An alert reader brought to my attention an outstanding article in today's WSJ by Steve Moore. In it he reminds us of the many disturbing parallels between "the economic carnage caused by big government run amok" as described in Rand's novel Atlas Shrugged, and the perils of "each successive bailout plan and economic-stimulus scheme out of Washington ... Our current politicians are committing the very acts of economic lunacy that "Atlas Shrugged" parodied in 1957."Read the article, and if you haven't read Rand's novel, by all means do. Steve reminds us that "as recently as 1991, a survey by the Library of Congress and the Book of the Month Club found that readers rated "Atlas" as the second-most influential book in their lives, behind only the Bible.
I love your commentary and your charts but I have found whenever an
ReplyDeleteeconomist inserts their political views into their analysis the observations get skewed, whether from the left or the right ,and have proved to be less profitable.
I don't agree, Brodero, although as a matter of course one should usually stick to one's knitting. Hollywood actors, novelists, and climatologists should not use their platforms to lecture us on political matters they clearly know nothing about.
ReplyDeleteIn this case, though, Scott is merely using his economic insights to comment on economic policy, pointing out what works and what doesn't in applying fiscal and monetary tools at the federal level. The best econ bloggers do this, and these folks are simply following the evidence, like any good investigator; they are not warping the analysis to get to a political position.
Like all good analysts, he backs up what he says with facts and analysis, not just opinion, unlike, say, Sean Penn on his soapbox screaming that Bush and Cheney are war criminals and belong in prison. Or unlike Paul Krugman, to pick an example closer to home, who is an economist but loves to write about things like Iraq and broader political themes -- almost of which is emotional and non-factual.
I don't agree, Brodero, although as a matter of course one should usually stick to one's knitting. Hollywood actors, novelists, and climatologists should not use their platforms to lecture us on political matters they clearly know nothing about.
ReplyDeleteIn this case, though, Scott is merely using his economic insights to comment on economic policy, pointing out what works and what doesn't in applying fiscal and monetary tools at the federal level. The best econ bloggers do this, and these folks are simply following the evidence, like any good investigator; they are not warping the analysis to get to a political position.
Like all good analysts, he backs up what he says with facts and analysis, not just opinion, unlike, say, Sean Penn on his soapbox screaming that Bush and Cheney are war criminals and belong in prison. Or unlike Paul Krugman, to pick an example closer to home, who is an economist but loves to write about things like Iraq and broader political themes -- almost of which is emotional and non-factual.
More facts and less political opinion tend to be the more profitable way. Agreed Krugman is way too political. I just hope Scott sticks mostly to facts and not politics.I can read National Review for political opinions.
ReplyDeleteI think we pretty much agree then, Brodero. This site offers mostly facts in any event. Whatever opinions are offered by Scott are, as I've said, backed up and are strictly related to matters brought up in a given post. But it's entirely appropriate and indeed one of the points of a blog of this type to offer thoughtful opinions on economic policy.
ReplyDeletebrodero: If I allowed my political opinion to influence my analysis, I could hardly be bullish at this point. My former London colleagues always used to say "value over view," and there is a lot of wisdom in that.
ReplyDeleteIf you look back through my posts you'll see that the great majority contain no reference to political developments.
Still, you can't do good analysis without paying attention to which direction the political winds are blowing. If I had been more convinced a year ago that Obama would win, I might have reduced my equity exposure on the view that his overtly leftist policies would terrify the market.
Today the reality of liberal policies is firmly with us and, I think, priced into the market. So we need to ask if those policies are likely to be passed into law and, if so, whether they are likely to make things worse than the market's already-dire expectations. I think there's some room for optimism on both these fronts.
Scott I appreciate the fact that most of your observations are apolitical and all of your observations are cogent and interesting but basing ones equity
ReplyDeleteexposure on the political winds seems misguided. Based on that premise with a Democratic President and a Democratic Congress we must stay in cash.
brodero: I don't think you understand my comment above, since I agree with you. Let's consider it from a different angle: what if you discovered inside information from top Obama advisors that he was going to back down from his attempt to engineer a massive expansion of government spending, and on top of that was going to propose the elimination of the corporate income tax? I think you would agree that the appropriate response for an investor would be to increase equity exposure, right?
ReplyDeleteI see your point. I just think selling when a democrat comes into office and buying when a republican
ReplyDeletecomes in is simplistic and I understand you are not saying that.That being said your blog is one of the best on the street.
Again I agree with you. It's not enough to know the parties and the politics, you also have to consider the valuations before buying or selling. I've had a series of posts where I note to the effect that the market is priced to a calamity, and if Obama's stewardship of the economy proves to be less than calamitous, then the market is a buy.
ReplyDeleteAtlas shrugged was a heavy read and I got just as much out of The Fountainhead which was a bit more adventurous in my opinion. Having said that, I fortunately also read "The Forgotten Man" last summer and since the bailouts have been rolled out, felt a greater sense of bearishness as the country turned toward Big Brother Obama. Uncertainty caused by oscillating forms of government intervention destroys wealth.
ReplyDeleteThe best bet is to clip coupons for the near term and buy hard assets (not necessarily commodities only) for the long term.
Casual: you make some good points. Don't overlook TIPS however (I've made quite a few posts on the subject). They combine an attractive real coupon and a guaranteed inflation hedge. Similar in some respects to a combination of bonds and commodities, only guaranteed by the U.S. government.
ReplyDelete