Final Installment: The Capital Commerce Debate


Our five part debate at US News & World Report comes to a conclusion. The follow up to this will be on Kudlow next week (Monday or Tuesday), where I square off against Don Luskin.

My biggest complaint is that this morphed into a battle between logic and rhetoric. I tried to stick to facts, cited sources, and logic. I thought Don became somewhat slippery in his arguments.

Read ’em all, judge for yourselves:

Round 5: The Recession’s Lurking on the Grassy Knoll vs The Likelihood of Recession Is Real

Round 4: A Disingenuous Look at the Hard Facts vs Job Growth Is Weak, Savings Are Nil, and Debt Is Soaring

Round 3: Bears Can’t Explain Why Housing Hasn’t Tanked the Economy vs The Numbers Are Clear, and the Economy Has Slowed

Round 2: Don’t Worry–Be Happy vs Worry a Lot–Housing Will Hurt the Economy>

Round 1: The Bullish versus Bearish Economic View


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  1. dblwyo commented on Apr 14

    “My biggest complaint is that this morphed into a battle between logic and rhetoric.”

    Here, here. Sigh. While the exact linkage (econometrically speaking) is hard to define statistics presumes stability in the underlying system. In this case the whole point is that historically low rates created an anomoly and changed the parameters on the relationships. As you point out.

    BtW – sidenote. Having helpded found FDX’s logistics bizz and run IBM’s supply chain solutions strategy I’ll suggest that JIT, etc. is more talked about than implemented. Penetration is not at all what the headliners would think having learned the jargon but not checked the realities.

  2. TrendWatcher commented on Apr 14

    Quick questions: Luskin claimed early on in your conversation with him that when you take housing out of the gdp calculation, it shows robust gdp growth everywhere else. Do you know where his source for that gdp less housing data series came from and can you post some charts that shows GDP, GDP not including housing, and GDP attributed to housing. Or if you can point me to the solid data, I would be glad to post create the charts and post it myself.

  3. Grodge commented on Apr 14

    BR had a graph of GDP less housing a couple posts ago. GDP has grown despite housing’s kerfuffle, but the argument is that it is not enough to hold the economy.

    Luskin is a dweeb, no question, but there is an argument for a bullish view of US stocks. As BR noted, this degenerated into a rhetorical debate. It’s unfortunate USNews couldn’t find a more worthy adversary to BR.

    I’d like to hear a more reasoned assessment of the bull case; frankly I find Luskin too damn annoying to even read (let alone watch on TV).

  4. Craig commented on Apr 14

    Yes, the MEW *could* be used for “asset allocation”. So what would those other assets be?

    Surely he means a second home or perhaps the equity markets. Now if we apply “econometrics” and perhaps a dollop of common sense and simple math, we can see how those assets have surely outperformed assets like the Euro, gold, Francs, etc. like Mr. Luskin and professor Dumbass suggest. So are they suggesting that Americans are so financially savvy that they took all that MEW and magically found and allocated it only to RISING assets?

    Oh, wait a minute. All assets didn’t really go up, did they? Did you all buy gold, euros and francs and that’s where the assets/MEW went? Uh huh.

    Savings is zero so MEW didn’t go there. Where did it go? Don’s not debating whether MEW existed is he? Did you all buy gold, euros and Francs and THAT’s why the dollar is croaking? Me thinks not.

    Does it matter whether MEW was spent on cheapass crap from Walmart or depreciating assets like homes, cars, or equites?
    Unless it is in gold or the euro right now, it’s LOSING VALUE.

    Nevermind the shrinking currency in this shell game. Can’t you SEE your equity liquidation value going up? More dollars means everything is going UP, don’t you know that? Just ignore that your dollar only buys .80 worth of goods or services.

    Poor Don, he’s been duped by a simple childs game. You can’t argue with that.

  5. Sammy20 commented on Apr 14


    I really think you need to start presenting information like an irrational perma-bull. Lets see some statistics where you remove the best performing elements in a data set. Examples would be to exclude government spending and see how GDP is doing, or strip out PC’s prices and see how CPI is doing or strip out healthcare jobs and see how NFP growth is doing.

