Clinton, circa 1998, saying: "Every single year we avoid resolving this, it will get harder and harder and harder."

Thanks to Caroline Baum for the link.

Update... That thin-skinned narcissistic whiner is already responding on his blog. Krugman starts, astonishingly, by saying "Early in my tenure at the NYT, I was advised that it’s a bad idea to devote a column to attacking another columnist — not just at the Times, but anywhere. Why? Because it makes you look small..." Well, yes. And from there, he proceeds to make himself look very small indeed.

He makes two basic points. First, he claims that in his earlier stance that there was a Social Security crisis, it was only an issue insofar as it should argue against income tax cuts. But Marcus's column clearly shows that's a lie. He wrote repeatedly that the program has its own problems, arising from its own legacy debt. And the income tax cuts Krugman opposed were in fact passed -- so now, according to his present rationale, there should be an even greater crisis than there was before. Yet now there's no problem? Looking small, Paul!

Second, claims that the 1996 projections were more pessimistic than the current ones. Indeed they were. But the current projections still show a huge shortfall.

Krugman is playing fast and loose with the facts on this subject. For example, In his 11/17 blog post, he attempts to document that there is no problem:

According to the “intermediate” projection of the Social Security trustees, this trust fund will be exhausted in 2041 — but they also present a more optimistic scenario, based on economic assumptions that don’t seem at all outlandish, in which the trust fund goes on forever.
But this "optimistic scenario" he's talking about isn't solely "based on economic assumptions that don't seem at all outlandish," it's based on many other factors, too, including demographic ones. All the factors must fall into place to avert insolvency. For example, fertility would have to permanently returns to levels we haven't seen since 1970. And longevity increases would have to slow so that gains over the next 75 years are less than over the last 35. That's a lot to ask.

This scenario is so unlikely that it doesn't even appear within the 95% confidence band of the Trustees' projections. The scenario in which the problem goes away entirely, even over 75 years, wouldn't even be a 1 in 100 shot. But Krugman doesn't warn you about that. Small! Small! Small!

Oh, and those economic assumptions he says are "not at all outlandish" include that real wage growth over the next 75 years will be more than 175% of the level it's been over the last 40 years. And inflation can never top 2% in any year over the next 75. Small! Tiny! Pygmy!

Posted by Donald L. Luskin at 9:57 AM | link  

SOMEHOW I DOUBT IT   Presumably this sign wasn't put up by the economics department.


Posted by Donald L. Luskin at 1:08 AM | link  

SEEN IN SILICON VALLEY   ...where only the best will do, in flowers as in software.


Posted by Donald L. Luskin at 1:07 AM | link  

JUST BECAUSE YOU'RE PARANOID   ...it doesn't mean the world isn't a dangerous place, full of suspicious packages, bomb scares, mysterious fires, and some terrorism here and there. Here's the whole bleak picture summed up as a Global Incident Map, link courtesy of Bruce Kesler.

Posted by Donald L. Luskin at 12:07 AM | link  


Tuesday, November 20, 2007

WILL GORE ACTUALLY REGISTER AS A LOBBYIST?   Following up on our suspicions last week about Al Gore becoming a partner at venture capital firm Kleiner Perkins primarily to act as a lobbyist, the Wall Street Journal has the goods.
After making more than a dozen "green tech" investments, Kleiner is still waiting for its first exit. According to a Kleiner spokeswoman, many companies in its portfolio are "in stealth mode." The firm will "neither name nor comment on them." So it's impossible to determine precisely how much the Kleiner-backed firms will benefit from either current federal subsidies, or new provisions that are part of the House and Senate versions of the stalled energy bill. But we do have some hints.

Of the portfolio companies acknowledged publicly by Kleiner, at least two, Altra and Mascoma, are involved in the production of ethanol, which is already heavily subsidized and would get more subsides in the House bill and higher mandates in the Senate version. A third firm in the portfolio, Amyris Biotechnologies, is developing a biofuel that will provide "more energy than ethanol," according to its Web site, and should be just as eligible for government set-asides.

Two portfolio companies in the solar energy field, Miasole and Ausra, should benefit if a House provision requiring investor-owned utilities to generate 15% of their power from wind, solar or geothermal sources becomes law. The same is true for Altarock Energy, a Kleiner-backed geothermal company. Lux Research analyst Ying Wu reports that "company valuations will take a pretty big hit" in Miasole's market segment if Washington turns off the subsidy spigot.

To put it another way, Kleiner's "risk-taking" here isn't all economic. When everything is going according to plan, do venture capitalists normally turn to a politician/filmmaker to help them cash out...?


Posted by Donald L. Luskin at 8:56 AM | link  

KUDLOW REPLAY   Here's the YouTube video, in which Brian Wesbury and I have to give Gary Shilling a little lesson in how to read a balance sheet, and I bet dollars to donuts about Fed policy with a former Fed policy maker.


Posted by Donald L. Luskin at 8:35 AM | link  


Monday, November 19, 2007

PAUL KRUGMAN EXPLAINS THE DOLLAR TO US   "WARNING," he warns us self-aggrandizingly, "FAIRLY WONKISH." Actually, it's just fairly foolish. So the dollar has been declining against most foreign currencies. Krugman wonders whether it is "recessionary" -- and then gives the game away when he proceeds to ask, "OK, so how do we make this story more pessimistic?" Turns out he really can't do it, which is surely a first for him.

