Saturday, August 14, 2010

The Same Old Tired Song

I’m always amused when anyone over on that paragon of financial stewardship, CNBC, gets on their high horse and starts preaching about the failures of Washington. These were the “experts” who not only missed the bursting of the housing bubble that led to this free fall, but confidently encouraged all of us to go full speed ahead towards the edge of the cliff. You know, experts like Rick Santelli, who went all Howard Beale when he found out that a small percentage of the bailout would go to struggling homeowners to help them pay their mortgages; or Jim Cramer, who was practically imploring his viewers to buy Bear Stearns five days before the stock collapsed; or Maria Bartiromo, who, when debating Anthony Weiner on healthcare, apparently didn't know that a 44 year-old can't be on Medicare. To quote Jon Stewart, “If only I’d followed CNBC’s advice. I’d have a million dollars today. Provided I started with a hundred million dollars.”

So you’ll forgive me if I seem somewhat skeptical over Larry Kudlow’s latest contributions to the Monday-morning quarterback contingent of financial experts who are once more talking out of their asses about something they still seem to know very little about.

The first was a piece Kudlow wrote for the Nation Review On Line called, “A Democratic Panic Attack?” In it Kudlow suggests that some Democrats are panicking over the “stalled economy” and, in some kind of “revolt,” are leaning towards extending the Bush tax cuts. Apparently, like so many conservatives, Kudlow doesn’t get it that not all Democrats drink from the same polluted fountain as their Republican counterparts. There are conservative Democrats along with moderate and liberal. Try finding a moderate Republican Larry and drop me a line when you do. And one more thing, since when is it a “revolt” for a politician to have weak knees during an election year and cave on core issues? That Kudlow doesn’t get this only proves how completely clueless he is.

But, not to be outdone, ole’ Larry’s finest moment came in a subsequent “op-ed” for Chip Hanlon’s mouth piece Greenfaucet, called, “The Fed Can Print More Money, But It Can’t Print More Jobs.” And guess who his prime culprit is in this piece? Yep, you guessed it, The Fed. Seems the only thing more vilified than liberals these days in the eyes of staunch conservatives is the Federal Reserve. When they’re not on their high horse advising investors to buy, buy, buy gold, then they’re railing against the Fed and calling for its abolishment.

Kudlow’s main beef? There’s plenty of money already in the system, so why did the Fed, in its monthly FOMC statement, abandon its money tightening policy by reinvesting the proceeds of mortgage bonds into treasuries? Unless, of course, it plans on “monetizing more Treasury debt and expanding the balance sheet to print money.” So why is that a problem? Because in that event, “the dollar will depreciate more and gold will rise more. A lot more.”

Funny, I would’ve thought that a supply-side, gold standard guru like Kudlow would welcome a depreciating dollar and a rise in gold prices. But seriously, this is just another example of Kudlow and his ilk missing the point. The issue isn’t how much money is “in the system.” The issue is how to get it moving. While I agree that merely printing more money isn’t in and of itself going to get the gears moving, tightening the supply of money sure isn’t going to do it either.

The trick is to get the money from A to B to C. To hear Kudlow tell it, the recovery is being held up by the “tax-and-regulatory threats and anti-business attitude coming out of Washington.” Oh, I see. It isn’t the actual tax policy, but the threat of one, along with that poor anti-business attitude, that is preventing all those entrepreneurs from jump-starting the greatest economic engine in the history of mankind. All you had to do was explain it to us. Now we understand. You see it’s really quite simple. Corporations won’t invest if they feel that all those bureaucrats in Washington don’t like them. And we all know from experience how sensitive they are to public opinion.

Come on Larry, give it a rest. This old “The stimulus was a bust and all we have to do is tighten our belts and get our financial house in order” line is getting a little long in the tooth, even for you. The real reason for your angst is that you and your Wall Street cronies don’t want the Bush tax cuts to expire. Well you can’t have your cake and eat it too. You want fiscal discipline in Washington? Fine, eliminate the greatest contribution to the deficit in over a decade and practice what you preach. Don’t whine about deficit spending out of one side of your mouth, while defending the single most fiscally irresponsible act out the other.

For once in your life stop being an ass and admit the obvious. Supply economics has never worked. And not because rich people don’t invest the extra money they get from the government, but because the Treasury never recoups in receipts what it loses on the damn tax reductions. Any child with a calculator can figure that out. But then a child would have enough sense not to tell its parents to drive full speed ahead towards a cliff.

Wouldn’t it?

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