    Mind you nothing will be even close to the impact that housing has as any rational individual can plainly see, but the results sure would paint a far different picture.

  6. Barry Ritholtz commented on Apr 14

    Then I would be a charlatan, hack, or politico

    None of those titles appeal to me

    I’ll stick with strategist, analyst, or my favorite epithet that someone hurled at me — an economic theorist

  7. mcg commented on Apr 14

    In the final round, Donald Luskin says:
    “I keep asking Barry why it is that- if
    mew is such a powerful force behind consumption,consumption growth didn’t surge when MEW surged after 2002, or for that matter,why consumption did surge in the late 1990’s when MEW wasn’t doing anything in particular” End quote.
    Perhaps some of this could explained because after the stock market declines we saw in 2000-2002, along with numerous job losses, a drop in capex, MEW just kept the economic ball rolling, not really showing any huge spike in consumption. Also, perhaps consumption did surge in the late 1990’s for reasons related to the stock market boom, capex, tech hiring, y2k, etc. It seems the wealth effect can cut both ways. Donald Luskin goes on to say:
    “There really have been higher energy prices. There really is a record trade deficit. There really has been record MEW, and now that has pulled back. But the economy and the stock market just keep going” End quote.
    I’m glad to see that Mr. Luskin can see potential problems and cross currents in the economic picture.

  8. Eclectic commented on Apr 14

    All in all… the debate was too long I think.

    The subject probably only needed opening remarks, one initial rebuttal, and then a closing rebuttal.

    I too am surprised that Luskin was not more academic, but he made his points effectively enough.

    Final analysis: Unfortunately, you have to knock the champion down or out as a challenger with no title. This recovery still has steam, albeit under falling pressure, and employment has not given us any tangible evidence of declining yet. So Luskin is in the champion’s corner, and that’s where the title is that you weren’t able to take away.

    My guess is we’re in the late rounds of a match that won’t be won with a knockout. It could end up being a split decision with both sides claiming a win.

    All I can say is that the upcoming few months will be the most interesting macroeconomic experiment that anyone could devise even with computer modeling.

    Basically the question will be: Can the American economy simply will itself to surmount every obstacle and not to fail? Late in his tenure, Greenspan made a similar observation, claiming that in all of his experience over the years of many times wondering just how it might happen, the U.S. economy had just seemed to (paraphrz) “always manage to somehow muddle through.”

    But, Barringo, beware of the Kudlownians Monday or Tuesday. “Yon Cassius has a lean and hungry look.” I think the Kudlownians figure you got clocked in the debate. They’re laying for you, and you’re fixin’ to get a sucker punch.

    If you don’t have something new… better than MEW… you’re screwed.

  9. Steve commented on Apr 14

    One thing I’ve noticed is that people are so quick to point out that we could be headed for a recession because of potential drags (consumption, capex, etc.) going forward.

    That’s certainly possible, but it’s telling that you rarely hear these same people talking about one of the most powerful drags on GDP beginning to lift.

    Residential investment won’t subtract 1.2% off of GDP in Q1, as it did in Q3 and Q4 of 2006. And it will likely be even less of a drag in Q2 and beyond.

    So, I think it’s fine to talk about potential drags on growth going forward, but a more balanced outlook would acknowledge that one of the major existing drags is likely abating.

  10. Steve commented on Apr 14

    I really think you need to start presenting information like an irrational perma-bull. Lets see some statistics where you remove the best performing elements in a data set. Examples would be to exclude government spending and see how GDP is doing, or strip out PC’s prices and see how CPI is doing or strip out healthcare jobs and see how NFP growth is doing.

    Did you miss this chart?

  11. flipper commented on Apr 14

    Did everyone notice that bloomberg removed the housing story from the front page?

    Shure we know that the worse is yet to come, but as Berstein’s strategiest noted until there will be problems so severe that can not be ignored the markets will probably rise on buyouts, etc.


    If US CapEX is slowing down here, but exploding overseas, what economies and markets do you think might be the beneficiary of that?

    Its why I think investing in the Pacific Rim will generate better returns then the US.

