Chronicle of the Conspiracy

REPUBLICANS AND THE POPULIST TEMPTATION

2010-02-08T21:40:00.002-05:00

My op-ed in Tuesday's Wall Street Journal:

The best stock market rally in 74 years may have ended on Jan. 19, the same day Republican Scott Brown won the Massachusetts U.S. Senate seat held by Democrats for 57 years. We don't know yet whether the alarming move down in stocks since then is simply a correction or something more serious. But the coincidence of these two history-making events raises troubling questions -- especially since a Republican resurgence, on the face of it, would seem to be good for business and good for stocks.

From the beginning of this historic rally of 73% over the 316 days since last March's market bottom, politics has been an important theme. That horrific bottom was reached after Democrats in Congress rammed through a $787 billion stimulus bill so quickly that no senator or representative could have possibly read all 1,073 pages of it. That hastily concocted porkfest should not be credited with turning stocks around. Rather, it should be blamed for the more than 18% loss that stocks suffered in the 24 days from the date of its enactment to the day of the March bottom.

The haste with which the stimulus bill was enacted made it seem certain that the cap-and-trade energy tax, unionization "card check," mortgage "cramdown" and health insurance nationalization would become law as soon as votes could be taken. It wasn't only the antigrowth implications of these initiatives that had investors terrified in March. It was the sheer recklessness with which they were being stuffed through the legislative pipeline under the Rahm Emanuel doctrine of never letting a good crisis go to waste. The crippling uncertainty of it all was making that good crisis worse.

Since then the historic stock market rally has tracked the demise, one by one, of all these initiatives, because investors could see that a political environment that had been far out of equilibrium was quickly finding its balance. Republicans stayed unified in their opposition, while in every case key Democrats lost their nerve. Since the stimulus, precisely nothing has been accomplished by the Obama administration or the Democratic Congress. The good crisis went to waste, and stocks soared.

Seemingly, the election of Scott Brown in Massachusetts should only be a continuation of that beneficent trend back toward political balance. At a stroke, it denied the Democrats their filibuster-proof Senate majority -- and opened up the real possibility of the Republicans taking control of one or both houses of Congress in November. Perhaps in 2011 a dream team, the same party configuration that proved so fruitful in the 1990s: Democratic president and GOP Congress.

So why did stocks collapse the moment the vote was tallied in Massachusetts?

It's because the immediate reaction to the Brown election -- in both parties -- has been a dangerous lurch toward antibusiness populism. The Obama administration's strategy has been to latch onto something that both parties can agree on: lynching Wall Street.

Just 24 hours after Mr. Brown's upset win, the White House let it be known that a radical plan to break up the largest banks, and to limit their size, was about to be announced. The next day the plan was revealed, and christened "the Volcker rule." What better way to lure Republicans onto a populist, antibank bandwagon than to associate it with the legendary Reagan-era figure?

Days later came the ordeal of Ben Bernanke's confirmation for a second term as Fed chair. Surely there are principled reasons for denying his confirmation, as there would be for any Fed chairman (they all have a way of being far from perfect). But it hardly seems possible that senators facing tough re-election challenges this year -- such as John McCain (R., Ariz.) and Barbara Boxer (D., Calif.) -- would just happen to discover those principled reasons in the hours immediately following the Brown election in Massachusetts.

More likely, they seem to have interpreted the fact that Mr. Brown wore a barn-jacket and drove a beat-up truck as indicating a voter preference for least-common-denominator populism. It's the low road to be sure, but desperate people do desperate things. And it might work. A recent NBC/Wall Street Journal poll showed that Americans with college degrees, and with more than $50,000 invested, supported Mr. Bernanke's confirmation. But those with only a high-school education, and with no money invested -- the classic populist audience -- opposed Mr. Bernanke's confirmation.

These developments have been profoundly destabilizing for stocks not because some version of the "Volcker rule" would necessarily destroy America's financial system, or because Ben Bernanke is utterly irreplaceable at the Fed. The crux of it is that it reveals a political process so dangerously narcissistic that it would use core institutions of the nation's economy as pawns in its own power struggles.

It's so dangerous because it potentially involves both parties, just when the Brown victory in Massachusetts holds out the hope of benign gridlock.

Don't think that Republicans can't be sucked in when an anti-Wall Street lynch mob gets its blood up. Recall that Sarbanes-Oxley, the devastating antigrowth response in 2002 to the Enron and WorldCom scandals, was passed with virtually unanimous support by Republicans in Congress, and signed by a Republican president. Recall that last year 85 House Republicans voted for a 90% tax on bonuses for any employee of any bank that took more than $5 billion in TARP money.

