Good Health

Today's edition of Brian Beutler's almost daily Corner-bashing locates Larry Kudlow's scintillating analysis of national security policy "Despite all the criticism President Bush has received over his administration’s Iraq war policies, isn’t it interesting that stock markets have been booming during the whole period from early 2003 onward? [. . .] Stocks are giving the president a vote of confidence."

Um, okay. Meanwhile, lurking in the ellipsis is Kudlow's confession that he doesn't know anything about economics. Or, as he puts it, "I have long believed that stock markets are the best barometer of the health and wealth of a nation." That verges on being silly -- huges swathes of economic activity, after all, are conducted by organizations that aren't publicly traded companies. It's fascinating, however, in a sociological sense. Kudlow isn't a specialist in something else who's just freelancing in economic ignorance on the National Review blogs. This is supposed to be his area of specialization. But he doesn't know anything about it. And National Review's editors are either too ignorant to do anything about it, or else just don't care. And, more tellingly, nobody in the conservative hierarchy who interacts with National Review's editors has communicated to those editors in a convincing manner that it reflects poorly on their publication to regularly run economic commentary by someone who doesn't know anything about it.

Comments

Well, they run cultural criticism by people who know nothing about art and foreign policy analysis by people who have never left their basements. Why should the economics beat be any different?

Posted by alwsdad | July 17, 2007 10:18 AM

Re Kudlow

Mr. Kudlows' big lies about Social Security should also be mentioned. Mr. Kudlow makes the claim that SS recipients get their entire contribution back in 2.5 years. He conveniently forgets the employers contribution and the interest earned by both the employers and employees contributions. Of course, one must make accommodations for coke-head Kudlow, an admitted coke snorter, relative to the possibility that the nose candy has addled his brain.

Posted by SLC | July 17, 2007 10:35 AM

Stock markets have been booming since early 2003?
What happened prior to that? And why didn't my investment portfolio fully recover until 2007? For me, the stock market boom has been going on for about six months.

Posted by FS | July 17, 2007 10:45 AM

If you're a magazine that's trying to support the conservative agenda, you're probably happy to have lots of inane "What's good for GE is good for America" propaganda between your covers.

To the National Review, I'm sure Kudlow's position is a feature, not a bug.

Posted by Neil the Ethical Werewolf | July 17, 2007 11:05 AM

1) Since late 2002, the dollar has lost about 26% of its value
relative to the Euro --see
http://finance.yahoo.com/currency/convert?from=USD&to=EUR&amt=1&t=5y

2) Similarly, the US Dollar Index (USDX) shows a decline of 25% against
other major currencies since late 2002.

3) Simply to MAINTAIN current value, the Stock Market would have to
have appreciated 25% since late 2002 -- in the same way that Gold, Oil,
and Real Estate have risen in value when priced in dollars.

4) The Dow has risen from 9000 to 14000, a gain of over 50%. The Nasdaq has
risen from 1500 to 2700, a gain of almost 80%.

5) However, the Nasdaq is still well below its
level in the Clinton Administration and the Dow is about the same level.
This after 7 years of the Bush Boom Kudlow was discussing.

6) Plus, much of the market is driven by the Bush Administration spending money like a drunken sailor. Bush has run up $4 TRILLION in debt on our national credit card since he entered office -- and most of that has been CONSUMPTION, NOT investment. The economy he has created is not sustainable -- already, the Chinese are beginning to dump their dollars.

Bush does not care, of course. His bumper sticker should read "Apre moi, le Deluge"

Posted by Don Williams | July 17, 2007 11:14 AM

"I have long believed that stock markets are the best barometer of the health and wealth of a nation."

He must not have thought that the old Soviet Union was much of a threat . . .

Posted by rea | July 17, 2007 11:20 AM

This would all be fine if Larry Kudlow were just a random whack-job employed by a partisan rag. But this twit has his own cable TV show. He even used to be on a show in which he played the "sane" economist paired with a screeching imbecilic nutbar who somehow managed to be less of a hack than Kudlow.

We live in a sick, sad world.

Kudlow's been rhapsodizing about the "Goldilocks Economy" lately -- not too hot, not too cold, just right. It's a good metaphor, which nicely captures both the fairy-tale nature of his political philosophy and his infantile grasp of economics.