  12. Nova Law commented on Apr 14

    Reading the dueling commentary reminds me of Harry Truman’s demand that henceforth he be advised only by a one-handed economist. Even worse – in this case there were four hands furiously at work, agreeing on little.

    And you guys wonder why it’s called the “dismal science”!

  13. Winston Munn commented on Apr 14

    Would it not be consistent with the data that most of MEW went into a reallocation of debt, rather than as an allocation of assets?

    One of the earliest uses of refinancing was the simple expedient of taking advantage of lower rates to lower house payments – not extracting MEW – and the lowered house payments had the effect of freeing more disposable income.

    As the housing freight train gathered speed, home prices rose, and in many cases MEW was used as a “bill consolidation” loan, swapping higher-priced, shorter term debt with lower-priced, longer term debt. Again, the net effect was more disposable income.

    With MEW extraction falling and due to fall further and no longer available as a method to realign debt, it seems likely that the next phase of the consumer comsumption orgy will be a reversion to the mean, i.e., an increase in short-term, high-interest debt.

    However, this well is not as deep and can run dry more rapidly.

  14. Steve commented on Apr 14

    Winston Munn,

    If MEW decreases, what will likely happen is consumer credit growth will return to levels prior to the housing boom.

    See this chart

  15. MAS (San Diego) commented on Apr 14

    The debate reminded me of Ali – Holmes, with Luskin as the mouthy Ali and Ritholtz as the disciplined Holmes.

    From BoxingScene:
    In the tenth round Ali was a shell and looked like a man half-asleep. Holmes to his credit, realizing Ali had nothing, pulled his punches and used mainly his jab to avoid hurting Ali.

  16. Craig commented on Apr 14

    Excellent point Winston. Funny how we tend to think in relation to our own situation.

    Let’s take your point and run it a little further.

    Many of those refi’s were to lower mortgage rates on existing housing, but it also was used by those with credit card debt to “consolidate” unsecured debt into longer term secured debt. My bet is that anyone running their finances that way wouldn’t be your high FICO score borrower but is the definition of sub-prime.

    So after they refinanced/zeroed the balance on their CC’s they were ready for another round of spending. It probably looked pretty good with CC’s at 4-5%.

    Pray tell, what is happening to those mortgages and Credit Cards right now?

    We are just seeing the sub-prime mortgages. Wait until CC’s and cars make their entrance.

  17. Worried commented on Apr 14


    Is it possible to overlay or integrate money being released from:

    Stock market appreciation

    House appreciation

    Credit card and other consumer finance

    So that rather than just showing mew versus consumption you have these other factors somehow made into one factor

    For example consumption while irratic rises to the Dow peak of 2000 and falls to the Dow low of 2003 and then rises again. To what extent is credit card etc debt now rising now MEW is declining?

    The bear case is that the stock market boom was replaced by the housing boom as a driver of consumption and it now makes sense that the last leg is to max out on all available credit including cards before no more can be withdrawn and recession begins. So can that actually be plotted in a meaningful manner?

    I agree that the other guy was obnoxious but it would be nice to see this nailed once and for all.

  18. spencer commented on Apr 14

    Trendwatcher — you can get the data on real gdp growth less housing from in the quarterly gdp release.

    Technically you can not add the components of gdp growth, but people do it all the time.

    the data shows that for the last four years —
    2003-2006 — real gdp growth average 3.4% and the contribution of housing was 0.2 percentage points so that real gdp excluding housing was 3.2%.

    Over the last three quarters it was.


    gdp x h… 3.3… 3.2….3.7

    Now Luskin calls the 3.3%, 3.2% & 3.7% growth –an average of 3.4% –robust.
    This is a word game the administration apologists get away with all the time. The long term growth rate of the US economy has been 3.5% so the past four year –and three quarter –record of 3.4% real gdp growth is just average or mediocre by historic standards. But they call it a boom or strong growth and get away with it because nobody calls them on it. Economic reporters should be ashamed of their selves for letting them get away with it.

  19. Shrek commented on Apr 14


    Could you please do a post on the huge amount of dollar reserves the ROW continues to accumulate, especially China, and what are the potential consequences for the US. I think its an underreported story in the financial community.