Investors got some good news last Friday. Stocks resisted following through on Thursday's sharp plunge after it was announced that the Senate Banking Committee's Democratic Chairman Chris Dodd and Republican ranking member Richard Shelby have reached an impasse on bank re-regulation. That's a nice downpayment on what investors need a lot more of now: proof that the GOP won't join Democrats in an anti-Wall Street race to the populist bottom.

THE SIMPLE ANSWER TO HEALTH INSURANCE REFORM

2010-02-08T09:25:00.002-05:00

Liberate insurers to sell across state lines! Natch, the Democrats' proposed "reform" makes this impossible. Insurance maven William Heasley explains.

CUOMO: CREDIT CRIMINAL

2010-02-08T09:15:00.001-05:00

Grandstanding New York attorney general Andrew Cuomo brings charges against Bank of America leaders. But the Wall Street Journal points out that he himself did so much more to blow up the economy in the recent credit crisis:

Before he pursued statewide office in New York, Andrew Cuomo was Secretary of Housing and Urban Development during Bill Clinton's second term. And lest you think his tenure is forgotten, the HUD Web site has an instructive item in its Archives section.
Entitled, "Highlights of HUD Accomplishments 1997-1999," the document chronicles the "accomplishments under the leadership of Secretary Andrew Cuomo, who took office in January 1997."
HUD's Web visitors learn that in 1999 "Secretary Cuomo established new Affordable Housing Goals requiring Fannie Mae and Freddie Mac�two government sponsored enterprises involved in housing finance�to buy $2.4 trillion in mortgages in the next 10 years. This will mean new affordable housing for about 28.1 million low- and moderate-income families. The historic action raised the required percentage of mortgage loans for low- and moderate-income families that the companies must buy from the current 42 percent of their total purchases to a new high of 50 percent�a 19 percent increase�in the year 2001."
It's a sign of Washington's continuing failure to examine its own failures that HUD still views such a policy as an "accomplishment." It's as if the Pentagon described Pearl Harbor as a victory.
We know that in the wake of Mr. Cuomo's agitation, Fannie and Freddie's purchases of subprime loans skyrocketed. Subprime and "liar" loans became loss leaders that eventually caused the two mortgage giants to fail�with taxpayers so far on the hook for $111 billion in losses and perhaps hundreds of billions more to come.
The problem wasn't merely that HUD under Mr. Cuomo was raising the volume of risky loans for which taxpayers were guaranteeing. HUD was also encouraging a dangerous decline in underwriting standards at these government-sponsored enterprises (GSEs). Says former Fannie Mae chief credit officer Edward Pinto, "HUD commissioned much research aimed at forcing the adoption of more flexible lending standards by the GSEs."
In 1999, the Urban Institute published a HUD-commissioned study of Fannie and Freddie's credit guidelines. Among its findings: "Almost all the informants said their opinion of the GSEs has changed for the better since both Fannie Mae and Freddie Mac made substantive alterations to their guidelines and developed new affordable loan products with more flexible underwriting guidelines."
Keep in mind that Mr. Cuomo was doing this Fan and Fred cheerleading even as his colleagues in the Clinton Treasury were publicly raising red flags about their too-rapid expansion. Had Larry Summers, who was then Treasury Secretary, and Republican Paul Ryan, prevailed in their reform attempts, Fan and Fred wouldn't have been able to pile up so much rotten debt and turbocharge the housing boom.
In 2008, Wayne Barrett wrote in detail in the Village Voice about the changes Mr. Cuomo also wrought at the Federal Housing Administration, encouraging bigger loans with smaller down payments.
Mr. Barrett wrote that Mr. Cuomo "made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis. He took actions that�in combination with many other factors�helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down . . . ."
Mr. Barrett summed up Mr. Cuomo's tenure in the Clinton cabinet by noting that "the country will be living with his HUD mistakes, ill- or well-intended, for a long time to come."

WHAT HAPPENS WHEN YOU DON'T SKIP THIRD GRADE

2010-02-05T13:41:00.004-05:00

I just love it when snotty liberal elitists embarrass themselves. Wait till you read this about our old nemesis Dean Baker. From Jim Glass at Scrivener:

The man writes...
More Failed Airthmetic [sic] at the WSJ
It's often said that everyone in Washington is so smart that they skipped directly from 2nd grade to 4th grade. This explains why so many people in top positions don't know third grade arithmetic.
The WSJ gave us another example of this lack of knowledge when it listed Medicare and Social Security as "the U.S.'s biggest budget busters." In fact, those of us who did sit through third grade know that Social Security actually is running an annual surplus. The amount of money it takes in each year on the designated Social Security tax and the interest it collects on its bonds exceeds what it pays out in benefits.
... Social Security is a money loser in the same way as IPOD is for Apple.
First, having looked at the offending WSJ piece -- always the responsible thing to do when one person is ranting about what another supposedly "said" -- we see something strange. The "failed arithmetic" Dean is ranting against is the Administration's, not the WSJ's. Here it is from the story...
Interest payments devour nearly one-tenth of federal revenues ... Spending on Social Security, Medicare and Medicaid consumes an additional 57%. The administration projects that those entitlement programs, as they are known, plus interest on the debt, will absorb 80% of all federal revenues by 2020.
So Dean seems really peeved that the Administration's arithmetic projects these as "budget busters" -- and the WSJ dared report it.
Moreover the year referenced is 2020, not today. Dean didn't notice?
And there are more strange things in this one little post:
..."those of us who did sit through third grade know that Social Security actually is running an annual surplus".
Well, no. Those of us who are alert to facts know that Social Security actually is incurring a shortfall right now. Back when Dean was in third grade they may have projected we'd be running a surplus today, but events have happened since then.

There's much more... read the whole wonderful thing!

ACRIMONY ABOUT ACRONYMS AND ADS

2010-02-04T23:54:00.003-05:00

My DC-insider friend "Mick Danger" muses about the California sentatorial race:

Let�s admit it�s fun to toss a few clever barbs at opponents. May I proceed?
Over at Daily Kos, they seem to have missed the memo that independent voters these days are attracted only to candidates who will deliver on their fiscal conservative promises once in office. On spending issues, you lie, you die.
Carly Fiorina can beat Barbara Boxer. She first needs to take out her Republican primary rival, Tom Campbell. She�s now running this ad.
Daily Kos calls the video �strikingly bizarre.�
Well, more like �strikingly effective� at inventing an acronym for Campbell -- FCINO, a Fiscal Conservative In Name Only � which puts him in a weak position on the biggest (maybe only) issue out there: government spending is completely out of control because incumbent politicians can�t say no. The only solution is to replace the incumbents. The voters are saying, �This time, no pretenders.�
OK, the ad also flubs its attempt to be artsy. Who cares, the message will break through. Like a bullet.
The Daily Kos piles on Carly�s Mad Men:
It's as if a very expensive Senate campaign for an incredibly wealthy woman in the biggest, richest state in the United States of America collectively dropped acid and decided to make an art school, prog rock "concept commercial." Tom Campbell's "pedestal" might be "so high," but not as high as Carlyfornia's new media team.
What�s the thinking behind the bombastic populist pie-throwing at this �incredibly wealthy woman�? Does the left still have that hangover from the �60�s, thinking the country wants to eat the rich? Not in this country. Here, the voters (increasingly, all but the leftists, die-hard liberals and celebrities) are positively starving for people who know how to manage money. Most voters don�t have any real money and that�s exactly why fiscal conservatism is so prevalent. The peeps are pissed at having to pick up the tab because Ted Stevens or Barbara Boxer has some cool new project.
Moreover, this ad by Carly sets a new record in the age-old battle of the sexes. It shows she knows how to manhandle her male opponent, Barack Obama.
Yes, indeed, I mean the President. Want proof? In this item on her campaign website, Carly attacks the President on the budget because it�s his power the voters want to check. Get very nervous, Barbara. Oops, I meant to use that title you�ve earned. The ones your colleagues use: Senator Bitch.
Was that use of the B word over the line? My bad, I guess I got a little Kos-tic.
Senator Boxer, Carly Fiorina will draw you out, wait for you to boil over and then she�ll pause, smile and talk to the voters.

Update... Jameson Campaigne writes,

Carly's campaign now being run by Mike Murphy and the stuff so far is classic Mike.
Not sure it is also Carly "stuff", but who cares if BB goes down?
I too thought it was a great ad. Ads are not supposed to be logical, to reason people into a p.o.v. Most ads would flunk sixth grade logic, if sixth grade logic, the basic fallacies were taught anywhere. They are impressionistic, aimed at the heart, the gut and the posterior ... only when absolutely necessary at the head.

NO Q? NO A!

2010-02-02T16:42:00.002-05:00

DC-insider "Mick Danger" thinks Obama might be afraid of a little friendly fire!

President Obama loves a stage, teleprompter and a crowd.
Questions? Depends upon who�s asking, I guess.
See this gem from today�s Politico:
Q&A WITH DEMOCRATS: President Obama will speak to Senate Democrats on Wednesday morning, and will take their questions as the cameras roll as he did with House Republicans on Friday, Majority Leader Harry Reid's office announced. But unlike at the rumble with the GOP, Obama is expected to take only a handful of questions.

