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Media Infiltrations: Republicans and the Populist Temptation  Wall Street Journal February 9, 2010 Why Taxing Stock Trades Is a Really Bad Idea Wall Street Journal January 6, 2010
"What has been your worst blogging experience? "That's a guy who actually stalks me on the Web and once stalked me personally." "I'm saying this...guy's a jerk."
 The Happy Body Aniela and Jerzy Gregorek What I'm listening to:  Langley Schools Music Project What I'm watching:  Star Trek What I'm playing:  Speed Racer Order these from Amazon.com at Amazon's normal low prices... and a fraction of your order goes to help support this site. Thanks!
Thanks to Irwin Chusid, public editor.
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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, July 19, 2008
FROM MY FAR-FLUNG TRAVELS Seen in the San Jose, CA airport. This certainly does make things easier.
Seen in Chicago. So global warming itself is not certain, but its disastrous negative consequences are? My, how he mighty Paul Volcker has fallen.
Also seen in Chicago, here are some of those fatcats that Obama and McCain are always villifying.
More Chicago. Is this that drain that Volcker was talking about?
More Chi. I often marvel at the mysterious use of quotation marks in signage. But here's a new mystery. Just what does the elipsis here do? Create suspense as one drives behind this truck?
Last one from Chicago -- the city that works, and the city that is happy in its work. Goes to show that status systems exist everywhere throughout the society and the economy (and that pride is a powerful motivator, no matter how trivial it may seem to one outside the status circle involved).
Posted by Donald L. Luskin at 3:13 PM |
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Friday, July 18, 2008
JOKE OF THE DAY This joke relates to palindromes. We believe the longest legitimate one-word palindrome in the Enlglish language is "detrarted." Here's the definition. But reader Neil Ferguson gives and alternate one:Adjective. Of or relating to a person from whose life a tart has been extracted. Example: After Vernon Jordan arranged a new job for Ms. Lewinsky, President Clinton revelled in his detartrated state.One might go further:
Adjective. Of or relating to a person whose success ratings have improved following the extraction of a tart from his life. Ex: After Vernon Jordan arranged a new job for Ms. Lewinsky, President Clinton was detartrated by the elecorate, as reflected in his higher approval ratings in opinion polls.
Posted by Donald L. Luskin at 1:29 PM |
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Thursday, July 17, 2008
KUDLOW REPLAY Featuring the long-overdue return of my friend Mike Darda! Here's more. I think.Update... Reader John Kranz asks,
I'd like to hear you expound on your aversion to naked shorts. I was surprised when you criticized the practice on Kudlow last night."Naked" shorting and "naked" option-writing have nothing to do with each other, except for the coincidence of the term "naked." In the case of option-writing, the "naked" writer is simply taking a short position in a put or a call without a risk-offsetting position in the underying asset (usually a stock). I have no problem with that at all. A short option, whether "naked" or not, is simply a contract to sell (in the case of a short call) or buy (in the case of a short put) at a fixed price by a fixed date. No issue there.Aren't naked puts and calls just pure option plays? Don't they provide more efficient price information and get risk in the hands of those who can best handle it? I'm sure you saw the Wall Street Journal editorial today, which is a little closer to my position.
However, "naked" shorting is an entirely different matter. When you sell a stock short, you are selling something you do not own. Yet the buyer requires that you deliver to him the thing he bought from you. Normally you accomplish that by arranging to borrow the shares from someone else who owns them. You sell the borrowed shares, and deliver them to the buyer in exchange for the buyer's cash. Ultimately, you expect to buy back the stock at a lower price, and replace the borrowed shares. In "naked" shorting, you sell to the buyer without any intention of borrowing stock to deliver. So on settlement day, your trade fails. You cannot deliver what you do not have. Yet when you made the sale, you were implicitly promising to deliver. After the fail, you can cure the problem by buying stock and delivering it, hopefully at a profitably lower price. But shat amounts to fraud -- in very much the same way that kiting checks amounts to fraud. It doesn't matter if you ultimately deliver. At the time of the sale, you had no intention or capability to deliver.
Posted by Donald L. Luskin at 8:54 PM |
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THE COMEDY THAT IS CONGRESS Our friend Jim Carter writes in IBD:
For anyone who is interested in a solution to America's fiscal policy woes, the person to watch is Jerry Seinfeld.Although not widely recognized as a fiscal policy expert, Seinfeld's advice to George Costanza in the final episode of season five is pure genius.
What was that advice? "If every instinct you have is wrong, then the opposite would have to be right." Congress should take this advice to heart.
Congress' natural instinct is to spend, spend and spend. Consider discretionary spending: Over the past 10 years, federal discretionary spending has virtually doubled. This year alone, discretionary spending is slated to jump $50 billion — an expenditure larger than the entire economic output of all but a few nations in Africa, South America and the Middle East.
