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Reality v. the Reality Show

There are all sorts of serious issues afoot these days, such as immigration policy and yet another continuing spending resolution that’s soon required to keep the government funded, not to mention that whole messy “Russia thing,” and ideally they would all be resolved by the merits of angrily shouted arguments. These days, though, one must also take into account all the soap operatic subplots of the nation’s ongoing reality show in the age of President Donald Trump.
The United States Senate, once known as “The World’s Greatest Deliberative Body,” took up the immigration issue on Tuesday with testimony from Department of Homeland Security Secretary Kirstjen Nielsen, and for the most part it was the serious sort of discussion of a serious issue one might wish from one’s government. Nielsen struck us as well-informed and well-spoken, made a better case for Trump’s policy of strict enforcement of current immigration laws and a more merit-based system than he ever could, and handled the Democrats’ mostly reasonable questions without resort to any of the taunting nicknames Trump routinely relies on.
She also struck us as a strikingly comely DHS secretary, which of course has nothing to do with the merits of her well-stated arguments, but it’s nonetheless worth mentioning in the context of this ongoing reality show in the age of Trump. We noticed that the Washington Post and the Associated Press ran the most unflattering pictures they could take along with otherwise fair coverage of the hearing, and if you’ll forgive some frivolous fan talk about the reality show we think we missed a bet. United Nations Ambassador Nikki Haley is also quite attractive, as is that communications director Hick Hopes, who’s lately been subpoenaed by another Senate committee looking into that “Russia thing,” prime time spokeswoman Kellyanne Conway has her own Cruella Deville sort of appeal, and the left should be making the very convincing case that Trump prefers women’s beauty over brains.
Nielsen would have overwhelmed that argument with her well-spoken and well-reasoned testimony, though, if only a couple of Democratic senators hadn’t asked her about Trump’s widely-reported comment to a bipartisan gathering of senators about immigrants from what he called “shit-hole countries,” which has lately been the biggest subplot in our nation’s ongoing reality show. A credible Democratic senator is staking his political reputation by insisting the president did use that vulgarity, a credible Republican senator has more or less verified the account and even claimed some discreet credit for raising his objections to such language, which the Democratic senator has praised him for doing, and the president’s more sycophantic senators are only saying they can’t recall what the president said.
By now even Fox News is reporting that yeah, the president actually said that, and anyone who’s been following this reality show since Trump descended down that Trump Tower escalator to launch his campaign with a speech about Mexican rapists knows it sure sounds like something he’d say. When Nielsen said that she couldn’t recall Trump saying that at the meeting she’d attended, only that she’d heard foul language from everyone but herself and the senator who as asking the question, she lost not only lost all the credibility she’d earned with her well-informed and well-spoken arguments for Trump’s immigrations but also killed our emerging crush.
All of which complicates the far more serious matter of a looming deadline for dealing with all those telegenically sympathetic “dreamers” who will be kicked out of the country if action isn’t taken by Congress and signed by the president. Trump himself claims to be the sympathetic to the “dreamers,” but he’s also wed to the more rock-ribbed and hard-sorted sorts of Republicans who have some very serious arguments about why America should strictly enforce its immigration laws and enact others that are even more merit-based, and his by-now undeniable comments about “shit-hole countries,” and his DHS secretary’s futile attempts to deny it, have made those arguments harder to make.
Which in turn makes it all the harder to get yet another continuing spending resolution to keep the government running. These every-few-months-or-so annoyances are always complicated enough, but this time around the Democrats have that “dreamers” issue as a negotiating position, probably even Trump and surely the rest of the Republicans majorities in the House and Senate know they’ll take the inevitable  public relations hit for a government shutdown, and the argument is unlikely to be decided on the merits. If these sorts of things were decided on the merits, though, we’d have annual budgets passed budgets passed by bipartisan majorities of both houses of Congress and signed by a president of one party or another, and honest people of both parties should admit that stopped happening long before the Trump reality show debuted
There’s also that ongoing “Russia thing,” too, and even Trump’s most die-hard apologists have to adit that’s pretty much unprecedented. Another Senate committee is calling for under-oath testimony not only from the aforementioned comely Hicks but also Trump’s former campaign and administration “chief strategist” Steve Bannon, now entirely disowned and dubbed “Sloppy Steve” by Trump, and that involves more reality show subplots than we can explain here. Bannon was quoted in the best-selling but widely disputed book “fire and Fury” that was was last week’s big story alleging that Trump’s son and son-in-law were “treasonous” by taking an admitted meeting with a Russian lawyer they knew to be connected to the Russian government during all that “Russia thing,” and his under-oath testimony about that will likely be the next big subplot in the nation’s ongoing reality show.
Elsewhere in the real world the stock markets are up, the unemployment rate is down, and despite the recent spate of cold weather around here most of the people we run into are pleasant enough. We’ll hold out some faint hope that our reality somehow prevails over all that nastiness in the reality show of the news.