Update... William Heasley commends our attention to this -- a website devoted to trinkets and trash commemorating TOTUS -- Readership You Can Believe In!

TAX-SIMPLIFICATION, OBAMA-STYLE

2010-02-01T01:25:00.001-05:00

Thanks to Dave Duval, via the Wine Commonsewer.

CAN SCOTT BROWN REALLY DESTROY ILLINOIS?

2010-02-01T01:15:00.002-05:00

My DC-insider friend "Mick Danger" admires the Massachusetts Cinderella. Who doesn't? But there seems to be a bit of a Brown-mania going on here...

Is Senator-elect Scott Brown really to blame for the big trouble with Illinois's budget? Someone asked this question of economist Don Marron:
A sharp reader offers the following hypothesis (which I have edited):
Illinois is fundamentally bankrupt. It has less than $1 million in cash, pays vendors net 90, and owes its state university $450 million that it cannot pay. Oh, and it also has $60 billion in unfunded pension liabilities.
Now that the Republicans have 41 votes in the Senate, Illinois can�t count on any federal aid. The President�s home state will thus become insolvent.
Marron (with all due respect) shows too much respect for a dull questioner and, instead, misses a chance to correct the poor soul. Excessive spending by the government of Illinois isn�t cured by a bailout from the Congress.
A quick check of the Scott Brown campaign website clears up any confusion:
I am a free enterprise advocate who believes that lower taxes can encourage economic growth. Raising taxes stifles growth, weakens the economy and puts more people out of work. Our economy works best when individuals have more of their income to spend, and businesses have money to invest and add jobs. I have been a fiscal watchdog in the state legislature fighting bigger government, higher taxes and wasteful spending.
OK, so who --- among many others -- was in Springfield, Illinois running up the spending?
From 1997 until 2004, among others, this guy was:
What trend is the �fault� of Scott Brown? Increased truck sales.
Welcome to Washington, Mr. Brown.

DOES ANYONE KNOW...

2010-01-31T18:16:00.001-05:00

...or at this point does anyone care -- what this blurb could possibly mean, describing the latest column of New York Times "public editor" Clark Hoyt?

Secondhand Sources
By CLARK HOYT
The Times avoided relying on someone else�s anonymous sources in reporting on a book written in a way that the paper�s standards would not permit.

THE SOLUTION TO THE HEALTH CARE "CRISIS"

2010-01-31T18:10:00.001-05:00

We have it already. It's already beginning to work. And Obamacare destroys it. Insurance master-maven Jim Heasley has all the details.

THE MORE STIMULUS FAILS, THE MORE STIMULUS COSTS

2010-01-28T10:40:00.002-05:00

Yep. That's the way incentives work in Washington. From our more conservative friends on the House Ways and Means Committee:

Democrats promised their 2009 stimulus law would get people back to work and jumpstart the economy. A look at the facts, however, tells a different story. As we approach the one-year anniversary of passage of the stimulus bill 49 out of 50 states have actually LOST jobs.
On January 26, 2010, the Congressional Budget Office revealed that this failure to create jobs has raised the law�s price tag from the original $787 billion to $862 billion � an increase of $75 billion.
The reason? Higher than expected unemployment and greater payouts of unemployment benefits, among other causes.
January 26, 2010 Congressional Budget Office Analysis:
* �When ARRA was being considered, the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) estimated that it would increase budget deficits by a total of $787 billion between fiscal years 2009 and 2019.� (page 95)
* �CBO�s current projection of ARRA�s budgetary impact over the 2009�2019 period�a total increase in deficits of $862 billion�is about $75 billion greater than the agency originally estimated.� (page 98)
* "Although total spending from ARRA in 2009 was roughly in line with CBO�s estimate, the cost of some individual components varied from the amounts initially anticipated. Most significantly, outlays for additional unemployment compensation were about $10 billion higher than CBO originally estimated, because the unemployment rate was higher than anticipated and people continued to collect benefits for a longer period of time.� (page 97)

LYING LITTLE DIRTBAG

2010-01-28T01:45:00.002-05:00

Sorry. That's very harsh. Let me rephrase that. "Lying dirtbag." There. That's better.

