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September 15, 2008
By: Hilzoy

Donald Luskin Reclaims His Title

by hilzoy

Even Donald Luskin, aka The Stupidest Man Alive (and inspiration for one of my rare attempts at parody), must be regretting publishing an op-ed called "Quit Doling Out That Bad-Economy Line" today:

""It was the worst of times, and it was the worst of times."

I imagine that's what Charles Dickens would conclude about the current condition of the U.S. economy, based on the relentless drumbeat of pessimism in the media and on the campaign trail. In the past two months, this newspaper alone has written no fewer than nine times, in news stories, columns and op-eds, that key elements of the economy are the worst they've been "since the Great Depression." That diagnosis has been applied twice to the housing "slump" and once to the housing "crisis," to the "severe" decline in home prices, to the "spike" in mortgage foreclosures, to the "change" in the mortgage market and the "turmoil" in debt markets, and to the "crisis" or "meltdown" in financial markets.

It's a virus -- and it's spreading. Do a Google News search for "since the Great Depression," and you come up with more than 4,500 examples of the phrase's use in just the past month.

But that doesn't make any of it true. Things today just aren't that bad. Sure, there are trouble spots in the economy, as the government takeover of mortgage giants Fannie Mae and Freddie Mac, and jitters about Wall Street firm Lehman Brothers, amply demonstrate. And unemployment figures are up a bit, too. None of this, however, is cause for depression -- or exaggerated Depression comparisons."

He then presents a bunch of data -- last quarter, he tells us, real GDP was up 3.3%. (He somehow fails to mention that the quarter before, it was 0.9%, and the quarter before that, -0.2%.) All sorts of things are really very good. So why don't people recognize that? He blames Obama. (Really. Obama, he says, is "Patient zero in this epidemic".) His conclusion?

"Whatever the political outcome this year, hopefully this will prove to be yet another instance of that iron law of economics and markets: The sentiment of the majority is always wrong at key turning points. And the majority is plenty pessimistic right now. That suggests that we're on the brink not of recession, but of accelerating prosperity.

Maybe this will turn out to be the best of times -- at least since the Great Depression."

Just for giggles, here's a compilation of some of Luskin's other predictions (h/t). They include:

* "So what words are left to describe a really big down day like Thursday? How about, "Stocks became a better bargain than ever!"" -- July 27, 2007 (DJIA closed at 13,265.47, 1843.47 points higher than Friday's close.)

* "If you see any financial stocks that have gotten run over by a bus in the last couple months -- and then the bus backed up and ran over them again -- you might want to consider taking a flier, and putting some money down by expecting the unexpected." -- Oct. 26. 2007 (see a chart of financials over the past year here, and tell me whether you think Luskin was right. Best I can tell, they've lost about a third of their value, on average.)

* "THE BOTTOM IS IN. Yes, I know I've been too early in saying to buy stocks during the correction from the October highs. But all the classic signals of a durable bottom are in place now. Let me count the ways." -- Nov. 30, 2007 (DJIA closed 13371.42, 1949.43 points above Friday)

* "On Wall Street, vultures don't go after dead things. They go after things that are alive and very cheap. And right now, they're going after troubled financial stocks in a big way, which means it's time to move in." -- Dec. 7, 2007 (see chart described above. Buy now, and you've only lost about 25%, on average, as of Friday.)

Just ten days ago, he truly outdid himself with a column called -- I am not making this up -- "GOP's Palin Could Be Savior of Stock Market".

But here's the truly scary part of Luskin's op-ed: "Full disclosure: I'm an adviser to John McCain's campaign".

I just hope he's their investment advisor.

Hilzoy 12:28 AM Permalink | Trackbacks | Comments (35)

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Comments

Right wing punditry has zero quality control. There are never any consequences to these people's careers or reputations.

Posted by: jimbo on September 15, 2008 at 12:40 AM | PERMALINK

Donnie sez: It's just a financial flesh wound.

Even worse, in a WSJ article, one risk analyst said there could be a bank run before November if they don't stop it.

AIG needs $40 BILLION NOW or it goes Belly UP in 48 hours. If this is not a financial shock then I don't know what the fuck it is.