— Bud Norman

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Smart and Stable Is as Smart and Stable Does

There’s something slightly unsettling about hearing an American president reassure the public that he’s intelligent and emotionally stable, as President Donald Trump felt obliged to do over the weekend. It reminds us of President Richard Nixon’s assurance that “I am not a crook.” or President Bill Clinton’s vow that “I did not have sex with that woman,” or Fredo Corleone’s cry in “The Godfather Part II” that “I’m smart, not like everybody says, like dumb, and I want respect,” and we remember how all those turned out. Trump’s boasts that “I’m, like, really smart” and “a very stable genius” have a similarly ominous ring.
Trump has been conspicuously defensive about his smarts and sanity ever since he took that elevator ride in Trump Tower to announce his improbable campaign for the presidency, but his sensitivity has been heightened by the publication of Michael Wolff’s book “Fire and Fury: Inside the Trump White House,” which has lately been flying off the shelfs with a considerable publicity boost from Trump’s futile efforts to prevent to its publication and his ongoing insistence that it’s all fake news. The book depicts a dysfunctional White House trying to cope with a not-very-bright and downright childish president, with some pretty unpleasant quotes coming from people once very close to the president, which prompted Trump’s “Tweets” and public remarks about being “like, very smart” and a “stable genius.”
As he did throughout his improbably successful campaign for the presidency, Trump answered his critics with characteristic braggadocio. He boasted of his academic excellence at a top-notch college, the billions of dollars he’d made in private business, his status as the star of highly-rated reality television show, and the fact that he’d won the presidency on his very first try. Such cocksureness played a large part in his improbable electoral college victory, along with an admittedly uncanny knack for convincing West Virginia coal miners that a billionaire New York City real-estate and reality-show mogul was their messiah, and it might work now. All of it was questionable all along, though, and we still suspect it worked mainly because the alternative was Democratic nominee Hillary Clinton.
Trump did indeed graduate from the University of Pennsylvania, which indeed plays its football and basketball games in the prestigious Ivy League, but he spent his first two years at second-tier Fordham University before his father’s money got him into Penn and nobody there recalls him as an exceptional scholar and his academic records are as tightly as restricted as President Barack Obama’s. He has made billions in business, but nobody who follows the big money believes he’s made even half what he claims, and most contend he would have done better by investing his inheritance in a solid mutual fund and spending his time reading up on history and public policy, and there were many embarrassing bankruptcies and business failures along the way. He did indeed improbably wind up as President of the United States, but there hasn’t yet been a public opinion poll showing most Americans glad of that.
As much as we’d like to we can’t deny Trump has a rare genius for making his character bugs seem a a feature to enough of the voting public to pull off an improbable electoral college victory, even it was against the likes of that horrible Clinton woman. Trump’s otherwise alarming tendency to say any crazy thing that popped up into his head was lauded as refreshing honesty, his glaring racism and sexism were celebrated as a blow against “political correctness,” the illiterate crudity of his ad hominem responses to any valid criticisms was cheered the “authenticity” of his “punching back twice as hard,” and a lot of West Virginia coal miners and other disaffected white folk in flyover cover wanted to vicariously live the gaudy decadence of his boastfully adulterous and self-indulgent lifestyle in a way they never did with Bill Clinton’s zaftig affairs.