Posted by LaFollette Progressive | July 17, 2007 11:31 AM

Has anyone also noted that Wall Street traders, especially in recent months, have been a bit like the Bush White House prior to the Iraq invasion -- cherry-picking for the data that supports their preferred scenario? It seems like a sequence of bad reports (on housing, retail sales, whatever) will persuade the Dow downward only reluctantly, by maybe 40-80 points. Then you get one optimistic reading (say, on consumer spending) or even just one not-as-bad-as-expected (like the Wal-Mart sales figures the other day), and the index soars 100-200 points.

What I fear is, the Dow -- while, like Don Willaims says, only barely at the level Clinton left it to begin with -- is currently being driven upward by folks fully as delusional as Bush or Kudlow.

Posted by demtom | July 17, 2007 11:32 AM

We all know that Kudlow is a propagandist for almost limitless capitalist exploitation and any government action to protect profits for management and those riding the luxury cars on the money train, but there is more than some credence to the stock market being a barometer of economic health. Therefore I believe this particular criticism of Kudlow is silly and infantile. My personal feeling is the market is going up because every day is one day closer to the end of the Bush-Cheney regency. On the flip side, the US dollar is in a big bear market relative to the Euro, British pound, Canadian dollar, Australian dollar along with many others. Does this mean the US and any assets quoted in dollars is really overvalued?

Posted by Alan Goldstein | July 17, 2007 11:44 AM

However, the Nasdaq is still well below its
level in the Clinton Administration and the Dow is about the same level.

Ah yes. Because of course all those internet stock valuations at the height of the dot.com feeding frenzy were perfectly reasonable and sustainable.

Posted by Mixner | July 17, 2007 12:58 PM

Isn't the larger issue the disparity of wealth because of Bush's policies? Substitute "rich people" for "the markets," and ol' Larry may be on to something.

Posted by David B. | July 17, 2007 12:59 PM

"Ah yes. Because of course all those internet stock valuations at the height of the dot.com feeding frenzy were perfectly reasonable and sustainable."

So what you're saying is that the stock market is NOT, in fact, a good barometer for overall economic health. Wow, I agree. Too bad that Larry Kudlow hasn't grasped our shared wisdom, Mixner.

Posted by LaFollette Progressive | July 17, 2007 1:10 PM

Larry Kudlow is a propagandist. I have listened to Larry for about 7 years now, I work in an environment where it is mandatory for CNBC to be on - really.

He freely admits such. Listen to his tag line, "We're Right on the politics, Right on the economy." I hear the capital R in both of those.

And Matt I have to disagree with you on Larry not knowing anything about the economy. He is a PHD, if I am not mistaken, and having looked and listened to the guy over the years, I can tell you that somehow he ferrets out the pieces of data that are most favorable to right wing spin all the time - I think he considers it to be his purpose in life, really. He couldn't do this on such a consistent basis if he wasn't smart or if he were ignorant of economics and finance.

Also, it is critical to understand that there are very rich people who think that having a propagandist of Larrys skill is extremely important and others who think that most of things he says are factually correct. If you think that National Review somehow doesn't care that Larry is wrong, well I would say you are ascribing motives to them that they do not have. They don't think he is wrong. There is a huge difference between not caring that someone is factually innacurate and thinking they are factually correct. The national review staff and readers would say the very statement you deride as being silly as it is obviously wrong is factually correct.

If you read his post, take a look at what it does. Conflates a big market rally with political event. Cheerleads for Bush and capitailsm with news of the economy.

Please do not underestimate Larry or the forces that support him. I know Ezra gave him the old smack down, but last I checked Larry still has his daily 2 minutes hate on CNBC and Ezra is a guy working for tapped. At least EK doesn't have a beard.

Posted by mickslam | July 17, 2007 1:18 PM

1) I suggest that people look at these long term charts of the Dow,
Nasdaq, and S&P. They are really AMAZING.
See
http://finance.yahoo.com/q/bc?s=%5EDJI&t=my

2) Notice how the US markets soared Upward for DECADES after the Great Depression. Now, look at the Bush Administration period.

Notice how the US stock markets seemed to hit a stone ceiling and suddenly went flat/ collapsed?

How in hell could Kudlow depict this as a boom?