Posted by: Former Dan on September 15, 2008 at 12:44 AM | PERMALINK

hilzoy,
Nice! I had no idea this guy existed, but this is precious. Humour fit for the piano lounge on the Hindenberg. I especially like the eye-rolling quote marks around the "panic" words that might cause a "run on the banking system" and "economic collapse".

Posted by: Jassalasca Jape on September 15, 2008 at 12:50 AM | PERMALINK

What Luskin doesn't mention about the 3.3% GDP figure is that the inflation deflator used to calculate it was changed to 1.2%. Does anybody seriously believe that inflation was running at 1.2% during that three-month period?

The conventional inflation number (CPI for the period) was 5.6%. The government can, and will, do anything it wants to make the numbers work in the GOP's favor.

Posted by: DevilDog on September 15, 2008 at 1:00 AM | PERMALINK

hilzoy,
Okay, I'm going to have to work through the full article in small chunks, lest I put my health at risk -- this thing has shades of Monty Python's Funniest Joke in the World sketch. Case in point:

Barack Obama has frequently used the Depression exaggeration, ... To be really true, it would have to be heavily qualified with words such as "maybe" or "probably."
Or even "kind of" or "sometimes". Move over Paul Krugman, this one's gunning for that Nobel Laureate too, and he really means business.

Posted by: Jassalasca Jape on September 15, 2008 at 1:14 AM | PERMALINK

Regret isn't in the wingnut lexicon; neither is shame or guilt.

Posted by: OriGuy on September 15, 2008 at 1:16 AM | PERMALINK

"The sentiment of the majority is always wrong" -

And they call US elitists...

Posted by: Nancy Irving on September 15, 2008 at 1:25 AM | PERMALINK

Yes, that IS pretty funny. What would be even funnier would be a crowd of the poor saps who took Luskin's advice with the last few dollars in the kitty - figuring their situation couldn't get much more desperate - waiting around 'til he got off work and then beating the living shit out of him on the sidewalk.

A few people are starting to notice the Republican party, and its pet agencies and media whores, are staffed with incompetent stunzios who bring nothing to the table except a big mouth and a streak of entitlement as wide as the Potomac.

In the real world, if you were looking for somebody to paint your house and a guy said he knew everything about painting houses, then painted it the wrong colour and got more paint on your car and on the lawn and driveway than on the house, he'd be out of the house-painting business faster than you can say "Run down to the Emergency Room and ask them to take this brush out of your ass". In upsy-downsy Republican twit world, you can just make it up as you go along and nobody will ever say, "Hey....this guy doesn't know shit about finance".

Posted by: Mark on September 15, 2008 at 1:36 AM | PERMALINK

I love how the right wants to talk about Obama's lack of experience while simultaneously claiming that he's responsible for the current state of affairs in this nation.

Also, Craigslist founder, Craig Newmark, recently wrote about this site on the Huffington Post. I thought it sounded like a great fusion of politics and technology - and worth passing along:

http://ObamaTravel.org — real grassroots democracy

"Hey, this is a good example of genuine grassroots democracy:

http://ObamaTravel.org is a platform that connects volunteers who want to travel to a swing state with financial sponsors and swing state host families. It’s sort of a political hybrid of craigslist and Team-in-Training - volunteers post profiles and solicit sponsorship from their family and friends. Sponsors can see their donations in action by following the activities of their volunteers.

... and let's remember that "community organizing" is pure grassroots democracy."

Posted by: sweetal on September 15, 2008 at 1:39 AM | PERMALINK

Jassalasca,
Were you aware that this maroon runs a blog called "the Conspiracy to Keep you Poor and Stupid"? It used to be all Krugman, all the time. There's something touching and strange about an economic illiterate like Luskin a)being tasked to "Truth Squad" one of the most accomplished economists of his generation and b)Luskin being hired as an economic adviser for McCain.

Posted by: alex on September 15, 2008 at 1:51 AM | PERMALINK

They may be idiots but sure know how to control the media.


Washington Monthly and Liberal Blogs: Even Rove says McCain is lying.


Yahoo headline: Republican leaders say that both Obama and McCain running dishonest campaign.

Posted by: gregor on September 15, 2008 at 1:56 AM | PERMALINK

This character is a fruit cake. I hope McCain's folks are using him as an investment counselor too. I imagine they've got 84M or so to invest. How about Lehman Bros? I hear they're a bargain.

