Shock Doctrine Indeed

Wannabe economist and anti-globalization zealot Naomi Klein has written a successful book claiming that free market capitalism is incredibly unpopular and only gets advanced by being rammed down people's throats in a crisis. The theory is pretty laughable, but every cockamamie theory needs to rebutted seriously as a matter of intellectual integrity. Here is the best one I've found (watch the video), although there is this too. Of course, any serious student of history knows that it is economic shocks that bring about increased central control of the economy. Nobody disputes that the Great Depression accelerated the world's gravitation toward socialism in general, and that Germany's inter-war economic dislocations gave rise to National Socialism. These are but history's most prominent examples. True to form, openly socialist Senator Bernie Sanders plays the same role that collectivists and utopians throughout history have played, seeing in a crisis the opportunity to seize economic power from individuals and garner it for the state.

HERE'S Your Predatory Lending

This is brilliant, in that it pieces together how the financial crisis came to be. It gets a tad political at about 7:50, but the analysis is dead on, it calls the spades spades. (Note: use the pause button liberally help follow along.) (Also, betcha Google takes this down after awhile...they'll say it doesn't comply with some 'standard', and we all know what standard that is.)

But he left out one other tidbit...follow along. What is the next bank to go down in flames? It's Wachovia. What was the the disaster deal that baked Wachovia's cruel fate in the cake? Golden West. Who were they? They were the kingpins of "affordable mortgages" in California, the biggest issuer of ARMs:

"Of the $11.6 billion of loans originated in 2005 by Golden West, 99 percent were adjustable rate mortgages. Billions of these loans were Option ARMs. An Option ARM gives the borrower the option to pay a minimum payment (the loan balance increases), just principal, or principal and interest. Over 70 percent of their borrowers chose the minimum payment option. This reckless choice will only work if housing prices go up 10 percent per year. When prices drop 20 to 30 percent over the next two years, it results in Armageddon for the borrower and lender."

Who built this house of cards and was lucky enough to find dumb-ass Wachovia to foist it on? Herb and Marion Sandler. Lefties. Real big lefties. They had the whole world fooled. They were "pioneers" in mortgage lending, breaking from the conventional practice, turning industry thinking on its head. Yeah, building a house of cards is more like it. They walked away with billions and within a year what they built and passed off on Wachovia was worthless. Zero. Zilch. Oh but the Sandler's billions will eventually go to a bevy of utopian, Sorosesque foundations. There's your predatory lending folks. There's your greed.

UPDATE: Finito.

Update: God Is REALLY REALLY Brazilian

Remember that oil discovery off of Brazil that was so huge - possibly 8 billion barrels - that it caused President Lula da Silva to exclaim that "God is Brazilian!" Whoops. Wrong. It's closer to 70 billion.

But there's no more oil out there left to find...

Miscellany

Don Luskin notices one of those, er, mere coincidences involving the New York Times.

Russia is so nervous about the direction of energy prices, they are simply trying to bull rush their way into more price manipulation ability. Russia continues to believe that it is a strong and powerful country despite the fact that its economy is the size of New Jersey's, and shrinking to boot.

Green-obsessed Britain says no to nukes and no to coal and are looking at perhaps another 'no' this winter. No heat that is.

New York City Psychological Health Update: It is deteriorating rapidly. NYCers can't seem to cope with the thought of Sarah Palin. She comes at a terrible time when the city's main industry is getting decimated (wiped out like Lehman, or sent to Charlotte like Merrill...Charlotte, egads!!). And now we have the Mets slip-slidin' away a-hey-hey-ay. The silver lining though, is that the shrinks are doing great.

Oh My Gawd!

Here in NYC, the hordes of self-righteous, self-styled enlightened sophisticates that are the citizens of this fine city are appalled, aghast, dumbstruck, flabbergasted and generally verklempt at the prospect of Sarah Palin in high elected office. Although I doubt she would ever say anything so dumb or dishonest as this.

This Crisis Needs Rule Changes, Not Federal Dollars

As expected, while the Great Sausage Factory dithers (thankfully, IMHO) the actual bailout, the free market bailout, is well under way. Just hitting the wires right now is perhaps the most visible sign yet of our capital market's astounding ability to punish, heal, and self-correct - Warren Buffett is injecting $5 billion into Goldman Sachs. Battered companies are finding dance partners. Buffett and Goldman are marquis players, but it is happening way way down the financial food chain too. Check this deal out, which was made possible by this rule change. There are many advocates out there for solving this crisis by tweaking some of our regulatory strictures (see here and here) rather than sweeping in with oceans of taxpayers' dollars. Based on the evidence, these people ought to be listened to. There is capital out there, it just can't seem to mate with the demand for capital in certain instances because of regulatory roadblocks. Paulson, Bernanke and Cox should spare themselves the bloviations of the Senate Banking Committee and huddle together and come up with rule changes in their respective domains that will ease the mating of available capital with the need for capital.

But How's the Food?