He's discards the idea that the falling dollar is inflationary, saying "The big dollar fall from 1985 to 1988 wasn’t notably inflationary." That's rich. Remember back in the early 1980s, before Krugman was so concerned that Ronald Reagan was a racist, and deigned to work for his Council of Economic Advisors? Remember that memo that he and Larry Summers wrote in 1982, "The Inflation Time Bomb?"? The one where he predicted an explosion in inflation, just as our economy was embarking on a quarter century of declining inflation? The one where he based his forecast on the exchange rate of the dollar? This is just too f***ing funny.

Posted by Donald L. Luskin at 11:00 PM | link  


Sunday, November 18, 2007

SENATOR WHO?   Crapo. Mike Crapo. Haven't heard of him? My DC-insider pal "Mick Danger" thinks you should start to pay attention:
Senator Crapo (R-ID) is a rare breed. Smart, hard-working and well positioned. Not heard much about him? Well, he’s the other Senator from Idaho.

If he’s got a problem it’s that he hides his light under a basket. Maybe that will change soon, as he’s starting the important work of readying the Senate for a battle royale over various proposals to raise taxes on capital. He chairs the Republican-only Task Force on Capital Markets. He sits on two important committees, on Finance and on Banking.

Putting out press release late on a Friday afternnon proves he’s no media expert, I guess, but more important, this group will surely be heard from again and again once the debate hits the Senate floor sometime in December. I know that the proposals to raise taxes on carried interest and on publicly traded partnerships are relatively small compared to the prospect of not extending the 15% rate on capital gains and dividends, in economic terms. However, in political terms, they are connected. Lose this battle, you weaken support for the bigger war.

Crapo's purpose, and that of this task force, is more to organize a posse to protect capital investment than to make a splash in the press. As for “splashing”, no one can compete with Senator Schumer. Trouble for Schumer, though, is that he won’t be able to hedge votes – he has to decide one way or the other. Stay tuned.

Money quote:

...significantly raising taxes on capital formation in the United States will increase the cost and decrease the availability of capital to businesses throughout the country. This could severely handicap a vibrant and growing part of the U.S. economy….every Western European nation taxes carried interest as a capital gain and there is a risk of a loss of U.S. intellectual capital to London or other jurisdictions.

Posted by Donald L. Luskin at 8:06 PM | link  

NOTHING LIKE BEING THROWN OUT A JOB TO CLARIFY THE MIND   And so it is with the Republican party. Is it, perhaps, beginning to find its way again with this -- The Little Book of Big Government. Lots of juicy facts and factoids to throw around a cocktail parties when the subject turns to politics and the guy or gal on the other side of the conversation is pontificating about what government "should" do under a Democratic president and congress. Not a lot about the GOP's own complicity in creating our bloated nanny state -- but it's a step in the right direction. When the GOP was in power, the Dems just talked about how to spend more money, and spend it differently. At least when the GOP is out of power it talks about spending less.

Thanks to Jameson Campaigne for the link.

Posted by Donald L. Luskin at 6:58 PM | link  

I GUESS THEY'RE STILL WORKING THE BUGS OUT   The new Fox Business Network didn't exactly cover itself in glory on this one last week:
ALEXIS GLICK: There's some news coming across the tape right now. We're seeing from Wall Street Journal that Apple is buying an 8 percent stake in AMD."

PETER BARNES: "The big chip maker, yup. And AMD and Intel battle back and forth, and so this is a very significant statement by Apple, Charles and Liz, is it not, that it's going to buy in to AMD, pick one of the two?" [one-year charts of Apple Inc and AMD]

CONTRIBUTOR CHARLES PAYNE: "Well, yeah, and AMD needs, uh - that's real smart by Apple because AMD is in trouble right now. AMD has always had two problems: either it had a great product that was either sometimes superior to Intel but not the distribution, or it would have a terrible product that obviously they couldn't compete. And they're sort of in the middle right now - they haven't had great product offerings per se recently, the stock has been really just sort of muddling along, so I gotta tell you, Peter, I think it's a smart play by both companies to get involved with each other."

BARNES: "And we are getting some more news [inaudible]"

GLICK: "That, oh, it's not Apple. Let me just correct ourselves here. It is not Apple. [cross talk] Alright, I'm sorry, we got a little ahead of ourselves here on that. Um, Apple Dubai? Abu Dubai." [sic]

BARNES: "Oh, the Arabs. Ok."

GLICK: "Oh, ok, there we go. [Laughs] We thought it was Apple! We got so excited about it!"

In fact, as the Financial Times reported hours earlier, it was Abu Dhabi--not Apple and not a mysterious new pan-Arabian country apparently called Abu Dubai--that bought the stake in AMD. But Barnes stuck to his guns about that new country When he reported the story again at 9:40a, the AMD buyer was still Abu Dubai.

Thanks to "Irrational Exuberance" for the link.

Posted by Donald L. Luskin at 6:36 PM | link  

THE SENATOR "FROM" MONTANA   I guess that's a literally true description of Democrat Max Baucus, the chairman of the Senate Finance Committee who holds the future of American tax policy in his hands. The question is: is he the senator of Montana?
Democratic U.S. Sen. Max Baucus, who is running for his sixth term next year, didn’t own a home in Montana for 11 years of his 29-year Senate career.

...Baucus now owns one-half of his mother’s Helena home, and Baucus and his wife, Wanda, are listed on the home’s title as owners, records show.

Baucus spokesman Barrett Kaiser said the senator has always considered the house where he grew up “home” and returns at least twice a month...

Chris Wilcox, executive director of the Montana Republican Party, said it’s wonderful that Baucus comes back to Montana to visit his mother, but said it’s not the same thing as actually living here..”


Posted by Donald L. Luskin at 6:30 PM | link