  20. bodanker commented on Apr 14


    I thought the debate was pretty good until round 4 when Luskin started with, “Ah, the “appeal to authority”–citing respected sources to back up one’s point when one doesn’t really have the facts on one’s side.” Since he went on the offensive against your MEW argument in round 3 by saying, “First, there are no authoritative statistics on MEW;”

    First he attempts to disprove your argument by saying there is no authoritative source for your data, but when you “cite respected sources”, that means you’re dodging the issue because the facts aren’t on your side. Well, Luskin can’t have it both ways, so which is it?

    Then Luskin provides a list of sources that he considers authoritative in the very next paragraph! I.e. he was appealing to authority to prove his argument via the lack of data from them! I’m really surprised you didn’t call him out on that.

    Thanks for posting links to the debate. The above notwithstanding, it was a good read.

  21. Winston Munn commented on Apr 14

    Is not this GDP argument biased in that for a true comparison one must also subtract housing during the time when housing contributed to growth of GDP? How about backing out housing for all quarters the past 5 years and making a comparison?

    And even then it is silly to re-add housing’s negative to show real GDP as the housing decline has influenced and will continue to influence areas outside of housing.

    However, I’m sure that will be the next “big thing”: GDP ex-housing.

  22. Steve commented on Apr 14

    However, I’m sure that will be the next “big thing”: GDP ex-housing.

    Hell, why not? We’ve already got GDP ex-MEW.

  23. Worried commented on Apr 14

    Don Rishkin has this in one of his articles

    “First, this whole thing is based on a fallacy that somehow MEW represents money in the economy that wouldn’t have existed otherwise. But since MEW, by definition, is produced by mortgage debt, then the money must have already existed. Someone had to have it initially in order to lend it to the mortgage borrower.”

    New Debt more or less creates new money where no money existed before. Be it credit card debt or mortgage debt around 9 times a banks cash deposits can be created by the bank when it offers a loan if the fractional reserve requirement is that high. It can be much lower.

    In the case where a remortgage results in one tenth of the remortgage money being deposited with the bank then no prexisting cash deposit at all would need to exist to create all of the money released to the customer. The money is created simply by typing the amount into the ledger

    The money comes from nothing and returns to nothing when the loan ends. In this way rising assett prices create money released into the economy in an uncontrolled manner if bankers dont require customers to account for all receipts to prove the money spent was spent on the mortgage assett.

  24. Worried commented on Apr 14


    The link was from Donald Luskin not Don Rishkin

  25. flipper commented on Apr 14

    Winston Munn, there is lies, damn lies and statistics.

    The argument to overlook housing is funny indeed –

    the patient has a heart attack, but if we cut the heart out, he’s just as healthy as always

    As Jim Rogers said most of the people have no idea that does the real estate buble burst look like.

    I myself have no idea either, but accumulation of debt can not go on forether.

    Really it will be very interesting to see how it all will play out if US decides to pay of debt via printing press.

    As for now it looks like it’s the base case scenario.

  26. flipper commented on Apr 14

    Barry, on investing in pacific rim – that countries would you invest in?

    China, India, Vietnam etc. have seen huge rallies in equites prices.

    I think China has now a stockmarket bubble, so investing there is a bit late.

    The only play left there in my view is Japan.

  27. Ralph commented on Apr 14

    I am at a loss as to why we keep this discussion limited to MEW.

    Credit cards, government borrowing corporate debt and derivitives are all part of this story. Housing is easier to talk about because we are seeing the effects now. It is only a matter of time before the same happens in all the credit markets.

    Government debt is probably the easiest to see and measure. Tax breaks without a corresponding cut in costs, allowing companies to depreciate capital expenses much faster than the items do actually depreciate. Forgiveness of income tax on monies repatriated from overseas and general government over spending (defense) etc. The result a trillion dollars of debt. That is just massive. As big as any debt problems form MEW.

    The bottom line is this is all borrowed money with no means to pay it back. Someday the bill will become due. Some day the government will run out of places to find more money to borrow to cover the monies that need to be paid back. (can you say Ponzi)

    This will then become a drag on the economy just like housing. Even the biggest bull out there must concede that if we end up with the equivalent of three housing drags on the economy that a recession is inevitable. The only question is the when.