As appalled as we were by that horrible Clinton woman and her hound dog husband and had been since way back when Clinton was contributing to her campaigns and inviting her to his third wedding and calling her the greatest Secretary of State ever, we never believed a word of it, no matter how many times Trump said “believe me.” The guy who draws the “Dilbert” cartoon and other thinkers would try to explain how Trump was a “master of persuasion” whose seemingly un-parsable pronouncements were the cutting edge of political rhetoric, and we had to admit that he was far better than we or Socrates or Daniel Webster could ever be a persuading broke suckers to sign up for Trump University or the rich fools who owned United States Football League franchises to go head-to-head with the National Football League and somehow win in the civil courts, but we doubted it could have the same effect on the presumably more sensible you hope to find in the Congress and federal judiciary and the free press and other institutions promised to vanquish. We also doubted that all those taunts and nicknames and National Enquirer stories would culminate in any positive policy results.
Trump and his apologists will point to the recent stock market records and holding-steady jobless rates and the absence of any nuclear mushroom clouds on the Korean peninsula, and they have a point that of course they’ll vastly overstate. Trump’s de-regulating executive orders and the tax bill the Republican establishment delivered to his desk have no doubt nudged the stock markets on an even higher trajectory that they’d been since before he took office, but at least one or two of those de-regulated regulations are likely to fuel some future scandal with multipole fatalities, that tax bill is polling horribly, and job creation has actually slowed compared to the last two years of Obama’s administration. The North Korean dictator that Trump has taunted as the “short and fat” “little rocket man” with a nuclear button that’s not nearly so manly as Trump hasn’t yet exploded any nuclear missiles, and he’s suddenly opening talks with South Korea that Trump claims credit for but isn’t involved in, and the rest of the world seems just as pleased to leave Trump out of it.
Meanwhile there’s the whole “Russia thing” and that messy business of what to do with all the “dreamers” who were unwittingly became illegal immigrants as children and yet another continuing resolutions that’s needed to keep the federal government running, along with numerous other matters that Trump hasn’t yet comprehensibly commented on. as well as a lingering concern that there’s something no quite right about the president. The worry is widespread enough that Trump spent a weekend “tweeting” and telling reporters that he’s very smart and sane, and reports suggest that its shared in hall of power of both allies and adversaries, and that’s bound to have eventual consequences.
Trump might have been an excellent student at that top notch college, but the seventh-grade English teacher at our otherwise second-rate junior high school would have riddled his “tweets” with red marks for spelling and punctation and syntax and general comprehensibility. He’s no doubt richer than we are, but even our limited entrepreneurial abilities could have at least broke even with a casino and we know enough about football not to go head-to-head with the NFL and we’re too kind-hearted to sucker anyone into investing in a phony baloney real estate course, and until he offers up his tax returns and the rest of the full disclosure that presidents are supposed to offer up we’re skeptical of any claims he makes. If we make it through the year without any mushroom clouds over the Korean peninsula we’ll give him some credit for that, but we’ll never agree that the nuclear button size comparisons had anything to do with it.
We’ve had the good fortune to know many brilliant people over the years, and we’ve long noticed that not a single one of them ever bragged to us that they’re, like, really smart, and all of them would have scoffed at being called a genius. Nor have any of the very stable people we’ve happily know ever felt the need to reassure us that they’re, like, very stable. We’ve also had the good fortune to know some highly ethical people, too, and none ever had to contrast their ethics with those of that awful Clinton woman.

