The Conspiracy to Keep You Poor and Stupid is a trademark of Donald L. Luskin

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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

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Peter Sellers and Peter Bull in ''Dr. Strangelove'' Columbia Pictures, 1964 -- Click to order!

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The Happy Body
Aniela and Jerzy Gregorek

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Langley Schools Music Project

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Star Trek

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Speed Racer

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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, December 13, 2008

KUDLOW REPLAY   Here's the YouTube video. I could hardly believe it when I heard they'd booked me with Peter Schiff. Seems like he's had his wings clipped a bit, having recommended shorting the dollar at the very bottom, and buying Russia and China at the very top. But he's still a filibustering windbag, only now, instead of bragging about his track record and promoting his book, he's spouting irrelevant free-market platitudes. Now, with this new encounter, I'm bracing for threatening emails from his brother, threatening phone calls from his fans, and a flood of hatemail. Haven't gotten but one so far. Maybe some of Schiff's cultish appeal has burned off a bit.

Update...Reader Joseph Russo III says,

Peter Schiff is a strange dude, I'm glad I was able to see you debate him on the economy. He reminds me of those cat clocks with the moving eyes...scary stuff.

Posted by Donald L. Luskin at 4:09 PM | link  

Thursday, December 11, 2008

"MICK DANGER" ON THE BIG THREE BAILOUT   From my DC-insider friend:
If you add it all up, it's too much.

The bill to provide a "bridge loan" to the auto companies formerly known as the Big 3 has stalled. It ran into the last remaining tough guys among Senate Republicans. That much you know.

What's not being reported is that it only passed the House of Representatives because 32 House Republicans for it.

The UAW cast its ballots with its PAC money.

And now it's backfiring. From the Detroit Free Press:
Complicating matters for the union -- which has been lobbying hard for passage of the rescue plan -- is that it threw its political weight behind many of the Democratic opponents who managed to beat Republican incumbents last month. Now those same defeated GOP senators are being asked to save the domestic auto industry from ruination before giving up their seats.

In this year's elections, the UAW gave $40,000, for instance, to six Democrats who won seats currently occupied by Republicans.

On Wednesday, Shelby -- who once was a Democrat but now leads the forces lining up against the automakers in the Senate -- said the most recently unveiled legislation reveals "the influence of the UAW," as it calls for no specific cuts in health care benefits or wages.

Corker, meanwhile, has demanded that the union accept wage cuts that put it on an even keel with nonunion plants in the South, a provision even the Bush administration didn't insist upon as a condition to passage...

Against that background is the fact that Shelby, Corker, McConnell and others represent states where foreign automakers have a presence.

Update... The anonymous reader who calls himself "Zoogler" writes,
Ford went out and sold most of its assets a few months back and then leased them. In the process, they freed up about $23 billion in cash.

I don’t know if GM has done anything like that, but if they haven’t – wouldn’t it make sense to do that now?

Since the credit markets aren’t exactly up to that right now, the government can step in and demand that Fanny and Freddy pony up some of those subprime (liar) loans at 125% or so, with the full backing of the UAW.

With all the CDO and CDS paper, the government can build a virtual Empire State building of cards.

It’s not all that different from the mortgage mess, except GM and Chrysler have more real assets.

Posted by Donald L. Luskin at 10:24 AM | link  

One of Europe's most prestigious scientific research institutes has had to issue an apology after discovering that the calligraphy used on the cover of its flagship publication to illustrate a special China edition was in fact an ad for a Hong Kong strip joint.

The institute hastily replaced the cover - which advertises "hot, young housewives" - from the online and English edition of the publication, Max Planck Research, but not before the German language version of the periodical had been dispatched to subscribers.

Posted by Donald L. Luskin at 8:25 AM | link  

Wednesday, December 10, 2008

WELL, IT DID SAY "MAY"   From the always excellent Fail Blog.

Posted by Donald L. Luskin at 7:46 PM | link  

Defending Fannie and Freddie, Paul Krugman posted "Fannie Freddie Phony" a month ago:
…Fannie/Freddie did some bad things, and did, it turns out, get to some extent into subprime. But thanks to the accounting scandals, they were actually withdrawing from the market during the height of the housing bubble — the vast majority of the loans now going bad came from the private sector.
This whitewashing of Fannie’s/Freddie’s role in the housing mess was proven absolutely false today when Krugman’s own paper reported on one insider’s account of the VERY LARGE extent to which Fan & Fred gorged on toxic mortgages:
Fannie Mae and Freddie Mac engaged in “an orgy of junk mortgage development” that turned the two mortgage-finance giants into vast repositories of subprime and similarly risky loans, a former Fannie executive testified on Tuesday…

The former executive, Edward J. Pinto, who was chief credit officer at Fannie Mae, [said] that the mortgage giants now guarantee or hold 10.5 million nonprime loans worth $1.6 trillion — one in three of all subprime loans, and nearly two in three of all so-called Alt-A loans, often called “liar loans.”…

Such loans now make up 34 percent of the total single-family mortgage portfolios at Fannie Mae and Freddie Mac, a level that will link them to eight million foreclosures, or one in six, in coming years.

Thanks to Randy Carney and Dave Duval for the link.

Posted by Donald L. Luskin at 7:38 PM | link  

HE REALLY MEANS IT   For Paul Krugman, this posting on his blog concerning his Nobel Prize is more than his usual self-congratulatory narcissism. He means it. Remember, he once wrote, "my economic theories have no doubt been influenced by my relationship with my cats."

Thanks to Clay Waters for the link.

Posted by Donald L. Luskin at 7:07 PM | link  

Monday, December 08, 2008

Add another economic worry to inflation and deflation: ecoflation, the rising cost of doing business in a world with a changing climate.

Ecoflation could hit consumer goods hard in the next five to 10 years, according to a report by World Resources Institute and A.T. Kearney, a global management consulting firm.

Companies that make fast-moving consumer goods, everything from cereal to shampoo, could see earnings drop by 13 percent to 31 percent by 2013 and 19 percent to 47 percent by 2018 if they do not adopt sustainable environmental practices, the report said.

Posted by Donald L. Luskin at 8:55 PM | link  

THE BIRTH OF A NEW BULL MARKET...   ...and a robust economic recovery. It is inevitable now, with Paul Krugman in Stockholm to collect his Nobel loot, and lecture the world on the the end of the world:
"A scenario I fear is that we'll see, for the whole world, an equivalent of Japan's lost decade, the 1990s -- that we'll see a world of zero interest rates, deflation, no sign of recovery, and it will just go on for a very extended period," he told a news conference.

Krugman added that in his worst case scenario there would also be a series of extremely serious crises "in particular countries that are in big trouble."

What an insight. "Crises" in "countries that are in big trouble." Does that mean there will be no crises in countries that are not in big trouble? But I digress...
"We can easily be talking about a world economy that is depressed until 2011 and maybe beyond," Krugman said.

"If there's a safe place I can't see it."

Buy everything. Buy it now.

Thanks to Chris Ciancio and Ajeya Tatake.

Posted by Donald L. Luskin at 8:48 PM | link