    Of course we could ease the depth of this coming recession if we were to just accept that we have messed up and start to fix things now. I know, I am dreaming.

    To sum up. The big picture economy problem is a general credit bubble!

  28. V L commented on Apr 14

    I agree with Flipper, Chinese markets are extremely overpriced — average P/E 50-60.

    Of cause, they can become even more overpriced but I am not sure if it is a good idea investing in Chinese markets. (Same as it was not a good idea investing in NASDAQ companies in 2000)

    As far as Japan, I do not really see any significant growth over there.

    India also has many problems.

    In short, you have to be very selective in the Pacific Rim.
    In addition, if something happens those markets will collapse faster than you will get a chance to get out.

  29. Winston Munn commented on Apr 14


    You make good point about credit and debt, but one item you overlook is how the Federal Reserve monetizes government deficit spending. There is a simple explanation here:

    The U.S. buys goods and commondities and sends dollars across the seas. These same dollars are returned as investment in treasury bonds, meaning no newly created money is required to finance the debt.

    Due to the amounts of monies involved, this is the main reason inflation is not rampant. If the Fed were required to actually monetize the debt with newly created money, the influx would be staggering – we truly are “relying on the kindness of strangers.”

    This is the national security concern we should be addressing instead of chasing al-Qaeda all over the middle east. It has been economic collapse, not terrorists, that has historically caused fiat-currency nations to fall.

    To quote Richard Daughty, The Mogambo Guru: “We’re frickin’ doomed!!!”

  30. Estragon commented on Apr 14

    Flipper – you say “I myself have no idea either, but accumulation of debt can not go on forether”

    Why not? Assuming inflation remains positive, isn’t a continued aggregate accumulation of debt over time not only inevitable, but required?

  31. Estragon commented on Apr 14

    This [stat] x-[whatever] stuff kills me. The economy is a system where everything connects to, affects, and is affected by everything else. Hiving off [whatever] is an exercise in pure fiction.

    MEW was an exercise in creating claims against future production (debt). Consumption has been supported by other forms of claim creation in the past, and will be in the future. Claim creation directly by consumers may be reaching an upper limit, but there’s considerable scope for claim creation in the corporate and government sectors. Considering the flat yield curve, tight corporate credit spreads, and record corporate bond issuance, there’s no evidence of market resistance to this.

    The alternative to creating claims on future production is to increase current domestic production. Although possible, the low unemployment rate and meager cap-x makes this less likely.

    In the near term, the most likely path is for corporate claim creation to indirectly support continued consumption, and for government claim creation to take over if and when corporate claim creation wanes. The biggest risk to this outcome is the emergence of viable non-US competitive claim creators, or an event (such as a disorderly decline in the USD) which diminishes the relative value of US claim creation.

  32. Francois commented on Apr 14

    “I keep asking Barry why it is that- if
    mew is such a powerful force behind consumption,consumption growth didn’t surge when MEW surged after 2002, or for that matter,why consumption did surge in the late 1990’s when MEW wasn’t doing anything in particular”

    Well! This can be simple to explain if you be careful not to trip on the carpet’s flowers. MEW didn’t take off right away in 2002? In real estate, things take TIME! You just can’t trade MEW like you have an E*Trade console and voila! Before noticing any meaningful increase in MEW, people have to realize it’s advantageous or necessary, then update the value of the mortgage, contact a lender and let’s shuffle and deal! Multiply this process by x millions of dudes and you’ve thorned several calendar sheets.

    As for the end of the 1990’s, pray tell WHY would people have extracted MEW for consumption when even the village’s idiot could make 30% CAGR in the stock market?

    Sorry, but I think Luskin was dishonest here. He kept shifting arguments and whenever Barry answered, then Oh my god! C’mon Barry! Who d’ya think you are kidding here?

    Give me a break!

    BTW, (for the nekulturny among us), it’s not because one agree with Barry’s analysis that this person gotta be short the market. Personally, it’s quite the contrary: Trend is up, I’m long; trend is down, I’m short. Right now, I’m long. It’s just that my stops are pretty tight, exactly like it would be if I had to play a 1,000/2,000$ No-Limit Hold’Em cash game against Chris Ferguson, Mike Matusow and Antonio Esfandiari at the table: just ready to Fold’Em stocks, at any moment.