This is how you kill a new restaurant's prospects in NYC:

"It looks more like the inside of a first-tier Kansas City airport hotel."

...and reinforce the belief that east coast media liberals are elitist jerkoffs.

or this..."I didn’t like the pork panini, which was stick-dry, or the strange, unwieldy gnocchi, which were sliced in discs, like sausages from North Carolina"

Progressives Are Petty

Bay area residents, like the EJM, do a service in reminding me yet again why "liberals" or "progressives" or "reality-based," or whatever the hell they wish to be called these days, are an intolerant bunch the likes of which decent people, myself very much included, are glad not to be of their tribe. There is a Chilean wine called "Palin" which bears absolutely no connection to Alaskan Governor Sarah Palin other than the coincidence of sharing a name. Doesn't matter, they won't drink it.

The Real Market Pain

Think the US stock market stinks? Check out Russia today. The MICEX is down over 50% this year. Why? Because "corrupt petro state + falling oil prices = you're screwed." Combine that with government expropriation of property and creeping authoritarianism and you've got a recipe for an emerging market tailspin. Would've helped to follow my rule #12.

If oil prices continue to fall expect the destabilization of Venezuela, Iran, and Russia to accelerate.

New Feminist Icon: June Cleaver

Wow. If the "progressive" movement takes this up, pretty soon stay at home moms will be able to sneer and look down their high and mighty noses at the women who trudge to work and resign themselves to an unsatisfying life as a cog in the American capitalist machine while liberated women find true fulfillment in raising the next generation.

HT: Instapundit

Thank You EJM for Reinforcing My Beliefs

I must admit I was totally unexcited about the candidacy of John McCain. I was resigned to dragging my buttocks to the polls to, in my own small way, try to counteract the most irresponsible national flirtation that we as a people have ever entertained, namely electing someone without even the remotest qualification to lead this country and setting the bar for the future so low as to be meaningless. The choice of Sarah Palin slightly changed that, for it seems that she is the anti-Ted Stevens and she has some appeal to libertarians. But now, after the appalling behavior of the elitist jerkoff media (I have recently determined that "MSM" does not accurately convey the perfidy, arrogance and willfull negligence of our major news sources, so I coined a new term), I am a hair's breadth away from breaking out the checkbook for the McCain-Palin ticket. Sarah Palin has drawn forth from the media and "progressives" everywhere a reaction that has reminded me yet again why I am not of their ilk - they are idealogically intolerant and pretentious to no end in their condescension. The whole experience has been remarkably edifying for me and I feel great. That's worth $500, no?

UPDATE: On that theme, this is Mark Steyn at his best - doing the Coke-spitting, gut-splitting, laugh out loud funny eviseration of the lame media that natural born citizens won't do.

Don't Tell Brazil That We're Running Out of Oil

Brazil is finding oil like nobody's business. Remember folks how you get rich in a gold rush...picks and shovels my friend, picks and shovels.

My New Supply Side Guru: Charlie Rangel !

Supply-side theory partly rests on the notion that people respond to incentives. As tax rates go up or down, people adjust their affairs to either minimize their tax bill or generate more income at favorable tax rates. Here is but a small example of what I mean. There is even a more radical solution which makes the tax system almost voluntary, which is the way that Sausage Factory Big Cheese Charlie Rangel dubbed our tax system. The only problem was you have to be rich to pull off opting out of the tax system. UNTIL NOW! Great leader that he is, Mr. Rangel has shown us common folk the way to achieve that same level of flexibility to opt in or out of the tax system. And it is so simple...just don't report income! It's the ultimate in supply-side dynamic effects! Out with Art Laffer, in with Charlie Rangel!

I'm Shocked the MSM Is Out of Touch

Devastating.

Election Year = Total Lameness from Bloomberg News

I haven't gone after one of Al Hunt's liberal minions over at Bloomberg News in awhile, so why not give it a whirl on this lazy Friday. Up today is one of my favorite columnists actually, Caroline Baum. (I generally like her columns, but I really became a fan when I saw her, at a panel discussion, refer to a bunch of economists using the names of the seven dwarfs, specifically referring to Stephen Roach as Grumpy. The scowl he shot back was priceless.) Unfortunately, this otherwise good columnist can't resist a tawdry, elitist New York sneer at Bristol Palin (Note to non-New Yorkers: we have no teenage pregnancy here, none. No teen drug use either. We wrote the book on involved parenting.) More galling however is that Ms. Baum lumps herself into the legions of commentating ignorami who still talk about the "savings rate" as if it were meaningful or indicative of anything. I know that here in the backwater of New York City, people still have cash in the mattress or their little passbook savings accounts, but in most of America people invest is homes, businesses and stocks and bonds. And the labor participation rate too? How lame. C'mon Caroline, this is soooooo done. Why do putatively knowledgable people take the two thinnest reeds of all the data out there to bash supply-side tax cutting? Don't talk about how much tax revenue is actually collected. Don't talk about whether people are getting richer because they've kept more of their money. Talk about how discouraged people feel.