3) Plus we will have almost $10 Trillion in federal debt when Bush leaves office --just as the huge aged baby boom generation enters retirement and starts drawing upon a Medicare underfunded by $40 TRILLION and a Social Security which is only underfunded by $8 TRILLION because it has $4 TRILLION in Bush IOUS as "assets".

4) This situation kinda reminds me of that scene in Mel Gibson's Apocalypto -- the part where the vast fields of Mayan corn crop lie wilted,
vast mounds of people lie dead from disease and starvation, and the elite leaders are pulling the hearts out of living people and lifting them to the sky in a desperate cry to the gods for
help. Suddenly a total solar eclipse occurs.

Lawrence Kudlow is the head priest who spins the crowd when the solar eclipse occurs -- claiming that eclipse is really a sign of the gods' favor.

Meanwhile the Spanish start wading ashore at the beach ...

Posted by Don Williams | July 17, 2007 2:10 PM

Here's the long term S&P 500 chart:
http://finance.yahoo.com/q/bc?s=%5EGSPC&t=my

Posted by Don Williams | July 17, 2007 2:12 PM

The only thing that is surprising is Matt's surprise here. Movement conservativism endorses very questionable economics, including (1) that at our current tax rates, tax cuts actually raise revenue, (2) that tax cuts for the rich always stimulate the economy more effectively than government spending, (3) that deficits don't matter except as a way to force cuts in government spending, etc.

The National Review serves the interests of movement conservativism. Thus, their economics person is going to endorse quackery. And no, they don't care that this stuff is rejected by academic economists-- that's where conservative anti-intellectualism about pointy headed lefty academics comes in.

Posted by Dilan Esper | July 17, 2007 3:02 PM

In real terms (PCE deflator), the broadest measure of the market (Wilshire 5000) is 10% lower than it was in March 2000 - equivalent to roughly $1.6 trillion of losses. If that's a vote of confidence, what's a vote of no confidence look like?

Posted by dcbob | July 17, 2007 5:30 PM

Dear Larry Kudlow: there's this thing called supply and demand. I hear they teach about it in econ courses.

The primary demand for stocks is amongst people who have far more money than they can spend on toys, even upscale ones.

So if you make those people a whole lot richer, which has been the main object of the Bush Administration, then you've got a lot more dollars chasing the same stocks around, and - whaddaya know? - stock prices go up!

Wow.

Posted by low-tech cyclist | July 17, 2007 5:49 PM

Don William made a great point that seems to be not fully appreciated by the blog. The gains in the stock market since 03 are an illusion created by the falling dollar!

During that same period the US market has been out gained by almost every other nation on earth!!!!! Especially right wing punching bags in western and northern europe.

KUD low = propoganda....investors wakeup!!!

Posted by CENTRIST | July 17, 2007 9:54 PM

I think it's important to distinguish between ignorant imbeciles like Luskin and a lying snake oil salesman like Kudlow. Matt's favorite lightwieght Jonah falls somewhere in between, though I would trust his judgment on TV shows and Mommy dearest.

And whoever above linked US Stock appreciation to the dollar devaluation is dead on. Kudlow is like the p.r. man proudly pointing to his company's 15% sales increase while the overall market is doubling. Not real good for market share or long term financial health.

Posted by Gene | July 17, 2007 10:17 PM

Not to defend Kudlow, who is, from all appearances, an idiot-- but is it really ridiculous to describe the stock market as the most important single indicator of economic wellbeing? I wouldn't go so far as to support that claim, but just because huge swaths of the economy aren't directly represented therein doesn't mean it can't be seen as an instrument uniquely sensitive to overall economic conditions. You certainly wouldn't want to base your analysis of the economy on nothing but the market-- and you certainly wouldn't want to deliberately misinterpret market data to fit your ideological bias, as Kudlow does-- but I don't think the precise sentence that set you off is actually as outrageous as you seem to think.

Let us also add the ugly little subtexts inherent in the stocks giving Bush a vote of confidence. 1) The American economy is solely a reflection of the policies of the executive, and any growth must be seen as because of (rather than despite) his efforts, 2) Despite the overwhelming voter dissatisfaction with Bush, it's the stock market that really matters-- money isn't just speech, it's votes.

Posted by Anthony Damiani | July 18, 2007 3:20 AM