  33. Eclectic commented on Apr 15

    Estragon, per you:

    “MEW was an exercise in creating claims against future production (debt). Consumption has been supported by other forms of claim creation in the past, and will be in the future.” end.

    It’s analogy in the U.S. corporate world has been almost something of the exact reverse. The existence of MEW is possibly the philosophical equivalent of the existence of phantom earnings in corporate America when it is necessary to discount “D” and “A” from EBITDA in order to produce them.

    Once that is done, no additional charges deriving from depreciation and amortization flow to the real bottom line. I’m not speaking of the real accountancy observation of the bottom line (because accounting is an exact science, regardless of how it is often misused), but rather the short-term conceptual effects of ignoring D and A.

    You can create a thought experiment yourself to illustrate this by thinking through what would happen to the way you mentally account for D and A at a plant you might own, supposing that suddenly you were notified that the plant and its equipment and grounds were for some reason simply to be condemned at some time in the immediate future with no hope of appeal, but not exactly at the present time.

    The important point to realize is that you would simultaneously both: 1)- take a huge mental and emotional hit when notified of the upcoming condemnation (charge against earnings), and, 2)- immediately book all remaining D and A essentially as capital without cost. Unused D and A are then like ‘found money.’ Consequently you’ll continue to operate the plant until the day it is condemned as long as you can realize even a small profit from marginal production, being fully able to ignore the true costs of D and A.

    This is the current story of domestic Big Auto in the U.S., and the point of notification of ‘condemnation’ I’m illustrating occurred back when Big Auto managers realized competing with the employee costs they must absorb in the U.S. was all but hopeless, and thus they themselves ‘condemned’ the plants they were operating. The lines will continue to run until they begin to lose on variable production costs. Were they literally forced to recognize the true costs of D and A in that production, they wouldn’t even be able to run the lines now. In other words, they would never replace the plant and equipment now in the U.S., and so existing plant and equipment is considered to be free of D and A replacement costs forever, and that remaining D and A will be fully consumed by the time the plant is finally closed.

    All that’s left then for you to accomplish in the condemned plant is sufficient production to cover only the variable costs of production. You’ll run the line until you start to lose money on marginal production, and finally shut it down when that cost exceeds the political costs and severance costs of laying off the employees. Even “I” and “T” might be ignored, if there are tax advantages in the form of incentives offered by local government to continue production, and when the interest charges can not be avoided simply by closing the plant.

    Among many industries in the U.S. this is also the reason for the lack of domestic Cap-Ex. A policy of unrestrained free-market capitalism does not allow the U.S. to force corporations to recognize replacement costs for D and A in the U.S., and thus we can not influence domestic Cap-Ex to meet the profoundly strong U.S. consumerism. This is the maddening dilemma faced by the U.S. Fed, although it has not to now been fully recognized, because housing saved the day post 9-11. If they attempt to stimulate the domestic economy, it just forces more Cap-Ex out of the U.S., and if they attempt to restrain, it brings unemployment home to the industries that do survive. It’s a structural demographic problem that will last for quite some time yet. Political reaction to a worsening U.S. economy would indeed make it worse, but the effects on the U.S. economy will nevertheless be felt for some time even if the politicians stay out of it.

    My point has been that the real costs of off-shore D and A are being grossly underestimated by our importing competitors (the ‘dealers’ among us in the sense of Adam Smith’s admonition against the dealers of the merchant and manufacturing trades), because they represent foreign interests that fail to observe common contract law, intellectual rights, human rights, environmental laws and trade rules that would dramatically raise those costs.

    This debate between Luskin and BR has been fun to observe… and my crediting Luskin entirely with a win has been tongue-in-cheek. The notion he presented that MEW has not been added as an integral and significant part of domestic consumerism is absurd. It was done because those who extracted MEW were confident that MEW was a riskless use of capital. Whether it was or was not riskless is still out to pasture, but the bell cow will bring it home eventually and we’ll get to see if it was or not.

