NOVEMBER 29, 2008

The potential game changer, and not in a good way, is Obama’s Grand Experiment: Global Warming Cap-and-Trade Policy This will be marketed as Economic Recovery by supporting "green technologies". This has the potential to be the biggest single scam in history. I am not sure there is much we can do to stop this despite people gradually becoming more skepitical about, ahem, "Global Warming" (LOSING STEAM). Once again, how it is structured will determine how bad it is. But there is no amount of structuring that can make it good. It is hard to believe that Barack Obama believes in Global Warming. But he does believe in the votes and the money of those who do or pretend to.

(posted at 12:17 pm by Mike Rulle)

It occurs to me in reading Michael Barone's article Managing Risk in an Unstable World that there really is a fundamental misunderstanding about the nature of risk. As he states, "eliminating risk entirely is an impossibility, and mitigating risk intelligently means not only maintaining sensible safety nets but, more importantly, stoking the engines of economic growth". This is literally, not figuratively, true. Risks can be diversified and broadly distributed but they cannot be eliminated. Someone has to take them. Without growth, there is also no safety net. If normal people understood that better, perhaps there would be less demands for the impossible from the Federal Government. The Government feeds on these fears for their own economic and power benefit. Sometimes I think people forget that there are real people who get paid real money with real power working for and with the Government. Isn't it likely their arguments are going to be biased in favor of having more Government?

(posted at 12:15 pm by Mike Rulle)

 

David Brooks asks "Is all this money doing any good?". Apparently not. In Stimulus for Skeptics Brooks notes that while the Financial System has stabilized, it may be that "we just have to endure some fundamental adjustments". Do you think so? I agree with Brooks on this one. Sometimes you break your ankle and it just takes time to heal. All the voo doo dances, expensive charm bracelets, and potions will only cost you money. But the current glide path, always subject to change of course, is to spend the maximum amount of dollars conceivable. Like Al Gore hoping to become a billionaire by hawking global warming, there are a lot of people out there who want your money in the name of Economic Recovery.

(posted at 12:03 pm by Mike Rulle)

I used to respect Bob Rubin and still want to. But this kind of self serving commentary makes it near impossible to do so. Rubin, Under Fire, Defends His Role at Citi . It really is a classic case of "heads I win tails you lose". There is no more scoundrel like comment then blaming it on the dog eating your homework. The reason top guys get paid is to avoid losing 5 years worth of net income in one year when financial crisis happens. The two Goldman golden boys, Rubin and Paulson, both have blamed their problems on "events". When times are good, a tree can do a good job as Chairman, but we never see these guys deflect credit. I thought Rubin's sole job was to see the big picture. An honest man would admit his failure to do so, and just let it go.  And no, I do not think he should give his money back. But he should shut up, resign and just go away. 

(posted at 11:45 am by Mike Rulle)

                                                                          

Greg Mankiw of Harvard points at what he calls the "elephant in the oinment" of the Obama/Summers/Reich/Krugman case for massive stimulus spending by the Federal Government. Mankiw invites us to read tomorrow's editorial in the NY Times (Click here to read my essay appearing in tomorrow's NY Times) Even though in the long run we are all dead, we don't all have the same long run. We already have promised tomorrow away with Social Security and Medicare/Medicaid among other things. Mankiw presents a Sophie's Choice of sorts. None of the other 4 "categories" of demand are currently functioning well (Consumers, Investment, and Net Exports) so many are looking to the Government. Normally he believes monetary policy can save us through lower interest rates. But we are already at 1%. He hopes the Bernanke decision to purchase $800 billion of debt can lower longer term interest rates as well. I like Mankiw. He does not sound too encouraged by all of this. Hmm.

(posted at 9:45 am by Mike Rulle)

Robert Reich's Blog Well, we cannot say we were not warned. Reich and Krugman (below) lay out the deficit spending case. Any "Demand" is better than no "Demand" they would say. The details are what matter at the end. The details I am afraid we will see are subsidized support for every favored constituent group in the Reid/Pelosi/Obama Blackberry contact list.