From Big Journalism:

Former Obama economic advisor, Clinton Secretary of Labor, and Berkely Prof. Robert Reich claimed yesterday in his column at Salon.com that Fox News played a role in the conservative resurgence of 1994:
In December 1994, Bill Clinton proposed a so-called middle-class bill of rights including more tax credits for families with children, expanded retirement accounts, and tax-deductible college tuition. Clinton had lost his battle for healthcare reform. Even worse, by that time the Dems had lost the House and Senate. Washington was riding a huge anti-incumbent wave. Right-wing populists were the ascendancy, with Newt Gingrich and Fox News leading the charge. Bill Clinton thought it desperately important to assure Americans he was on their side.
But Prof. Reich overlooked one minor detail: Fox News Channel�s first broadcast wasn�t until October 7, 1996.
The plan for FNC wasn�t even outlined until January of 1996, so what could explain such a patently false claim? Is the professor suggesting that even in 1994, Fox News� imminence did in fact play a role in the political upheaval of that year?
Or is this a moment where Fox Derangement Syndrome enters the realm of full-blown paranoia?
Either way, where was Salon on this one to save Reich from himself? And would Prof. Reich tolerate fact-checking this poor from his college students?

Thanks to Jameson Campaigne.

Update... More from Big Journo:

Salon corrected the mistake. Reich�s article was cross-posted at Huffington Post (yet to be corrected) and at RobertReich.org, where the professor took out the error and replaced it with a dig at Fox News.

MICK CROWS

2010-01-26T19:58:00.004-05:00

An update from "Mick Danger":

Of course, readers of your blog would have known much of this already via Mick�s post on David Brooks's ramblings on the �educated class,� and his crystal ball readings the day before the Massachusetts Senate election.
Michael Barone writes up the same stuff beautifully a week later, and proves it carefully with data.
Bottom line: The Democratic candidate held �the educated class� corridor, but failed to generate good turnout or high percentages in the factory and mill towns. The other corridors swung heavily to the Republican candidate. Under Barack Obama, who has chosen to live all his adult life in university neighborhoods, the Democratic Party has been reduced, at least in Massachusetts and in this special election, to �the educated class��and not much else.

KUDLOW REPLAY

2010-01-26T09:54:00.001-05:00

Here's the YouTube video of a few words in edgewise -- always hard to stop a lynch mob.

BLOGS WITH A UNION LABEL

2010-01-26T09:50:00.002-05:00

From my DC-insider friend "Mick Danger":

From the heady, Obama-crazy days of last year:
Green jobs [yes, this labor blog used the color red for "green jobs"] can be a pathway to middle class for millions of Americans, but only if we ensure they come with good wages and benefits, union and environmental leaders told a White House panel. Speaking to the first meeting of Vice President Biden�s Middle Class Task Force in Philadelphia today, United Steelworkers (USW) President Leo Gerard said any new green jobs also must be good jobs.
The head of the steelworkers union � guys who use fire and carbon to make steel � wants more �green jobs�? All makes sense when you translate that phrase �any new green jobs also must be good jobs� as �jobs obliged by law to pay a monthly vig to Leo.�
Looks like Leo is banking on these new green union dues to eventually replace those from his steelworkers. Wonder if he brings that little scheme up with the hardhats?
That was last year. What�s new?
No green jobs, good or not, as oil and natural gas prices aren�t sky high, Cap and Trade flopped, Waxman & Markey couldn�t buy a vowel in the Senate, and the only jobs created by the DOE green energy spending spree are...new DOE employees, an agency with a different union.
So...what says that same Labor Blog today? Blah, Blah, Blah.
As Mark Steyn would say, where did all the �hopey-changey � go?

BETTING ON BERNANKE

2010-01-25T17:38:00.002-05:00

I'm quoted on the CBS MoneyWatch blog:

At around 4 p.m. Monday, the price of a $10 contract [on Intrade] in favor of the Chairman [Bernanke being confirmed as Fed chair] traded at 93. Taking such a bet you would buy in at $9.30, and in the event of BBII, you'd collect $10 from InTrade, less commissions.
I've never looked at InTrade before, but among the many political outcomes you could wager on, this one seems to be the most one-sided. That is, the weight of money is on Ben.
One who seems to be is Donald Luskin, an accomplished investor and trader, and today chief investment officer of Trend Macrolytics, a research firm for institutional investors. On the InTrade web site, Mr. Luskin gets credit for thinking up the Bernanke contract, back in August when President Obama first made his renomination.
In a phone call Monday, Mr. Luskin told me:
These so-called �prediction markets' are really accurate. They get a first call on things that other means of prediction, such as opinion surveys, don't get. They were all over Scott Brown [last week's Massachusetts upset winner in the U.S. Senate], and a while ago they were even right on the new pope.
These are great little laboratories that show how markets work. The person that knows the most will make the largest bet, and influence the market the most. In a simple opinion poll, any idiot can shoot his mouth off about he wants, rather than what he really predicts,and doesn't have to be right or wrong.
So I take it on face value that there's a 93 percent chance that Bernanke will be renominated.

