When Even the Good News is Bad News

Sundays are usually slow news days, when we show up at the West Douglas Church of Christ across the Arkansas River in the rough Delano district to hear the two-millennium-old good news of the gospel, but yesterday it was hard to avoid the more recent bad news abut the coronavirus pandemic that seems to spreading exponentially and has pretty much every person on the planet freaking out. Attendance at our small and aging congregation was down, and when we awoke from our usual post-church nap we saw that the Federal Reserve Board had lowered interest rates all the way down to zero.
That’s good news, we suppose, as it signals to the suddenly bearish stock markets that the federal government is doing everything it can to sustain the economy, including quantitative easing of freshly printed money and another trillion dollar or so of deficit spending and other governmental actions that used to offend Republican free market sensibilities. The bad news is that by doing so they acknowledge such extreme measures are now necessary, as people all over the world are starting to think we’re all going to die, which of course is very bad for most businesses.
We have no idea what the stock markets will do today, and we’d be far too rich to be writing at an obscure internet publication if we did, but as we write this the future markets that keep going overnight and through weekends are seeing the zero interest rate announcement as a glass half full and are again deep in the red. Given what we’ve seen over the weekend here in Wichita, where the coronavirus is currently taking up just one hospital bed, we can well understand the pessimism.
Around 8 p.m. on Friday we dropped in on the nearest Dillons’ grocery store, which is the Kroger-owned chain where most Wichitans buy their groceries, and even at that usually late hour the place was packed with customers, all of whom had carts stacked chest-high with at least a month’s supply of meat and beans and frozen food and toilet paper and whatever else they considered essential. It took us longer than usual to pay for our meager single guy’s day-to-day purchases that fit in a small hand-held basket, and the woman at the cash register apologized for the wait, but we told her we’d seen how hard she working and very much appreciated the effort, and we wished her well. For now business is good at Dillons’, but if things work out for the best they’ll wind up selling the same amount of goods over the long run, as people deplete their hoards, and if it doesn’t we’ll probably all be dead.
We also dropped in on the notorious dive bar called Kirby’s Beer Store over the weekend, where business was also down. Kirby’s usually thrives on wizened customers from the across-the-street Wichita State University in the afternoon and the more youthful music lovers who crave its eclectic offerings in the evening, but WSU is extending spring break and offering only on-line classes due the coronavirus, and the bands who were booked on their way to Austin’s big and recently cancelled South-By-Southwest Festival are now cancelling their engagements. There were a few hardy daredevils among the regulars who ventured out to have a beer with us, and we had a good time with them, but we couldn’t avoid the topic of the coronavirus.
Sunday was supposed to be the day when the National Collegiate Athletic Conference announced the field for its basketball championship, which might or might not have included WSU’s Wheatshockers and most certainly would have had the University of Kansas’ Jayhawks as a top seed, but all of “March Madness” was cancelled due to mania about the coronavirus. The National Basketball Association and the National Hockey League and Major League Baseball an golf’s prestigious Masters Tournament have also been postponed or cancelled, and we figure the economic fallout from just that sector of the American economy is enough to send the stock markets into bear territory. Throw in all the economic fallout hitting all of sorts of large and small businesses all around the world, and we can’t advise anyone not to panic.
We’ll stay cool, though, as we’ve thus far survived an appendectomy and several global pandemics and numerous recessions and an F-4 tornado that ran right over us, as well as our many vices, and we maintain an irrational but unshakeable in faith our invincibility. We’re not so sure about the rest of you, but we wish you the best. We can’t look to either of the political parties for salvation, but if worse comes to worst we’ll be counting on the good news that’s still being preached to the dwindling congregation at the West Douglas Church of Christ.