— Bud Norman

Looking Ahead at Anger

In such a crazy election year as this we’ll leave it to all those poor pollsters and the more presumptuous sorts of pundits to predict who’s going to win that awful presidential race, but we will venture a confident guess that no matter how it turns out there are going a lot of very angry people. How angry remains to be seen, and we’d also prefer not to speculate about that.
The New York Times is worried that some supporters of Republican nominee Donald Trump will resort to armed insurrection should their man be denied the presidency, and has quite believable quotes from his fans in several states admitting that possibility with various degrees of enthusiasm for the project, and although we’d usually be inclined to consider that mere left-wing media propaganda we heard pretty much the same threats coming from one of the more effusive right-wing talk radio hosts while driving home on an otherwise lovely evening from a nice dinner with the folks. Trump’s recent talk of a “rigged election” and his vow to keep the country in suspense about whether he’ll accept an unfavorable result certainly doesn’t diminish the chances of post-election unpleasantness, and there’s no denying the videotaped evidence he’s encouraged rough behavior by his most so-loyal-he-could-shoot-someone supporters, so we can’t say that the once-venerable Gray Lady’s worries are entirely unjustified.
We do regard it as rank left-wing-propaganda-by-omission, however, that they aren’t also fretting about how some supporters of Clinton might respond to a still-at-least-slightly-possible Trump victory on election night. Trump’s supporters have been attacked by vicious mobs at several rallies, Republican offices have been fire-bombed and vandalized, and the theft of Trump yard signs has become so common that The Washington Post acknowledged it by running an op-ed from a convicted sign-stealer. Clinton has carefully courted the support of a “Black Lives Matter” movement that spilled over into violent and destructive riots in several cities, whatever’s left of that destructive “Occupy” movement and a broader campus left that has students scaring speakers away and professors calling for “muscle” to remove any pesky journalists, and certainly done nothing to diminish their red-hot hatred of Republicans in general and Trump in particular. The more left-wing media might have reason to regard a Trump win as only slightly possible, but we’d like to see them acknowledge that the likelihood of any widespread problems resulting from that is also worrying.
We hold out some hope that either outcome won’t result in anything of remotely civil war proportions, but not for very hopeful reasons. All the polls and plenty of anecdotal evidence suggest that most of Trump’s so-loyal-he-could-shoot-someone supporters are past their prime rioting-in-the-streets age, and although some of them are still pretty feisty and pretty much all of them are gun-owning we can’t see them mounting anything that could reasonably be called an insurrection. Should all the polls and anecdotal evidence be proved false and Trump wins, we expect a far worse response, given that the angry will be younger and include a whole lot of recently experienced urban rioters and what Trump might aptly call “bad hombres,” but we expect that the campus left will retreat into safe spaces, the fires will burn themselves out before Trump starts to impose his promised law and order is required to put down anything approaching an insurrection, and after a brief panic the stock markets and the rest of that hated “establishment” will start negotiating deals with the self-proclaimed master deal-maker and four-times-bankrupt casino mogul.
There will be much ill-feeling among much of the the country no matter the outcome, and as Trump might say, that we can tell you, believe us, OK? For as long as we can remember politics ain’t beanbag, as one of our favorite old sayings goes, but this crazy election year’s awful presidential race has featured an unprecedented amount of mud-slinging, and so far as we can tell from our pox-on-both-their-houses perspective all of it has stuck on both of these awful candidates, so we expect that post-election recriminations are also likely to be more troublesome than usual. We’re pleased to note that neither candidate has a clear majority in any of the polls, however, because that means no matter who wins there’s still a chance that most of our fellow Americans will have righteously joined us in not voting for either her or him. Probably 90 percent of the country will have voted for one of the other, which is not so pleasing, but we can respect their reasons for doing so at this sorry moment in our binary world. No matter the outcome of this awful presidential race in this crazy election we promise that won’t be rioting in the streets, and even though we do have a handgun around just in case of the worst possible scenarios we won’t be fomenting any armed insurrection.