Posted by Donald L. Luskin at 6:37 AM |
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Tuesday, July 15, 2008
CHUCK SCHUMER: HEDGE FUND TOOL An amazing story in today's Wall Street Journal:The federal takeover of IndyMac Bank over the weekend could cost the Federal Deposit Insurance Corp. between $4 billion and $8 billion. But Senator Chuck Schumer, who helped to precipitate the collapse by publicizing a letter to the bank's regulator last month, has no remorse.My DC-insider friend "Mick Danger" sees deeper implications.He was, he says, just doing his job in telling regulators that the bank "could face a collapse," a prophecy that quickly proved to be self-fulfilling. "It's what legislators are supposed to do," the New York Democrat told the Journal. Depositors who spent Monday trying to recover some of their money might beg to differ.
The Office of Thrift Supervision (OTS), whose job it actually was to regulate IndyMac, took a different view. "The immediate cause of the closing," the OTS wrote in a press release, "was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York." The OTS added: "In the following 11 business days, depositors withdrew more than $1.3 billion from their accounts."
The SEC is investigating hedge funds to see if they circulate rumors, knowing they are false, and trade on them, manipulating the market. Now, did the brave writers at the WSJ miss something?Someone -- with an interest -- brought Schumer information on IndyMac. Who? When? Why? What are the chances that Schumer was looking into irregularities into IndyMac because some hedgie with a big short position turned him onto it?
Well, they ain't zero.
What are the chances Schumer was "investigating" IndyMac because the Senate Banking Committee assigned that case to him? Zero.
What are the chances the SEC enforcement guys will get very shy, very fast if they pick up a trail leading up the Hill? Close to 100%. (Note, Senators have a constitutional shield against certain prosecutions of actions taken in the course of their work as Members of Congress.)
Most likely result? The SEC staff will pluck a few hapless hedgies out of the middle ranks and shoot them in the public square.
Is Schumer correct? Or did Schumer break a law by leaking his letter? What if he were a research director at a hedge fund and told people what he suspected? Would that be the kind of rumor the SEC is hunting?
Think there might be a clever hedge fund which might use Schumer to leak info so they can trade on it without fear of prosecution? Uh, yeah.
Posted by Donald L. Luskin at 10:37 AM |
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Monday, July 14, 2008
NOT EXACTLY REASSURING Here's the new CEO of the failed bank IndyMac, John F. Bovenzi, put in place by the FDIC who seized the bank over the weekend. Creepy. Could be worse. At least his hand is in his own pocket, not yours.
Posted by Donald L. Luskin at 10:55 AM |
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Sunday, July 13, 2008
NO LEFT LEFT BEHIND My DC-insider friend "Mick Danger" is rabidly anti-union (or, to put it more accurately, anti the political influence exercised by unions). He particuarly despises Andy Stern, the boss of SIEU. So it's a surprised to see "Mick" quoting Stern approvingly, as he does when he cites this interesting Jonathan Alter piece on education reform in Newsweek:Jonathan Alter gets it mostly right but still feels compelled to throw rocks at the very successful No Child Left Behind law; bitching at NCLB's testing "mania" while calling on schools to improve classroom performance. Yeah. Teachers hate it because it exposes incomptence; students have always hated tests but study because of them. Is there anyone who does not already know these things?Update... a reader responds:Why is that liberals want to test everything -- lead levels, stockbroker emails, etc -- except the performance of government workers -- e.g., teachers?
Andy Stern is quoted; Andy must have hit his head because he sounds rational. Key quote:
Teachers unions bristle at the business comparison. But they should listen to Andy Stern, head of the nation's largest union, the SEIU: "Education is like any business. You need a return on investment. Outcomes do matter. Paying people according to outcomes does matter. I don't care if a teacher has a high-school degree, college or a Ph.D. if he or she can produce results." Stern is worried that if his brethren in the teachers unions don't embrace accountability now, "parents will vote with their choices" and the unions will begin dying, as they already are in reform-minded cities like Washington, D.C., and New Orleans.Oops. I almost forgot to pass judgment on Alter's plea that Obama to be independent of the teachers unions on educaton policy. DENIED. Instead, you will be sentenced to periodic Clintonesque head fakes and half-promises designed to manipulate.Obama has never challenged the doctrines of the left. Ever. Why would he do so now?
Don't defend the No Child Left Behind plan. My view is this. The school district results are primarily a function of the community. All plans like NCLB do are waste federal money on top of state money that is being wasted.Look how much money is wasted in New Jersey on trying to get Newark, Asbury Park and other schools to work. Accept the fact that there is only so much the teachers can do. The teacher's job is to prepare a lesson and let the parents know how the child is doing. If the parents are preoccupied with other things, then there is not much the teachers can do.
Sen. Obama wants to spend 18 billion federal dollars on these idiotic plans. That is based on the idiotic notion behind NCLB that the government can make a difference. Its time to accept the fact that after 20 years of failure in NJ, we have had enough of these reform education plans. Just accept the principle that a large responsibility for success or failure is based on the parents and there is not much the government can do if the parents aren't able to assume that responsibility.
Posted by Donald L. Luskin at 6:58 PM |
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