— Bud Norman

One Weird Trick

We seem to be living in the age of the one weird trick. The phrase is now frequently encountered in advertisements, which promise one weird trick that will do almost everything from reducing belly fat to increasing penis size to providing a steady income stream, while the concept seems to be popping up everywhere.
The one weird trick for reviving an ailing economy, for instance, has been to print gazillions of additional dollars. This is called “quantitative easing” in the modern parlance, but it is an old weird trick that has been frequently attempted over the years. It didn’t work out well for the Weimar Republic or Zimbabwe or countless other countries inclined to such weird tricks, but this time around it is credited with keeping America from sliding into third-world poverty and the earth from hurtling into the sun. Future historians will adjudge these claims better than we can, but it already seems clear that after more than five years of unprecedented money-printing the program has worked well enough that for the time being the Federal Reserve will slow down to pumping a mere $65 billion of bond purchases into the economy every month. This one weird trick is called “tapering,” and is prompted by the fact that enough Americans have at last given up any hope of finding a job to reduce the unemployment rate to below 7 percent, which is the one weird trick the government uses to make the economy look rosy.
The stock markets are supposed to be reassured by the optimistic rationale behind the tapering, but thus far investors seemed more concerned about the suddenly missing billions of newly-printed money that wouldn’t have had anywhere to go in a zero-interest environment other than the irrationally exuberant stock markets. Aside from the phony baloney unemployment numbers the stock markets’ recent unaccountable record highs were the only reasons for the Fed’s optimism, so a steep dive in stock values might cause a perception or a slumping economy which leads inevitably to the reality of a slumping economy and thus forces a return to the quantitative easing that created the perception of a booming economy, so there might be hope for your 401-K yet. The one weird trick then becomes even weirder, and thus all the more brilliant.
Anyone who contemplated economics back in the days of Ronald Reagan or Calvin Coolidge or Adam Smith would probably prefer unleashing the entrepreneurial energies of a free people from the heavy hand of taxation and government regulation and subsidization of sloth, in which case they would almost certainly find the current supply of dollars quite sufficient to meet demand, and they might have a point. We would be tempted to use weird tricks to flatten our bellies and swell our endowments and thereby earn a steady income stream in the gigolo trade, thus contributing a far greater share to the gross domestic product, and there’s no telling what weird tricks more imaginative and industrious fellows might come up with, but apparently free market capitalism is a bit too weird a trick in a the age of the one weird trick.
That “one weird trick” catchphrase always seemed a strange marketing ploy, as “weird” had previously implied a troublesome sort of strangeness and “trick” had negative connotations in almost every sense of the word. Tricks are what cheesy nightclub magicians do to make an audience think they’re witnessing something extraordinary, or what prostitutes do with their clients, or what the devious pull on the trusting and gullible. In its most modern incarnation the word seems to hold out the promise of a short-cut to success that doesn’t entail hard work or actual accomplishment. We’re still trying to figure out what weird trick Justin Beiber used to become famous, or Barack Obama used to be elected and re-elected, or how we arrived at this age of the one weird trick, but we are not happy to be here or at all confident that it is a sound economic policy.

— Bud Norman

Yes, Wall Street, There is a Santa Claus

“Santa Claus rally” is a stock market slang term that the highly-caffeinated fellows on Wall Street like to throw around this time of year, but the jolly bearded fat man who delivered Wednesday’s big gains was Ben Bernanke.
The out-going Federal Reserve Chairman has been very generous to the stock markets during his long reign, having printed up so many billions of dollars of that had nowhere to go in a zero-interest economy but Wall Street, and his parting gift was an announcement that the printing presses will now slow a bit. This might seem at first glance a veritable lump of coal to investors who have become addicted to the Fed’s unprecedented “quantitative easing,” but the stock market responded by pushing the Dow Jones Industrial Average up an impressive 293 points to a new record close.
Most of the media, who occasionally take time out from bashing those greedy Wall Street fat cats to tout their obscene profits as proof of a roaring economy, at least when there’s a Democrat in the White House, saw the gains as a reason to declare that happy days are here again. The Fed is “tapering” its money-printing because of recent encouraging economic data, the media helpfully explain, and the markets are now responding to same hopeful signs of growth. This beats writing stories about the record number of workers who remain out of the labor force, and there might even be some truth to it, but the good news seems wildly overstated.
Although the Fed will cut back on its bond purchases by $10 billion a month, it still believes that the economy is wobbly enough to require a $75 billion monthly infusion of freshly-printed cash. This is still a huge amount of monthly money even by Washington standards, and the more likely explanation for Wednesday’s big jump was the market’s relief that it will likely keep coming when incoming Fed Chairwoman Janet Yellen takes over. A 7 percent unemployment rate and the best year for housing starts since the immediate aftermath of the catastrophic popping of the last housing bubble might be good news by recent standards, but it’s hardly a reason for the record highs on the stock market.