— Bud Norman

The Doomsayers Have Their Day

The doomsayers have a lot to say these days, and most of it is all too plausible. There’s also been a lot of happy talk from the White House lately, especially about the economy and that 5.1 unemployment rate, but it’s not nearly as convincing.
Even the suddenly front-running Democratic candidate and self-described socialist Sen. Bernie Sanders is getting big cheers from his far-left fans by scoffing at that 5.1 percent figure, which conservatives already know is severely understated by excluding the record numbers of those who aren’t even bothering to find work or those working part-time jobs or taking jobs for which they are obviously over-qualified. Even the usually uninformed folks of no political persuasion who occupy the middle have noticed their stagnant wages, and that most of those news jobs are going to legal and illegal immigrants, so they might have also noticed the latest trends are not positive.
Sanders probably won’t mention it in his otherwise frankly gloomy and doomy stump speeches, but what anemic economic growth  has occurred over the past six years of “recovery” was largely financed by extraordinary amounts of debt, not just here but in Europe and China and almost everywhere in the less consequential parts of the world economy, and not just among the countries’ governments but also their private sectors. The Switzerland-based Bank for International Settlements, considered “the world’s top financial watchdog,” now notes that since 2006 the combined public and private debt of the world’s developed economies has jumped 36 points to a daunting 265 percent of the world’s gross domestic product. Meanwhile the Federal Reserve Board of the United States, which is either the first or second biggest economy in the world depending on what accounting systems you prefer, is contemplating at long last allowing interest rates to soar beyond zero, which those Swiss bankers reasonably worry would might reconfigure the global ledgers in all sorts of troublesome ways. Much of the United States’ debt is owed to China, which is either the first or second biggest economy in the world, depending on what accounting system you prefer, but they’ve also managed to rack up a mountain of debt on building uninhabited cities and other make-work extravagances, and there’s no telling what measures that country’s communist leadership might resort to. The European Union, which includes most of those “developed economies,” is currently preoccupied with one of those occasional invasions by the Muslim world that they’ve had to put up with for the past several centuries. Perhaps debt can be perpetually incurred, but otherwise nowhere in the world does there seem to be any happy endings on offer.
All that debt did by one hell of a stock market run, here and elsewhere, with all the freshly-printed money having nowhere to go in a zero-interest world, but here and elsewhere that seems to be at long last coming to the same sorry end as all Ponzi schemes. The Chinese are resorting to the old Maoist adage about all power growing out of the barrel of a gun to deal with the situation, with stockholders being threatened with severe retaliation if they sell any shares in tanking companies, and the unlikelihood that even President Barack Obama and newly-anointed Labour Leader Jeremy Corbyn or any other EU official would dare to employ such methods makes the situation all the more uncertain.
Robert Schiller is a professor of economics at Yale University and a Nobel laureate in his science, and we are neither, but our gloomy and doomy temperament inclines us to agree with his worried assessment that “It looks to me a bit like a bubble again with essentially a tripling of stock prices since 2009 in just six years, and at the same time people losing confidence in the valuation of the market.” One needn’t be a Yale professor or Nobel laureate to have noticed that the American economy has not tripled in strength and size over the past six years, or kept apace of the growing debt and surge of legal and illegal immigration, and that the rest of the world hasn’t been managing its affairs any better, nor to draw the obvious conclusions. Every roller coaster ride we’ve ever taken has eventually ended at ground level, and we can’t shake a bad feeling that the world’s stock markets will prove true to this rule.
We read that the stock markets are further spooked by the sudden realization that Donald Trump might actually be the Republican nominee for President of the United States, and that the equally embarrassing fact of self-described socialist Sanders as the front runner makes it possible that he might actually win the office, and this causes us even further gloominess and doominess. There’s little hope to be found in Europe, where the self-described Hollande is still running and some English guy with no discernible identity is Prime Minister of Great Britain and Germany’s Angela Merkel is talking crazy-talk about immigration one day and her usual common sense the next, with no time to talk about debt or stock markets or other economic issues. The Chinese communists are both Chinese and communists, and at the risk of sounding stereotypical we found them quite inscrutable. In any case, we find little reason for optimism.
On the other hand, the local QuikTrip convenience stores are now selling their lowest-octane gasoline for $1.99 a gallon, an economic stimulus the administration hasn’t been able to thwart despite its best efforts, the earthquakes that have occasionally troubled our fracked region might not have anything to do with that, and Americans have proved a shrewd people in other uncertain times, and one can still hold out hope that neither Donald Trump nor Bernie Sanders will ever be this country’s president. This doesn’t guarantee a hopeful outcome, especially with Hillary Clinton as a the next-most plausible alternative, but at least it allows for the possibility or the best and precludes the worst.