Not the first time that Bloomberg pimps the anti-tax-cut meme during an election season. On the bright side however, Al Hunt, who was the WSJ's token liberal columnist for so many years, knows the value of having a token around, so he does give us an actual economist to read every so often.

Syria Jilts Iran?

In my last installment on the cold war we are waging to stop Iran from developing nuclear weapons, I suggested that Syria was in the process of taking a bribe. I suggested that they were given back their waning influence in Lebanon and offered better ties with the West if they sold Iran out. Lo and behold, Nicholas Sarkozy is in Damascus saying that Iran better come clean or those big meanies in Israel might bomb them, and Junior Assad is in full agreement. (All of this notwithstanding the Dutch, who recently claimed to stand down their fearsome espionage activities in Iran because the US was ready to whack Iran.) Has the bribe been accepted and is Assad now letting Iran know who his new friends are? If so, it would be an encouraging development, indicating that we've pulled one more rug out from under the mullahs by taking away one of their key allies in the region. If the Syrians can tell us what they know and the Israelis can sow enough fear by making a potential this-time-around look alot like last-time-around, then we stand a good chance of having diffused the Iranian bomb without it getting too messy.

Bush to Putin: I'll See That Raise, and Raise You Back

This is great, great news. We're telling Putin that we're doubling down on Georgia and we're telling Georgians and Shaakasvili not to worry. Still, let's make sure those navy ships stay a five iron off the Georgian coast for awhile. Oh, and let's let Vlad know that we'll have some more troops available sooner, fresh off a successful nation-building, security mission.

Ever Seen a Brain Explode?

Lordy. If this happens, the incidence of spontaneous massive cranial eruption will approach levels not seen since this event. You see, here in small minded NYC the world is cut and dried...Murdoch is evil, the Times is scripture. How can the devil be allowed to write in the scriptures? It won't be safe to walk around the city with all that brain tissue flying everywhere.

TR Comparison? Check. NYT Scoffs? Check. But What Will She See in Vlad Putin's Eyes?

Way over here in the hinterlands of New York, it is hard to get a true read on this Sarah Palin character. So we have to look to some proxy information...

Alec Ellison of Rye, NY gets a letter into the WSJ letters section today that is quietly and elegantly devastating to the critics of Sarah Palin, at least to history buffs and TR fans...

"Under 45, lover of the outdoors, a Republican reformer who has taken on the Republican Party establishment, has many children, and a spot on the national ticket as vice president with less than two years in the governor's office -- you describe Teddy Roosevelt in 1900 and Sarah Palin in 2008."

Of course it might simply suffice to say that if you know nothing about Sarah Palin, all you need to know is that the New York Times scoffs at her. In fact the entire cadre of elite media jerkoffs hate her.

Judging by the evidence so far, you gotta love Sarah Palin. If she makes any reference tonight to Milton Friedman, bashes Hugo Chavez, or says she'll make Vlad Putin lick her Jimmy Choos, we'll have all the confirmation we need.

UPDATE: Was it just my satellite feed or did Sarah Palin really say "Vlad Putin will crawl back across the Georgian border or I will waste that miserable Russian bear like it was a crippled moose." ??

Thomas Frank Still Dreadful

Well it's Wednesday so I guess we can expect another dreadful and illogical column from Thomas Frank, the WSJ's "Wednesday Liberal". Frank doesn't disappoint. He's appalled, and he wants you to be appalled as well, that American business isn't democratic. I guess he wants all of us savers and entrepreneurs to stick our money into a bank account and invite a couple hundred strangers to vote on how to spend it! No shit business isn't democratic, it's our money! Speaking as a representative of America's shareholding class, I can clear it all up for Mr. Frank...we don't allow votes on raising deductibles or relocating factories because it is our damn money. If I deem that more generous healthcare benefits are economically damaging to my business's interests or fully justified to retain talented individuals, that is my decision to make. If I happen to believe that Paducahans and Peruvians have an equal claim to earn a living and must compete for my payroll dollars, that is my decision. Conduct charity with the dollars you control Mr. Frank.

Books

The Washington Post compiles a recommended reading list from a list of putative luminaries to direct readers to books that will help them understand our current, volatile economic times. The results are typically good and bad, but this comment by an otherwise ignorable Mark Cuban was interesting:
"I don't think there is such a book. In my humble opinion, people who actually believe they can understand all the issues are the ones that got us to where we are today. In reality, there are so many variables and so little data, it's all a guess. I don't think a book exists that can explain it. Is there a book out there called 'No One Has a Clue What Is Going On and the Whole World Is Guessing'?"

Well yes Mark. Someone has written such a book. That someone is Nassim Nicholas Taleb and the book is entitled The Black Swan. Surprised you never heard of it.

FWIW, if you want to understand, nearly perfectly, what is going on today in our economy and our financial markets, I suggest The Panic of 1907: Lessons Learned from the Market's Perfect Storm.