— Bud Norman

The Good News is Killing Us

On Wednesday the experts at the Federal Reserve once again reported that the  economy is not at all well, something plainly obvious to all the non-experts who have given up all hope of finding a job, and the stock markets celebrated with yet another record-setting close. In the convoluted world we now live in, bad news is good news.
The bad news that the economy is sputtering and will likely continue to do so is good news for the stock markets, because it means that the Fed will continue to flood the economy with newly-printed dollars that have nowhere to go in our low-interest world except Wall Street. That record number of former workers now resigned to long-term idleness is good news, too, as they’re no longer counted among the unemployed and thus unemployment rate is falling. Should the bad news ever get so good that economy comes grinding to a complete halt that will also be good news, as America’s carbon emissions will also come to an end and we’ll all be saved from global warming, although the stock market might see that differently no matter how many dollars are printed onto recycled paper.
Those of a more glum disposition might think that the good news about an over-inflated stock market is actually bad news, or will be when the Fed is at long last forced by economic reality to stop printing money and the bubble is inevitably popped, and that a 7.3 percent unemployment rate is insufficient compensation for the lowest work force participation rate in decades, but that is why they aren’t editors or producers at the big news media outlets. The cheerier sorts of people who do get those jobs are content to report a record closing at the stock market and a declining unemployment, then move on quickly to the latest murder spree or celebrity divorce. Much of the public is therefore unaware of what the Federal Reserve is or what it’s been up to or what the consequences might ultimately be, and we’ve doubt they’re cheerier yet.
Many of the public officials who have to worry about this stuff as a requirement of their jobs are more concerned with other matters, judging by the debate about who will be the new boss at the Fed. Current Chairman Ben Bernanke is coming to the end of legally-limited term, during which he has been so obliging to the stock markets, and some of the Senators who will be voting on his successor seem more interested in the applicants’ race and gender than their monetary theories. President Barack Obama had hoped to appoint former Treasury Secretary, White House economic advisor, president of Harvard, and lifelong white male Larry Summers to the post, but so many Democrats objected to Summers’ past friendliness to business and his white maleness that he politely declined to be considered.
One of the leading foes was Sen. Elizabeth Warren of Massachusetts, the fake Indian and bona-fide left-wing nutcase, who was serving on the Harvard faculty during Summers’ presidency there and apparently developed a personal dislike for him. Much has been made about Obama’s inability to get a high-level appointment past his own party, with some seeing it as another encouraging indication of his weakened political standing, but even the shrewdest politician would find it difficult to placate a personally offended Ivy League professor.
There are good reasons that Larry Summers shouldn’t be the Fed chairman, but his whiteness, maleness, and insufficient anti-capitalism are not among them. The poor fellow has a strange record of being fired for the wrong reasons, though, and was pushed out of his post at Harvard by the likes of Warren not because he had badly mismanaged the school’s finances but because he quite reasonably stated that the Harvard math faculty was mostly male for reasons other than sexism. This is how positions of responsibility are now filled and vacated, though, and it looks likely the next several years of monetary policy will be determined by the same sort of silly identity politics.
The two most likely candidates are now Janet Yellen, currently a vice chairman of the Fed but invariably described as someone “who could become the Fed’s first woman chairman,” and Roger Ferguson, a former Obama advisor who is invariably described as someone “who could become the Fed’s first black chairman.” There are no doubt good reasons that either should Fed chairman, even if that “former Obama advisor” line on Ferguson’s resume is distressing, but their femaleness are blackness are not relevant qualifications any more than another candidate’s maleness or whiteness would be. Any applicant who is invariably described as “most likely to keep the foot on the pedal even after the car has gone flying over the cliff” would be the clear frontrunner for the gig, and you’ll want to be in the market on the day that good news is announced.

