30 September 2012

Confirmation Day, Part the First

If it's Sunday, then it's NYT Sunday Business and Sunday Review. As a young Episcopalian, I had my Confirmation Day; now it's time to look into these two major sections in search of Mainstream Punditry confirming past musings. We'll see if there's a posting here each week. May be yes, may be no. This week is yes.

Let's start with David Leonhardt's "Obamanomics: A Counterhistory". He makes the case, without coming out just saying it (may haps his handlers won't permit it), that Obama's error was not implementing fiscal policy. Obama, well Bernanke by default of course, just continued the monetary policy of Greenspan. The result, of course, is inflation in the sector getting the moolah, abetted by all the existing money chasing "risk free" high returns. Those have evaporated, so the lemming money is chasing the smart money.
Ben S. Bernanke, the chairman, works hard to achieve consensus on the Fed's policy committee, and in 2010 and 2011 the committee was skewed toward officials predicting -- wrongly, we now know -- that inflation was a bigger threat than unemployment.
So, why did The Smartest Guys on the Planet get it wrong? My assessment from the start was that they're Banksters, one and all, even the Obama operatives. This makes them monetarists, which makes them view money as commodity, which makes them view any increase in money as universal throughout the economy. Of course, what they were doing, with TARP and QEx, was narrowcasting the manna. That they concluded that the moolah would "trickle down" to the greater economy was just either blindness or perfidy. "Pull the string, and it will follow wherever you wish. Push it, and it will go nowhere at all." - Dwight Eisenhower. That formulation and cite isn't familiar, but too cute to pass up, all things considered.

Leonhardt gives these guys wide berth, asserting, covertly, that they're still The Smartest Guys on the Planet, just made a small error in judgment. I don't buy it. Monetarists and Banksters engage in trickle down. It's the only mantra they know.

Leonhardt does get credit for pointing to the evil Right Wingnuts:
By any measure, Mr. Obama and his team faced a tremendously difficult task. They inherited the worst economy in 70 years, as well as an opposition party that was dedicated to limiting the administration to one term and that fought attempts at additional action in 2010 and 2011. And the administration can rightly claim to have performed better than many other governments around the world.

Finally the Times finds someone (Jeff Sommer) to get really close. The title tells it all: "As Money Pours Down, It's No Wonder That Stocks Are Up". One has to wonder; do these editors ever talk to each other?
Robert Rodriguez, managing partner and chief executive of FPA, an asset management firm in Los Angeles, says it's possible that fund managers, seeking to bolster their returns, will "continue to pile into stocks in the remainder of this year and push them to even higher levels." But he says he believes that the market is already overextended, and his firm has begun to reduce its stock exposure.
With both Fed free money and all that (possibly apocryphal) Chinese money seeking high returns, there isn't much choice. Stuffing it in the mattress isn't really an option. While the Apple's of the world continue to do that, pension funds and hedge funds don't have the luxury to flip the bird to their "owners". Their job is to generate returns. It's just these sort of days that prove publicly funded pensions are the only sensible approach. That's been touched on here before. Perhaps again, soon. In a nutshell, Social Security wasn't/isn't/never can be an "investment plan". To do so would undermine governance of the country, and waste oodles of moolah along the way. Serving two masters never works out well.

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