KUDLOW REPLAY

2010-01-23T00:29:00.002-05:00

Here's the YouTube video of last night's appearance... from "out there"...

THE YEAR IS 1947...

2010-01-22T18:17:00.001-05:00

Some of you will recall that on July 8, 1947, a little over 60 years ago, witnesses claim that an unidentified flying object (UFO) with five aliens aboard crashed onto a sheep and mule ranch just outside Roswell, New Mexico. This is a well known incident that many say has long been covered up by the U.S. Air Force and other federal agencies and organizations.

However, what you may NOT know is that in the month of April 1948, nine months after that historic day, the following people were born:

Albert A. Gore, Jr.
Hillary Rodham
John F. Kerry
William J. Clinton
Howard Dean
Nancy Pelosi
Dianne Feinstein
Charles E. Schumer
Barbara Boxer

See what happens when aliens breed with sheep and jackasses?

Thanks to Ken Prevo.

A MASS GRAVE FOR TWO

2010-01-22T12:45:00.000-05:00

IT'S REALLY JUST THIS SIMPLE

2010-01-21T09:13:00.003-05:00

From my DC-insider friend "Mick Danger":

This just in... the New York Times agrees to a voluntary commitment for its entire editorial staff, checking into the Massachusetts Home for the Permanently Bewildered.
Their confession was posted today on their opinion page:
To our minds, it is not remotely a verdict on Mr. Obama�s presidency, nor does it amount to a national referendum on health care reform � even though it has upended the effort to pass a reform bill, which Mr. Obama made the centerpiece of his first year.
Scott Brown gave himself the nickname �41� indicating his desire to block Obama�s health care bill in the Senate. He didn�t hide from it, he ran on it. Everyone, except the NYT-wits, seems to know this.
Does any other NY newspaper get it? Why, yes.
The Village Voice sums it up well:
Scott Brown Wins Mass. Race, Giving GOP 41-59 Majority in the Senate

KUDLOW REPLAY

2010-01-19T21:57:00.002-05:00

Here's the YouTube video of tonight's appearance. Let's see who's right about the stock market's reaction to the Scott Brown win, me or Cramer.

Update [1/20/2010]... This is exactly what I was talking about in the replay, when I said I feared the worst in Republican populism. I mention the word "protectionism," and this crazy hate-mail appears this morning:

I heard you say that trade barriers, "tariffs" and such, are a really bad thing on Kudlow yesterday (01-19-10). You disgust me! Article I., Sec. 8., Cl. 1., "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States(.)" Who are you and those like you kidding. You are robbing the United States. I allege that you and other free traders conspire to operate a Ponzi scheme against the United States and call it free trade. Literally trading away our wealth in exchange for debt. Making profits off our accumulation of debt. That is not the worst of it. This system only works, allegedly, because the Fed is backing up the Ponzi scheme with unlimited amounts of counterfeit money and debt creation. The Constitution does not permit any of this. Art. I., Sec. 8., Cl. 6.
So far you have gotten away with it. But time is running out. The people are waking up to what people like you have been doing to the country and they will seek justice for what you and people like you have done to the United States. To be sure you, I allege, are a conspirator. The big cheeses made it possible for the little cheeses like you to make money robbing the American people. Next time you get into a car with folks on their way to commit crimes, think twice before going along. This is the first or second lesson my dad ever taught me. YOUR RIDE IS JUST ABOUT OVER! You and your kind, the wheeler-dealers with American wealth, go beyond the pale of decency and lawful conduct.
Go to http://speechcommon.net/wordpress to see why I would say what I have said and what follows--to put my words into context. Our nation is failing and people like you made it happen. Can it be saved? Probably not without putting people like you in jail at some point.
You and I suspect "the Club for Growth" crowd have destroyed the United States of America. WHERE'S THE GROWTH??? I SEE THE MOUNTING DEBT!!!
But for a miracle, that would be so morally and physically compelling that hundreds of people like you might wind up in jail, some charged with treason, the evidence for this is mounting with every passing day, war crimes trials follow massive harm done to a large number of people, the United States will fall. That is where this nation is headed thanks to people like you. I don't offer advice. People should have enough sense to be more cautious about advocating free trade "when a criminal conspiracy clearly, allegedly, underlies it." This E-mail comes from someone who actually knows what he is talking about or, at least, in any event, is not actively engaged in treasonous activity.
This nation has been taken over by Big banks doing the dirty work for a global arisitocracy that has overthrown the Constitution and legitimate government. As far as I am concerned you have no qualms about lending "aid and comfort" to the activities of such persons by advocating foreign investment in China at the peril of the United States and American people. Spies make money selling secrets. You are making money or trying to selling out our national economic order: its technology and manufacturing base. YOU HAVE NO RIGHT TO ADVANCE THE STATE OF THE CHINESE ECONOMY OVER THAT OF THE U.S. ECONOMY as is currently being done, nor, I believe, to advocate such activity as a player in the field. That a crony capitalist government, some of whose leaders have walked way out on a limb themselves, has facilitated your activity in this arena, to the extent you are engaged in financing the Communist Regime in China, with your actions and investments, is your concern not mine.
I did not say that I have knowledge that you have supplied money to the Communist Chinese government through foreign direct or other investment in China. You have or your haven't. What I do know is that you lend aid and comfort to those who do by advocating that the United States should be sold out for pennies on the dollar to foreign interests hostile to the United States, like China, by not protecting ourselves with reasonable weapons of national interest in foreign trade arena when those weapons are necessary to maintain the standard of living of Americans and the power of the United States. If you cannot make an honest living don't ask me to worry about you.
There are some people who laugh at the truth if they cannot put it in a bottle and seal it there. You might even get upset that anyone would challenge your business activities or speech; that I consider hostile to the United States and the American people. I really don't care what you think. Just be thankful that I am unable to prosecute a citizens arrest for what I believe you are doing!
One more thing. You have no idea what kind of social science is coming. I do. I will be leading the charge!
A copy of this E-mail is going to the Federal Crisis Inquiry Commission. I have been writing them. [A second Cc: to Kudlow.]
Ervin Kreutter
Xophe LLC