— Bud Norman

The Cloud in the Silver Lining

Federal Reserve Chairman Ben Bernanke offered an upbeat assessment of the economy on Wednesday, and of course the stock markets immediately took a dive. So convoluted is the American economic system that bad news such as the latest jobs report will prompt a stock market rally, while any talk of good news such as the Fed is now peddling will as surely cause a sell-off. Should the country somehow ever again achieve robust growth and anything close to full employment it will surely be the ruination of the economy.
Although counter-intuitive, the stock market’s recent tendencies are easily explained. After the crash of ’08 the Fed started churning out dollars at unprecedented rate, and with interest rates and bond yields being held artificially low those dollars had nowhere to but the stock markets, which have since expanded at a noticeably faster pace than the overall economy. Anything that would ordinarily be considered good economic news will tempt the Fed to take its foot off the metaphorical pedal, which makes it bad news for those invested in stocks.
Investors might find reason to keep buying if the economic news is good enough, but what Bernanke was touting on Wednesday was just good enough to be bad news. The Fed raised its forecast for economic growth to 3 to 3.5 percent in the next year, reduced its outlook for unemployment to 6.5 percent, and although Bernanke left himself ample wiggle room he made it quite clear that such statistics would justify at least a slow-down in the pace of money-printing. Those statistics aren’t good enough to justify a Dow Jones at 15,000, though, and private forecasters think they’re suspiciously rosy anyway, and with Europe in recession and China rapidly slowing and Obamacare offering massive incentives for employers to hire no one for more than 29 hours a week there is plenty of reason to suspect things are going to get worse rather than better. If a precipitous drop in the stock markets occurs, the worry that caused it could easily become self-fulfilling.
All that dollar-printing must eventually come to an end, lest people start using the things to paper their walls, and it is most unlikely that the stock markets can maintain their historic highs while the economy catches up to it, and it is altogether impossible that the government will cease its ever-increasing meddling, so considerable economic turbulence seems likely in the coming months. This should be good for stocks, though, and perhaps we should just have that this somehow makes sense.

— Bud Norman

And the Living Is Easy

There is no news on Memorial Day, a strict rule of journalism that most newsmakers gladly obey, and in any case all sensible people ignore whatever does happen out there in the rest of in world. The stock markets are closed, the bureaucrats are barbecuing in their well-tended backyards instead of issuing new regulations or scary statistics, the right-wing ranters on talk radio are running repeats, the editorial pages are devoted to solemn sermonizing about the fallen heroes of long ago, and the troubles of the present are momentarily forgotten.
We spent much of the day listening to old Chuck Berry records, an appropriately apolitical way of rockin’ and rollin’ into the summer, but could not resist some stubborn instinct to glance at the headlines. At the Drudge Report the big story was about Sen. John McCain, who can not resist a stubborn instinct to make headlines even on Memorial Day, traveling to meet with the unsavory Islamist rebels fighting the equally unsavory Assad regime in Syria. The reports were a depressing reminder of what a disaster a McCain presidency would have been, and that the only reason we don’t regret having voted for him is that the alternative proved even worse, as well as the unsettling fact that there are no good options left in Syria. Another story that caught our eye was about a planned Hollywood movie depicting Hillary Clinton’s heroic role in the Watergate hearings, with the famously luscious actress Scarlet Johansson playing the lead role, but that was also too depressing to read.
Memorial Day marks the beginning of summer, which is supposed to be the slow news time of year, but expect no respite from events. The slow trickle of revelations about the various scandals will continue through coming months, no matter how much the media would prefer to ignore it, and both sides of the partisan divide will fight to a draw on most matters. Immigration reform might pass, but not without plenty of resistance from people outside Washington. The quantitative easing of billions of dollars per month into the markets can’t continue forever, and if it ceases this summer the economy will be back on page one after a long and inexplicable absence. Summertime offers a delightful number of distractions, but what’s happening out there in the rest of the world will inevitably intrude.
In the meantime, we wish a happy summer of poolside frolics and good time rock ‘n’ roll music to all our readers.

— Bud Norman

Running With the Bulls

As much as we hate to be the gloomy sort who find dark clouds within every silver lining, we just can’t shake an unsettling feeling that there’s something fishy about this bullish stock market.
By the time you read this the Dow Jones Industrial Average might well have surpassed its all-time high, in which case the usual media cheerleaders will be singing “Happy Days Are Here Again” and claiming vindication for Obamanomics. Such gloating is understandable, as the stock indices provide a pleasant diversion from more depressing numbers, but those more depressing numbers make it all seem rather unaccountable.
The reigning record of 14,164 was set back in Oct. 9, 2007, in the dark days of the Bush administration when the economy was suffering through 4.9 percent growth in gross domestic product and a 4.7 percent unemployment rate, with personal income rising four-tenths of a percentage that quarter. In the Golden Age of Obama the Dow is back within shouting distance of that closing figure, but unemployment is at 7.9 percent, the latest quarterly GDP growth has recently been revised from a contraction of 0.1 percent to a slightly more robust gain of 0.1 percent, and personal incomes are dropping by 3.6 percent. Throw in another $7 trillion of national debt, a few credit downgrades for the federal government, higher taxes, a weakened global economy, and assorted international crises, and the current bull run becomes very hard to explain.
Bullish types will always find reasons to buy, and even such bearish types as ourselves must concede they can usually find them, but it’s currently hard to see any compelling reasons for a new record. The CNBC news service quotes a giddy analyst who is heartened by signs of an improving housing market and “good reports” from Priceline and The Dollar Tree, but the housing prices aren’t rising at the overly rapid rate they were back in ’07 — a soon-to-burst bubble caused by the government-created subprime mortgage boondoggle — and Priceline and The Dollar Tree are hardly drivers of the American economy. We’re not even sure what either company does, although we believe that Priceline is the company that William Shatner pitches and has something to do with the internet, and judging by the “Dollar” in its name we presume the Dollar Tree caters to budget-conscious shoppers trying to get by on incomes recently diminished by 3.6 percent.
The same analyst assures CNBC’s readers that the current state of the stock market is due to “more than soothing words from Fed Chairman Ben Bernanke,” but we suspect that the Bearded One is mostly responsible. Bernanke has quantitatively eased a few gazillion dollars into the money supply during his time at the Fed, and with bonds yielding laughably low rates and new ventures smothered by reams of new regulations those dollars have nowhere to go but the stock market. So long as Bernanke keeps the printing presses running, the stock market should do fine.
Until it stops, as all things do. When it does, we hope to be safely invested in something very tangible. The bigger the bubble, the bigger the burst.

