Posted on 07/29/2009 8:37:57 AM PDT by SeekAndFind
Are Republicans too pessimistic about the economy? I put this question to Sen. Jim DeMint (R., S.C.) this week, and it would be hard to describe his response as optimistic. The senator trash-talked Vice President Joe Biden's recent defense of the stimulus in the New York Times, and he warned that any economic rebound will be short-lived because of the runaway spending-and-borrowing plans of the Obama administration.
Truth be told, respected economists like Donald Marron, Keith Hennessey, Bruce Bartlett, and Kevin Hassett have carefully chronicled the fact that Obama's stimulus package does not feature any real fiscal multipliers. They say the bulk of the package consists of transfer payments to individuals and states, along with tax credits that will produce no real incentive effects to spur economic growth.
But the fact remains that numerous signs are now pointing to economic recovery. And the GOP needs to craft smart political response to this. Obama and Biden will surely take credit for the better economic news, just as any White House would. It's the way the political game is played. But Republicans have to play the game, too.
A tremendous summer rally is going on in stocks, and being driven by better corporate profits and improved leading indicators -- including a possible upturn in housing starts and sales, and a major downward spike in weekly initial jobless claims. So you have to believe the stock market is calling the tune for recovery.
And while politics are not everything, I do believe that shrinking prospects for Obamacare have been big contributor to the stock market's recent surge. This sweeping new government insurance plan would lead to high-tax-and-spend-and-borrow-and-regulate nationalized health care, a big economic negative. Ditto for nationalizing energy through cap-and-trade-and-tax. If these initiatives fail, it is very bullish for stocks and the economy.
(Excerpt) Read more at realclearmarkets.com ...
Larry Kudlow has always been the eternal optimist.
He looks at the good side of the equation and overlooks the dire side.
Hence, today he gives reasons for his optimism by pointing to the following :
1) A global stock market rally strongly suggesting that a global economic recovery is in the cards. The biggest gainers are coming out of Asia, especially China. But the larger economies of Europe, Japan, and the U.S. are also producing large market gains.
2) The rise in world commodity prices, especially Copper — a metal forecasts economic growth.
3) A steeply upward-sloping yield curve in the U.S. Treasury market.
4) The very bullish action in corporate bond prices, where declining yields have narrowed the interest-rate differences with Treasuries all the way back to pre-Lehman-AIG-credit-collapse levels. This is yet another sign that business credit and profits are improving.
5) There’s an enormous volume of newly created money out there that’s ready to be put to work through economic spending and investing. Down the road there’s an inflation threat from this money, but not now.
Based on the above factors, Kudlow then concludes that if industrial and service production levels are poised to rise — because of an improvement in profits — then consumer and family incomes also will rise to provide the spending stimulus.
Fiscal multipliers? I’ve heard this argument for many years. Yes, spending creates a multiplier effect greater than one. The problem with this Keynesian bullshit is that for the government to spend it (and therefore get the multiplier to work), it has to remove spending from the private economy where the multiplier is the greatest.
If you track that rally, you will see that the stock market surges when opposition to Obamacare gains traction.
When Zero's programs get a headwind the averages go down.
When it was clear the Senate wasn't going to pass this thing a couple of weeks ago, the DOW started to rally. Wait till it's totally trashed. We'll likely head for 10,000.
Instead, they want to bring back 2005, and have it last forever.
And you, Cocaine Larry Kudlow, I'm thinking about you in particular.
And you, Cocaine Larry Kudlow, I'm thinking about you in particular
Nailed it!!!
What will be interesting is how localized the inflationary pressures will be. While America has jumped in head-first with it's willingness to spend money it doesn't have, Europe has taken a more "conservative" approach in dealing with the economic downturn. Many European countries have actually reduced taxes and have held the line on increased spending.
I don't believe it's impossible that over the next 20 months, the world economy - and specifically the European Asian economies - could improve, while the American economy starts to fail again, albeit after a brief respite.
I have a feeling that Kudlow is still holding his Yahoo stock, waiting to sell when it breaks $100 again.
After belly-aching about the Bush economy, Democrat’s make things even worse, there’s good reason to to be ‘realistic’ about the Øbama economy, but keep your optimism up Larry, I’m looking to cash out
“and being driven by better corporate profits and improved leading indicators — including a possible upturn in housing starts and sales, and a major downward spike in weekly initial jobless claims. So you have to believe the stock market is calling the tune for recovery.”
Hey Larry...don’t bogart that doobie!
The best Cinderella story never told aye?
...just another shill for the WS crowd people...move along.
How reliable is an optimism based on fraudulent indicators? IMHO we are going to see better numbers manufactured out of whole cloth by the various fed agencies, and even the DJIA will be manipulated by 0bama infiltrators. Our vaunted MSM will do their Lewinsky duty and gleefully report any positive sign they can find.
Clinton had a "Plunge Protection Team" that manipulated the market by buying low-priced stocks at inflated prices just to drive the market up and make clintoon look better. Zero most certainly has a similar, if not even better funded, team working now.
In the meantime we average Joes will not see our neighbors going back to work, our local county sales taxes will stay depressed, more and more foreclosures will happen on our streets, but Wall Street will "look" like Happy Days Are Here Again.
I find conservatives, at least those who post at sites like this, tend to be very bad at political reasoning, even while they are very good at expressing correct political philosophy.
If there is a chance for an economic recovery, it is important that, when discussing how disastrous Obama is, we always remind people that, without ANY intervention by the feds, the economy would get better, as it always does, in cycles, and that in fact we would have already seen the peak months ago if the Obama administration wasn’t scaring businesses into laying off more people.
You have to craft a message that matches what is seen in reality. When the economy recovers, we can note what conservative principles guide the recovery, and how liberal philosophy has made it harder for the economy to grow.
I remember back when Clinton took office, and I think Rush bet that the economy would tank, and then it didn’t. Better to push conservative principles than hang our arguments on how bad things might be in the future, when we can’t predict the future.
If the republicans are known as the “party who says the economy will get worse”, and then the economy gets better, nobody will take anything we say seriously.
But too many conservatives confuse tailoring your message with compromising your principles. Probably because too often, politicians do both. But that doesn’t mean they have to.
The "possible" upturn in housing sales are occurring in a buyers market in summertime. 37% of these sales have fallen through due to over regulation by the Govt. on appraisals.
That was on speculation of Al Gore's bronze statue being cast. The guy's 3D profile sequesters a lot of carbon.
Dissent is patriotic.
“but keep your optimism up Larry, I’m looking to cash out”
The weird thing is that this “sucker rally” is being advertised as such by people who are less naive than Kudlow. But the message is to jump in now because this is an opportunity to get your money back, so you sell before the real crash comes. It’s easy. All you will have to do is to get out before the other suckers do.
What will he say when today, Rahm forced the Blue Dogs to capitulate to the Obama tyranny on Healtcare. They want a vote; they will get one and the people will lose. More pessimism is needed not less.
Everyone thinks they are smart enough to time the market. Everyone is counting their money all summer long and then comes that fateful October morning when the market, the present commodity bubble or some too-big-to-fail corporate bond issuer collapses.
The young, the agile, the professionals and semi-pros are all going to be ok. Everyone else is going to lose 40% or more of what they have left if they are still invested.
And then, it will begin all over again.
“then comes that fateful October morning when the market, the present commodity bubble or some too-big-to-fail corporate bond issuer collapses.”
The “individual” can’t compete with the pros. They get the bad news early then sell before they find time to tell the rest of us. The best we can do is allocate to hedge against possible outcomes.
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