Posted by: Chuck on September 15, 2008 at 2:00 AM | PERMALINK

alex,
George Stigler once wrote jokingly that a license to practice economics should be introduced with all possible speed. If he were alive today, I suspect he would choose a different punchline.

Posted by: Jassalasca Jape on September 15, 2008 at 2:12 AM | PERMALINK

From the June 5 Mortgage Bankers Association press release:

"Once again this quarter, the rate of foreclosure starts and the percent of loans in the process of foreclosure are the highest recorded since 1979."

Once again this quarter????

Luskin's article: "As to the foreclosure rate, it was setting records...in 1999, at the peak of the Clinton prosperity that Obama celebrated....."

Just piling on at this point.....

Posted by: scott on September 15, 2008 at 3:07 AM | PERMALINK

Luskin is not only a spectacular fool and an utter fraud, he's also a brain dead cheerleader for all things Republican. In 2004, when Bush won the narrowest reelection since 1916, Luskin declared Bush's 2 point margin a "landslide". What a weasel.

Posted by: Joseph Miller on September 15, 2008 at 4:06 AM | PERMALINK

No one should be surprised. It's just more of Phil Gramm's style of psychological economics. It's all in our heads! More importantly, says the MAN in the "wife-beater" t-shirt, we shouldn't complain about it -- just sit back and take it like the good little victims we should be.

Posted by: JWK on September 15, 2008 at 4:30 AM | PERMALINK

Whoa boy, I just read today's column by Krugman. What was that phrase that Glenn Reynolds is so fond of? "Read the whole thing." For good reason on this occasion: much of what he has to say would be alarmist taken out of context.


Posted by: Jassalasca Jape on September 15, 2008 at 4:55 AM | PERMALINK

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Posted by: federico on September 15, 2008 at 5:44 AM | PERMALINK

"It's almost like these people take pride in being ignorant."-Barack Obama

He may yet prove to have been all too prescient.

Posted by: Jake on September 15, 2008 at 6:57 AM | PERMALINK

You know, I am beginning to think McCain's line about not knowing much about the economy, holds true for many of the HUGE firms that are scrambling to pool 70+ billion dollars this morning.

WTF?

For all those folks who hold up capitalism as a god and socialism (of any sort) as evil, how come they all want taxpayer bailouts? Ain't that social ism of a sort?

But then again, when you have a government for the rich and nothing but the rich so help us god, what else would you expect?

P.S. Bear Stearns bailout happened after Spitzer was outed.

Good luck on Wall Street today folks.

Posted by: Tom Nicholson on September 15, 2008 at 7:39 AM | PERMALINK

Wow, I wondered what happened to Luskin since his Krugman stalking days. McCain and his team are right-wing nuts, and Phil Gramm is only the tip of that corrupt and looney iceberg, but I never would have imagined they'd tap Donald effing Luskin as a campaign advisor. They really are no different than the Soviets, circa 1948, where the theories and opinions of the most egregious party hacks and idiots were called upon to screw up everything. What's next, Jonah Goldberg to advise the McCain campaign on nutrition, or maybe natural gas?

Posted by: R. Porrofatto on September 15, 2008 at 7:44 AM | PERMALINK

It is unbelievable to read the total shit that this moron dishes out. This guy is advising McCain!!!! Unbelievable!!!

Posted by: POed Lib on September 15, 2008 at 8:27 AM | PERMALINK

My, my, my! Look at all the tolerant, open minded liberals calling for violence, using profanity, calling people names, and generally acting like brutish pigs.

How the mighty have fallen.

Posted by: Barry on September 15, 2008 at 9:46 AM | PERMALINK

Nice one, Barry. Attack the people who are aghast at yet another Republican fool outted.

Next time I would suggest either (a) addressing the issues at hand, or (b) not posting at all. It's manifest that Luskin is an idiot. I guess that much is obvious even to you. So do the Rovian thing. Attack, attack, attack.

And no, the mighty haven't fallen yet. But let's hope they do when November 4 rolls around. Lord knows, we can't stand another four years of Republican nonsense.