– Bud Norman

The Rising Cost of Living and Chili

A recent cold snap induced an appetite for our famous homemade chili, with “famous” being an honorific bestowed on any decent pot of chili in these parts, and that in turn led to our latest measurement of the inflation rate.
The folks in the federal government measure inflation in one way, some economic contrarians figure it another way, and it seems that everyone else uses a methodology of their own. We go by the Chili Index, which is pegged to the price paid at a nearby grocery store for the necessary ingredients for a large pot of the stuff, and it suggests the country has yet another economic problem to worry about.
Lest anyone doubt the scientific validity of the Chili Index, we would note that its findings are corroborated by more familiar data. Even the folks in the federal government have noticed a steady rise in prices, for among the slew of dispiriting economic statistics that were released just after the election — odd timing, that — was an uptick in the official inflation rate to 2.2 percent. That’s not a particularly worrisome number to most economists, who apparently enjoy regular cost-of-living raises, but it’s the third increase in as many months and rapidly approaching a rate that would cause policy-makers to reconsider all the quantitative easing that’s been propping up the slumping economy.
There’s also reason to believe that number significantly understates the economic reality. Shortly after the bad old days of stagflation in the ‘70s the government revamped its formula for determining the inflation, including the use of “hedonic” pricing to account for the supposedly improved quality of some of items, and running the same information through the earlier formula would put us right back in the bad old days of stagflation. Given that the quality of ground beef, onions, bell peppers, jalapeno peppers, crushed tomatoes and chili beans has not improved noticeably in recent years, the Chili Index reflects on the price charged at the register.
We’re not the only ones who perceive a higher rate of inflation than the government statistics would suggest. An exit poll conducted by NBC News during the election found that 37 percent of the respondents cited rising prices as the biggest problem they face, just one point shy of the number who cited unemployment, and other studies have shown that most Americans guess the inflation rate is higher than the official figure. Women tend to see even more inflation than men, and low-income people more than the higher earners, but almost everyone is seeing higher prices than the bureaucrats are reporting. That likely reflects a widespread skepticism about all manner of government economic statistics, including unemployment rates that sometimes drop because of all the people who have given up looking for work, but it’s not because the government knows better than the skeptical individuals about the prices of the things they buy.
Should the inflation rate continue to rise, even the official one, expect to hear a lot of pontificating in the media about the advantages of inflation and how brilliant the federal government has been in staving off the dread deflation. They’ll note that inflation is beneficial to debtors, among its many other virtues, but they’ll probably not mention that the biggest debtor in the history of the world is the federal government. Let us hope that the government doesn’t print up enough money to pay off the current $16 trillion of debt and tell its creditors to use it for a pot of chili.

— Bud Norman

Easing Into Darkness

The Arab spring has turned to a brutal fall, the president can’t quite decide if the Egyptian government that he helped bring into power is a friend or foe, and there seems to be a similar question in the president’s mind about Israel as it readies for a war with Iran. The folks down at the stock market are happy, though, because the economy’s so lousy that the Federal Reserve has decided to hand it a whole lot of newly-printed money.