FAMA ON KRUGMAN

2010-01-18T13:43:00.002-05:00

From an interview with the New Yorker, here's Gene Fama, the great economist who, in a rational world, would have already won the Nobel Prize, instead of poseur hack Paul Krugman.

So you don�t accept the view, which Paul Krugman, Larry Summers, and others have put forward, that what has happened represents a rehabilitation of government action�that the government prevented a catastrophe?
Krugman wants to be the czar of the world. There are no economists that he likes. (Laughs)
And Larry Summers?
What other position could he take and still have a job? And he likes the job.
...Thanks very much. Finally, before I go, what about Paul Krugman�s recent piece in the New York Times Magazine, in which he attacked Chicago economics and the efficient markets hypothesis. What did you think of it?
(Laughs) My attitude is this: if you are getting attacked by Krugman, you must be doing something right.

Thanks to reader Tom Scott.

"MICK" HAS A MASSACHUSSETTS CRYSTAL BALL

2010-01-18T13:35:00.002-05:00

Here's what DC-insider "Mick Danger" sees:

Despite the fact that Bostonians love to call their town �the Hub,� to most Americans, it�s hardly the center of attention. More like a forgotten snow tire than a hub. See this headline from today�s Boston Globe: Pulling out all the stops
Obama, in Hub, says he needs Coakley; Brown swipes at �machine politicians�
Every politician in America, not just The O, is paying attention to Massachusetts these days. So, let ole Mick tell you what he sees:
* So many people turned out to a Scott Brown rally that police had to close the streets.
* President Obama headlined a rally in Boston for Martha Coakley and drew 1500. You are the President of the United States, you have every union on red alert and the single best Democratic party grassroots activist � nicknamed �the Wizard� � lives in Boston. You�re on a college campus with an enrollment of 15,585. You only draw 1500? The NU Chess Club could probably draw 1500.
* The Boston Globe reports: �Obama also cast the Massachusetts election in stark terms regarding the future of the Democratic agenda, including the health care reform plan, which Coakley supports and Brown does not.� Umm, Mr. President, I think they know that and that�s why Brown is doing so well.
* Brown had help drawing that spillover crowd in Worchester as his rally had some real �A-List� stars such as the Red Sox champion pitcher Curt Shilling (whom Martha Coakley misidentified as a Yankees fan) and Boston College legendary quarterback Doug Flutie. Sports heroes in Massachusetts are like movie stars in Hollywood. If you can�t turn out the A list, don�t bother. If you can, you start looking A list yourself.
* Polls are said to be all over the place. Well, true, but let�s look closely at the latest one by the Public Policy Polling which says: �Scott Brown leads Martha Coakley 51-46 in Public Policy Polling�s final survey of the Massachusetts Senate special election, an advantage within the poll�s margin of error.�
* Democrats will hang onto that �margin of error� as a lifeline of hope. Trouble is that this very PPP poll oversamples Democrats as the poll�s sample of 1,231 likely voters was 44% independents and 39% Democrats. Independents are over 50% of likely voters in Massachusetts and headed higher.
* Any other polls out there with a higher percentage of independents? Yeah, try this one with 48% independents. It shows Brown with a lead of 9.6%:
* Last word to the real money bettors at Intrade: 63 to 36 Brown.
Say goodnight, Martha.