  34. Eclectic commented on Apr 15

    Let me clarify something I wrote [by adding brackets]:

    Its [MEW’s] analogy in the U.S. corporate world has been almost something of the exact reverse [the reverse of the corporate experience of phantom earnings recognition].

    Estragon, you correctly noted that MEW is a claim against the future, as you term it: against future “production.” Obviously you mean in the sense of the eventual recognition of unrealized capital gains, and to be objective we can’t know the level of those gains yet, or if there will be any at all.

    The reason phantom earnings recognition from the ignoring of “D” and “A” is something of an exact opposite is because those earnings are actually c-r-e-d-i-t-s derived from past Cap-Ex, rather than c-l-a-i-m-s against future Cap-Ex.

    MEW is an unrealized capital gain.

    Phantom operating “E” that comes from ignoring “D” and “A” is a sort of realized capital gain and can’t reoccur.

  35. Pete commented on Apr 15

    I don’t know much about Luskin, but I am embarassed for him after reading that last article. And I am more bullish than bearish right now.

  36. D. commented on Apr 15

    The biggest problem with the modern occidental world is that we’ve been brainwashed into thinking that optimism means that we must be hopeful that everything will always work out fine. Yet it doesn’t; we actually get sick and die.

    In my book, optimism means that you can keep a positive attitude throughout your hardships.

    Everyone keeps on harping about the fact that America always manages to bounce back forgeting about the millions who have to struggle along the way.

  37. Eclectic commented on Apr 15

    tjofpa, per you:

    “Eclectic does Lorne Greene.”

    Glad you enjoyed it.

    See number 7, “Riders in the Sky.”

    “Pro forma’s slack and slimy…
    …and it’s not beneath’em to steal.

    A chortled sneer went through him
    …as they blundered and denied,

    For he saw the law a-comin’ hard,
    …and he heard the moans and cries.




    Ghost e-a-r-n-i-n-g-s are…
    ……just lies.”

  38. Teddy commented on Apr 15

    Eclectic, right on and to the core, thanks.

  39. Eclectic commented on Apr 15

    Thanks Teddy, but just remember… don’t mess with Eclectic! I’m fast!

    From here:

    “One night a wild young cowboy came in,
    Wild as the West Texas wind.
    Dashing and daring,
    A drink he was sharing
    With wicked Felina,
    The girl that I loved.

    So in anger I

    Challenged his right for the love of this maiden.
    Down went his hand for the gun that he wore.
    My challenge was answered in less than a heart-beat;
    The handsome young stranger lay dead on the floor.”

    Barringo, you think this would’ve drawn a crowd in the subway entrance?:

  40. Eclectic commented on Apr 15

    That was a MIGHTY long de-bate, Barringo!

    Six days on the road, and I’m gonna make it home to-night!

    “I just passed a Jimmie and a White
    …I been passin’ ever-thang in sight!

    Six days upon the road, and…
    …I gotta see my baby tonight!”

    A little whis kskee’n coekeee and ssume sewwweertt drifvctingg… Ggoodsdd gniight allll.

  41. Eclectic commented on Apr 15

    Let me ask you a question:

    Do you reckon the boy in the red shirt knows the difference between a Shiite and a Sunni?

    Do you reckon he knows the significance of Ali?…Do you reckon he knows wHY Sunnis hate Shiites… and why Shiites hate Sunnis?

    I sorta doubt it… but then, I’m only Eclectic and what do I know?

  42. V L commented on Apr 15

    It is amazing how Don Luskin cannot even read his own data: “There’s just no connection between MEW and consumption”, says Luskin.

    Gee, Don… please take another look at your own chart: from 2003 to 2007 (period of high MEW) there is near perfect positive correlation between nominal PCE and MEW (correlation co-efficient of +0.9)

    Barry, I do not know why you are wasting your time arguing with this ….

    Kudlownians (borrowing it from Eclectic) like Luskin and Laffer will never accept the truth.
    Kudlownians always find some twisted reasons as to why you should buy stocks. For Kudlownians it is always time to buy no matter which way the market turns.

    Stocks are down; it is time to buy say Kudlownians.

    Stocks are up; it is time to buy say Kudlownians

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