(posted at 9:31 am by Mike Rulle)

                                                                                                                                                         How does someone like Harry Reid get elected and become Majority Leader? Even though he is strongly on record against 95% of our energy sources, is it possible this is just another joke being played on the American public? Can it really be the case that someone in that position is as stupid as he actually seems? Or is it the case that we really don't know what any of these guys actually vote for or against? You know its bad when you believe this is a legitimate question. Reid is against burying Nuclear waste in the Yucca mountains. His thoughts on offshore drilling is that it is snake oil and quackery (Harry Reid: Offshore Drilling is "snake oil" and "quackery" His latest is about coal. That just about covers it. Harry Reid: No New Coal Plants in Nevada  

(posted at 9.20 am by Mike Rulle)

                                                                                                                                                      It is obvious one can hardly know what is happening let alone predict what is going to happen in the economy. We are all the proverbial blind men touching the elephant. One reason for this is we are trying to predict human behavior. Humans, all though trapped in their "humanness' (I like to say we cannot choose to become giraffes), still are a species where billions of free choices are being made each minute (or second, whatever). Hence, when we see someone look at a chart and confidently predict the future, be skeptical. See here (CONTINUED HERE) 

(posted at 9:15 am by Mike Rulle)

Wrong Forecasts. One of the little games being played today inside the Intelligentsia (Wikipedia, the free encyclopedia) is how no one, or so few it is de minimis, forecast the current financial problems. The irony vacuum in most of these commentaries is interesting. Should we not, therefore, also be skeptical of the current conventional wisdom forecasts?  This seems to be not recognized. This is what I have referred to as the financial Armageddon narrative.Bold and Fresh

(posted at 9:00:am by Mike Rulle)

  

I don't know what happened to former Reagan speech writer Peggy Noonan, but her outlook on things has turned foggy, mushy, and uncentered. The floating conventional wisdom of the day becomes, in her mind, the equivalent of a spiritual awakening. Her recent opinion column Peggy Noonan: Turbulence Ahead is typical of her recent style. 

(posted at 8:45 am by Mike Rulle)

Amity Shlaes' recent bestseller, The Forgotten Man: A New History of the Great Depression is timely. Today she takes on Paul Krugman in the WSJ The Krugman Recipe for Depression. Krugman is a strong proponent of Government deficit spending as the solution to the current expected (that's right, not here yet) recession and uses the New Deal as a Model. So does Obama. But the New Deal was Industrial Policy at its worst, subsidizing favored groups and favored industries. Joblessness was above 14% from 1931 to 1940. It did not work, and it should not be surprising. 

(posted at 8:12 am by Mike Rulle)

One of the memes that has been repeated for years is that median incomes have not grown. Growth on the margin has been sustained by consumer borrowing, either in the form of normal consumer credit or through the increase of leverage of the housing markets On Black Friday, Cash Is King.I don't know if this is true or not but few commentaries on the subject ever use the correct data. I just finished reading an academic study (which I cannot find at the moment) which refutes the entirety of this "meme". Hopefully, I will find it to post. 

(posted at 7:57 am by Mike Rulle)

Early signs are that there was ‘Surprisingly High’ Traffic at Stores on Black Friday . What if it turns out that the 4th Quarter is not as bad as first thought?  That would be good news. Would we still go through with these panic driven spending and guarantee programs? 

(posted at 7:40 am by Mike Rulle)

Man Killed in Wal-Mart Stampede  Crowds are almost an independent organism. It is as if the melding together of so many minds in so tight a space creates this creature. Anyone who has ever been caught in one of these phenomenon has had the feeling that the crowd itself is independent of themselves. Also, I really do not understand this 5:00 am Black Friday concept. Amazon is just a click away. 

(posted at 7:33 am by Mike Rulle)