Posted by: Ed on September 15, 2008 at 9:54 AM | PERMALINK

Luskin couldn't hack freshman English, so he became an investment advisor. It sounds like his mommie still has to buy him his cars.

Of course he's a McCain advisor. When you don't care enough to send the very best ...

Posted by: on September 15, 2008 at 10:03 AM | PERMALINK

Even Donald Luskin, aka The Stupidest Man Alive…

Did something happen to Doug Feith?

AIG needs $40 BILLION NOW or it goes Belly UP in 48 hours.

Couldn't happen to a nicer bunch of jerks. Did some consulting for AIG about two decades ago at the highest levels of the company -- it was already seriously dysfunctional then, both internally and in its approach to the world.

Posted by: Cervantes on September 15, 2008 at 10:09 AM | PERMALINK

Shorter Donald Luskin (aka Chance the Gardener): "Yes! there will be growth in the Spring!"

Posted by: notKeith on September 15, 2008 at 10:11 AM | PERMALINK

I hope your compilation gets turned into an Obama ad, only with numbers replaced by "down X percent" after each Luskin prediction.

Posted by: allbetsareoff on September 15, 2008 at 10:45 AM | PERMALINK

You know, I am beginning to think McCain's line about not knowing much about the economy, holds true for many of the HUGE firms that are scrambling to pool 70+ billion dollars this morning.

It seems that those complex financial instruments that were too complicated to be understood by government regulators were also too complicated to be understood by the people who came up with them.

Posted by: Mnemosyne on September 15, 2008 at 11:15 AM | PERMALINK

I just hope he's their investment advisor. -- Hilzoy

It's my most fervent hope, too.

Posted by: exlibra on September 15, 2008 at 11:32 AM | PERMALINK

Oh, and I most sincerely hope, that he followed his own advice to buy, too.

Posted by: exlibra on September 15, 2008 at 11:33 AM | PERMALINK

There's one huge difference between the Great Depression and today.

In the 1930s, the US was sitting atop huge fossil fuel, mineral and natural resources.

The US peaked in oil production in 1970, natural gas production is in trouble. The rich mineral and metal ore bodies have long ago been mined, refined and converted to products. The great underground aquifers are being pumped dry, while entire river systems are oversubscribed throughout the West.

So tell me again -- what will pull this economy out of this mess?


Posted by: Joseph Palmer on September 15, 2008 at 11:47 AM | PERMALINK

He's right about pessimism being rampant before a long term rally.

Problem is, that majority he speaks of can get bigger before we're done and can last a really long time.

Optimism was quite high through years of the tech boom.

It's kind of like saying, boy the rain is coming down hard! Bet it'll stop soon. Well, sure... you'll be right EVENTUALLY. Going out without your umbrella with that in mind, are we?

This is no worse than what a lot of stock analyst blowhards say. Tying it into politics just adds a level of stupidity, that's all.

Posted by: toowearyforoutrage on September 15, 2008 at 12:55 PM | PERMALINK

He's right about pessimism being rampant before a long term rally.

Problem is, that majority he speaks of can get bigger before we're done and can last a really long time.

Optimism was quite high through years of the tech boom.

It's kind of like saying, boy the rain is coming down hard! Bet it'll stop soon. Well, sure... you'll be right EVENTUALLY. Going out without your umbrella with that in mind, are we?

This is no worse than what a lot of stock analyst blowhards say. Tying it into politics just adds a level of stupidity, that's all.

Posted by: toowearyforoutrage on September 15, 2008 at 12:56 PM | PERMALINK

It's the Economy: Stupidest Man in the World, Dumbest President Ever, & Oldest Candidate Running.

Maybe there's a window that some of these fools can exit from; but before they go they need to sign over their estates to the American people.

Now I have to go home and listen to the bitching about how we have lost another $100K today, on top of the $250K we dropped in the High Tech markets over the last few years because our President is not a techie, and the other morons in this country want another self-admitting nontech imbecile.

McCain won't be replying to this comment, will he? Because he doesn't even know what a keyboard is. He's more of a McCain't than a McCan, when it comess to re-assuring the middle class that it's wealth will be there over the next 4 years

Posted by: Fedup reserve on September 15, 2008 at 2:44 PM | PERMALINK




 

 

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