Citing all the familiar economic doom and gloom, a statement from the Fed on Thursday announced that it will buy $40 billion of mortgage-backed securities every month for an indefinite period of time as part of a third round of “quantitative easing” that will wind up increasing the money supply by more than $3 trillion. Given that the Fed also signaled its intention to keep interest rates at their current historical lows for the foreseeable future, making bonds and other fixed-income investments a mug’s game, much of that money will quickly make its way to Wall Street.

This made for a big rally on the big boards, naturally enough, but it’s hard to see how it will do much for a real economic recovery on less fashionable roads. The first two rounds of quantitative easing clearly didn’t work, or there wouldn’t be any need for a third one, and there is no convincing theory to explain why this effort will be any more successful. There’s an old adage that the third time’s a charm, but we can find no scientific basis for this notion, and our thrice-married friends assure us that it’s bunk.

What’s troubling the economy is not a lack of pieces of paper printed with green pictures of federal buildings and former officials, as these are already in greater abundance than ever, but rather a lack of incentives for people to start moving them around. Until the tax codes, regulations, and prevailing political climate all signal that Americans can expect to keep most of what they earn, the Fed can roll out the dollars at a Weimar-era rate and the smart money will still be seeking a safe haven far offshore.

The Fed’s actions entail considerable risks, too. One of the reasons that people are sitting on their money is a reasonable expectation that the government’s about to go broke, and although Fed Chairman Ben Bernanke said in a Thursday news conference that his plan won’t affect the budget it is unlikely that it will induce any non-Tea Party politicians to cut back on their spending. Should the plan actually stimulate the economy, whatever goods and services are created will be chasing so much money that a ‘70s-style inflation rate might prove a best-case scenario. More dollars mean a weaker dollar, as well, and could even threaten the reserve currency status.

None of the negative effects will be immediately apparent, however, unless you’re a retiree who was suckered into bonds and other traditional retiree-age investments, and by the time the worst of it hits the election will be long past. Any short-term benefits that might occur will be more immediate, on the other hand, but surely it would be paranoid to think that politics had anything to do with it.

— Bud Norman

Bad News is Good News

The stock markets sometimes have a peculiar notion of what constitutes good news.

Back in the seemingly long ago era when the American economy appeared to be humming along nicely a slight decline in the unemployment rate would always prompt a sell-off, as investors worried that the inflation hawks at the Fed would cut off its steady infusion of freshly-printed cash. Conversely, a recent slew of dire news about slowing economic growth, rising unemployment, and impending global calamities sent the Dow Jones surging by 287 points on Wednesday as investors guessed that the Fed will now feel forced to keep the presses running overtime.

We might find out if the bulls guessed correctly when Fed Chairman Ben Bernanke testifies today before the Congressional Joint Economic Committee, although Fed-speak can be so vexingly cryptic that it will probably take the Fedologists a day or two to translate his remarks into English, but in any case the market’s momentary giddiness should not be mistaken for a sign of an improving overall economy. The bad news that gave rise to the markets’ expectation of good news is still bad news, while another round of “quantitative easing” is unlikely to help in the short term and could very well prove hurtful over the longer term.

Which is not to say that the stock markets won’t rise atop a new flood of money, as low interest rates and negligible bond yields give all that cash nowhere else to go, just that the rising numbers on the board won’t reflect any commensurate improvement in the fortunes of anyone not invested in the markets. After two previous rounds of multi-trillion dollar quantitative easing, and similarly extravagant efforts by central banks around the world, it no longer seems plausible than an insufficient supply of paper printed with chlorophyll is the problem with the American or global economies. Nor does an expanded money supply seem necessary to stave off deflation, as the inflation rate has lately been holding at 2.3 percent lately and would be even higher if it included gasoline, ground beef, coffee, and other essentials of life.

The more acute problems with the economy, both here and abroad, are too much debt, too much bureaucratic control, enervated populations and a lack of confidence in the governments’ ability to do anything about it. A Weimar-style fiscal policy that is clearly intended to sustain current deficits, enlarge bureaucracies, and placate the populace while postponing the painful but necessary reforms is not likely to inspire much faith.

A few analysts attributed some part of Wednesday’s big gains to the results of Wisconsin’s recall election, which kept Gov. Scott Walker in office and proved that a politician can enact painful but necessary reforms and escape with his political life, providing some sliver of hope that political solutions are still possible. That might or might not have had anything to do with the green arrows, but it’s still good news, and not just by the perverse reasoning of the stock market.

— Bud Norman