HERE'S WHY OBAMA'S POPULARITY IN THE POLLS IN PLUNGING

2010-01-17T20:17:00.001-05:00

While he and the Dems fiddle with health care "reform," this license plate seen by reader Jim Kaminecki in Wisconsin tells you what's really relevant for voters.

MORE ON RAND, GOD, BOWYER AND ALL THAT

2010-01-15T05:50:00.004-05:00

I keep getting letters about my confrontation with Jerry Bowyer several weeks ago on the Kudlow show concerning Ayn Rand, and Bowyer's silly belief that capitalism can only be justified by making recourse to religious beliefs. Here's a particularly thoughtful one from Shawn Hansen:

As usual you were on topic, rational and presented very convincing arguments. I am surprised at Bowyer's behavior. I can't think of too much that I have disagreed with him on in the past (with my surface level knowledge of economics and finance) but the overly combative style, and the contention that he was answering your questions when at some points he clearly was not, made him look like a politician. I happen to agree with the idea that a higher power was behind the creation and success of this country. I don't require my neighbor to hold my beliefs. And when I questioned a very religious financial industry friend of mine about something that Ayn Rand wrote he told me I was in danger of getting onto his commie list (joking) and that he doesn't go to Ayn Rand for spiritual knowledge, he reads her because she is one of greatest defenders of capitalism and rational self-interest, without which we have tyranny. Not much freedom of religion under tyranny.
I was actually surprised to hear that you are an Atheist. I wouldn't have guessed that. I have deduced that you are a libertarian as opposed to a conservative. That's what I think may be the case anyway. You strike me as a very decent, honest, moral person that cares about his fellow man and American liberty and capitalism. I can see that it bothers you, and you correct the record where you can, when people blow their own horn and give out faulty or uninformed financial advise. Also, you should receive this nation's highest award for your work exposing Krugman for the fraud, ignoramus, and political hack that he is.
This is coming from a guy who grew up in Sebastopol, Sonoma County, as a pretty far(out) lefty Atheist. I have moved all the way to staunch conservative, supply-side, baptised Christian (LDS). I have never known so much peace and what I believe to be light and truth.That being said, I do not like to see anything that can be painted as "kooky religious right". Kooky religious right gets you a man hooked on releasing people that should be in prison. (Huckabee) Now there are 9 children who lost a parent because someone professed to have "found Jesus". All I hear from you has the ring of truth. When I listen to him I hear lies.
I hold you in very high regard, whatever your religious beliefs. I have learned a lot from you. I learned a lesson from you when I sent out an email regarding mark-to-market accounting rules on info I learned from Wesbury and Steve Forbes only to find out later from you that maybe it wasn't that simple. I can't argue with you on that, still confused about where my position is on it though. Maybe that brings out the combative debates. One has to get up pretty early in the morning to present a position counter to yours on national television. You clearly do your homework and have mastered your discipline. Your responses are immediate, clear, and concise. It irritated and disappointed me that Boyer hogged the airtime. That's what the liberal idiots do, not the adults.
Something else I learned from you was to avoid "dogmatic adherence to a set of simplistic ideas which he repeats with the tone of great authority and knowledge. The real world is subtle and complex, and simplistic ideas never lead you to the right conclusion except by luck. He got lucky this time." I could apply that to myself at times. I am sufficiently cognizant of shades of gray, but I prefer to mold many of my views closer to black and white. Does that make me shallow? But isn't Atheism a fairly black and white way of looking at the world. If it can't be empirically proven to me, how can I believe it? So does my instinct and what I perceive to be super compelling evidence all around me telling me that there is a creator working through methods (possibly including a form of evolution) not necessarily known or even knowable to me make me someone aware of the subtleties and complexities of reality?
Truth be told, in the best of all possible worlds, concerning monetary and fiscal policy, Luskin, Wesbury, Kudlow, and Forbes would always agree and always be right. I have a feeling you would differ with me on that. I like your pragmatic and, esoteric if I may, analysis, but I also like what I see as the informed optimism of Kudlow, Wesbury, and Forbes. I have to say that it is a lot more enlightening to watch supply-siders debate than to have to listen to mindless drivel, psychobabble, poisoned crybaby ideology, and outright lies from the likes of Krugman, Reich, and Quentin Hardy. I do respect your insight and analysis. Poorandstupid.com and Trendmacrolytics.com are with Drudge on my daily reading list. Thank you for all that you do.