— Bud Norman

Oy Vey, That Stock Market

These days our interest in the stock markets is mostly academic, but the past several days have been quite interesting nonetheless. Pretty much everywhere the stock markets are panicking, and suddenly the most alarmed pundits are surpassing even our usual gloom and doom.
The Dow Jones Industrial Average took a catastrophic 1008-point plunge Monday before a roller coaster rally reduced that to a still dire drop of more than 588 points, which is about 3.7 percent of the market’s total value lost in a single day, which is enough for some pundits with a economic stake in their reputations to advise people to invest heavily in bottled water and canned foods. Our own reputation for economic prognostications is of negligible value, as we won’t even pretend to know what the hell is going on out there, but for what it’s worth we’ll go on record to say that it apocalyptic predictions sound plausible enough to us.
Maybe it’s just that early 1008-point plunge that’s got us fretful. We’re old enough enough to recall a time with the DJIA measured in four digits, and when a three-digit drop dominated the next day’s headlines, so a three-digit drop has a scary sound to our ears even in this age of a Dow so many thousands ahead of even the Reagan days. That 588-point closing plunge even seems frightening, especially after the previous week of steep decline, and there’s little elsewhere in the news to provide reassurance that this is just one of those occasional dips in the inevitable road to prosperity. The popular explanation is that the Chinese economy, which might or might not be the world’s first largest economy depending on which method you believe, is suddenly going from vastly overstated good fortune to probably overstated decline and that the rest of the world is running the numbers and realizing that as a result they’ll fall far short of the promises that have been made to their restive peoples. The rest of the world is mostly the United States, which might or might not be the world’s first largest economy, depending on which method you believe, and the European Union, which is by all accounts a solid third in the pecking order, even with Greece’s ongoing catastrophe and all the the other brewing problems with that misguided project to meld fissiparous Europe into one state and economy, and the Latin American economies that have lately seen a plunge in the value of their currency, and the African states that are so dysfunctional they barely rate a mention in the stock market news, and the Asian countries that are overwhelmed by the Chinese, so the global situation doesn’t seem at all encouraging.
We have some faith in our fellow citizens that they’ll still be able to provide the products and services they’ve made their lives’ work, so that the bottled water and canned goods aren’t the next shrewd investment, but we have little faith in any of the governments and we’re still pretty gloomy and doomy. The communist Chinese method of mandating by law that by power of the gun the economy will continue to climb no matter how many ghost cities they build is proving powerless against the almighty market forces, the United States’ and European Union’s method of simply printing enough money to pay of all the promises is proving just as ineffectual, and the rest of the world is of course entirely hapless. The inevitable fact that ghost cities and printed money and false promises of government-engineered property aren’t enough to sustain a global economy seem to have reached their conclusion.
Those Dow Jones Industrial Averages were always overstated, to our admittedly unreliable thinking, by all all the quantitative easing of free money that had nowhere to go in a zero body yield world except the stock markets. All of the eye-popping numbers the markets produced seemed wildly incongruent with an economy that had a record lows in labor participation and declining wages and the scant job claims outstripped by immigration, and the current panic seems more in line with the reality of the actual situation. Although we don’t recommend investing in bottled water and canned goods we don’t expect any good news about the economy soon.

For those who insist on a silver lining we we will note that the economy should soon its rightful place among the pressing issues of the day, and that the public will not be inclined to buy any arguments for the status quo.

— Bud Norman

The Real Threat of the Ebola Virus

We still haven’t panicked about the Ebola virus, but the news that President Barack Obama cancelled two days of fundraising to deal with the disease has made us a bit more nervous. Only a matter of the utmost seriousness would interrupt the president’s fundraising, judging by some of the earth-shaking events that haven’t dented the schedule, and we’re not reassured that he’s taking charge.
The news is chock full stories suggesting that we’re all going to die, and even the most optimistically skeptical reader can’t help concluding that the government’s response has thus far been inept, but we suspect that the president’s newfound urgency has more to do with a growing threat to his approval ratings in the public opinion polls, which are lately low enough that the Democratic candidates in flyover country are declining to say if they ever voted for the guy. People get skittish about deadly diseases flying in unimpeded from the third world, and there’s already a widespread public perception that the president spends an inordinate amount of time fundraising and golfing and hanging out with his fellows celebrities while the world burns, so some photo-ops with a few anonymous health care workers and the equally anonymous cabinet are just what the spin doctor ordered.
Thus far Democratic efforts to score political points from the Ebola virus have faltered, with even The Washington Post giving a “Four Pinocchios” rating to the claim that evil Republican budgets are the reason we’re all going to die and the more conservative media having great fun with all the frivolous studies of feces-flinging chimpanzees and other esoteric subjects that the relevant agencies have been spending all those billions on rather fighting deadly viruses that fly in unimpeded from the third world, but the president’s photo-ops might prove more effective. They not only reassure his dwindling fan base that he’s still on the job, but also distract attention from a variety of other unsettling stories. The Islamic State terror gang’s rampage through the Middle East has spilled into the streets of Europe, the stock markets continue to slide in response to a slew of bad economic news, all those long-forgotten scandals are still under investigation, a wily unpopular executive action granting amnesty to millions of people who have already snuck into the country is still being threatened, and the kids are still grousing about the First Lady’s school lunch menus. Success stories for those Democratic candidates in flyover to tout are hard to find, too, so the making the Ebola virus a higher priority than even fund-raising and the fact we haven’t all died yet is bound to help more than another speech about billionaire-loving Republicans in front of a bunch of billionaire Democrat donors.
This might seem a cynical assessment, but the only alternative explanation is that the threat posed by the Ebola virus is as dire as the most alarmist stories suggest and that the president feels he needs to personally take control. This would cause us to panic, and we’d prefer not to.

— 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

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

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