Fantasy-based Economics

Here’s the latest work of David Malpass, chief economist at Bear Stearns. You can find it in the romance & fantasy section of your local bookstore WSJ Oped page:

"When President George W. Bush addresses the Economic
Club of New York on Friday, his comments on the dollar crisis will be
the crucial issue for markets and the economy. The best thing he could
do would be to state clearly that he wants a stronger dollar. That
would draw liquidity back to the U.S., lower inflation risks, and head
off the growing calls for government bailouts and support programs.

Absent administration support for the dollar, recent
Fed rate cuts have simply sped up the flood of capital away from the
U.S. without providing enough domestic stimulus. The rest of the world
is already full of cheap dollars, pushing gold and oil to new highs,
European tourists onto Madison Avenue, and petro-dollar sovereign
wealth funds into building islands to use up their excess.

A clear presidential preference for a stronger dollar could cause an
immediate leap in financial markets
. U.S. stocks and corporate bonds
are attractively priced — except for the dollar risk. No matter how
high a bond yield or how strong the track record of a U.S.
private-equity manager, the threat of continued dollar weakness holds
global liquidity at bay. The prospect of a stronger dollar would
reverse that." (emphasis added)

Um, no.

The folks who believe this sort of drivel would do well to recall Ralph Waldo Emerson: "Your actions speak so loudly that I can’t
hear what you’re saying."

The President’s words about the dollar, in the waning lame duck months of his presidency, are irrelevant. His actions over the past 7+ years, in concert with those of the Federal Reserve, are what matters. Can anyone honestly believe that mere speechifying is going to overcome the impact of enormous deficits, excessive government spending, reckless growth in M3, historically ultra-low rates, and an ongoing intervention in credit, currency, capital and fixed income markets ?

I’ve noticed this wingnut fantasy sequence repeatedly over the past 8 years: ignore reality, jawbone the way you hope things should be, ignore the results of your words and actions, declare victory. Mission accomplished.

It is an absurdly infantile way to manage any sort of enterprise. You will note that none of this crowd truly runs anything — much less manages assets. The returns would overwhelmingly disprove the theory; this group is long on blahblahblah and short on accountability.

Here is a simple truism: Capital goes to where its treated best. All the bully pulpit speeches and wishful thinking cannot change that reality. The Fed’s mad dash towards zero interest rate policy (ZIRP) has debased the dollar in pursuit of an even more absurd policy aim: ending the ups and downs of the business cycle.

Who is more culpable: The emperor, or those who comment on his finely woven garb?


Bush and the Dollar
WSJ, March 11, 2008; Page A21

Quote of the Day: Malpass (WTF?) on the Dollar

The "Chutzpah" of Bear Stearns

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What's been said:

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  1. Bucky Cat commented on Mar 11

    I could not agree more!

  2. Greg commented on Mar 11

    Maybe Malpass’ guidance has helped BSC perform so well. Thanks again for the great site.

  3. dave commented on Mar 11

    Tax the poor (w/inflation) to save the (rich) bankers…Goldilocks lives!!!

  4. Douglas Watts commented on Mar 11

    It’s not polite to ZIRP at the dinner table.

  5. SPECTRE of Deflation commented on Mar 11

    Manufacturing coming back to America. They will be buying more parts in America as well. Interesting times we live in.

    BMW to hike U.S. auto output
    To cut 7.5 per cent of its workforce in Germany

    Mar 11, 2008 04:30 AM
    COLUMBIA, S.C.–BMW says it will cut 7.5 per cent of its workforce in Germany over two years while increasing production in the United States by more than 50 per cent by 2012.

    “This is completely driven by the plunge in the dollar,” said Greg Gardner with Oliver Wyman, publisher of the Harbour Report on automotive manufacturing activity. “It is untenable to produce at a much higher cost in Germany.”

    The euro climbed to record heights on Friday, reaching $1.5463 (U.S.) before falling back to $1.5335 in late trading after the Federal Reserve announced it would provide more cash to banks that need it. That means European goods cost more for Americans to buy. It ended trading yesterday at $1.5352.

    BMW said yesterday it would spend $750 million to expand its manufacturing facility in Greer, S.C., and create 500 new jobs.

    The company will add 1.2 million square feet of production space, and work already has begun with the construction of new paint shop facilities, it said.

    BMW, which started producing cars in Greer in 1994 and plans to increase yearly production from 155,000 to 240,000 during the next four years, will build a new hybrid vehicle unveiled in the fall and diesel-powered models at the plant. Greer has about 4,500 permanent employees and up to 900 temporary workers.

    By building the cars in the U.S., BMW can save money on the lower dollar and on wages since its South Carolina workers make less than German workers, Gardner said.

    The declining dollar also means BMW and other foreign automakers likely will start buying locally for more of the parts used by their U.S. plants, he said.

    That shift in production has led to the cuts at home for the Munich-based luxury automaker.

    BMW’s head of personnel, Ernst Baumann, said last month that 5,600 jobs would be cut by the end of the year. That’s on top of 2,500 positions already eliminated. That adds up to 7.5 per cent of the company’s total workforce of almost 108,000, including both permanent and temporary employees.

    While luxury car sales are expected to be flat or a little down from last year, “BMW will still show growth,” said Jack Nerad, executive market analyst for Irvine, Calif.-based Kelley Blue Book.

    The company said BMW Group, which includes the Mini and Rolls-Royce brands, sold 198,628 cars worldwide in January and February, up from 191,357 for the same period last year. Sales of the BMW brand for February rose to 89,983, up from 85,310 for the month last year.

    Nerad and the company say launches of new 1-Series models and the X6 also are expected to lift sales in 2008.

  6. SPECTRE of Deflation commented on Mar 11

    Of course with glabal wage arbitrage, we won’t be having any wage inflation which is what we really need in order to pay for our depreciating assets. Can anyone find me some wage inflation? Please!

  7. Jay commented on Mar 11

    Poor Mr. 19% Approval Rating. He genuinely seems shocked that his lack of regulation, and anti-labor/anti-consumer regulation, lax money policies, and hidebound economic orthodoxy would come to this. Who knew that giving tax breaks to corporations who offshore jobs would gut Michigan and Ohio? Who knew that squeezing the middle class to utter collapse would be bad for the economy? Who knew that lax monetary policy and the ownership society would lead to the bankruptcy and repossession society? Or rather, he probably thinks there’s something or someone else is responsible for what’s happening. After all, he’s never responsible for anything.

  8. John F. commented on Mar 11

    I’ve noticed this wingnut fantasy sequence repeatedly over the past 8 years: ignore reality, jawbone the way you hope things should be, ignore the results of your words and actions, declare victory. Mission accomplished.

    Much like the New Deal and the Great Society, n’est-ce pas?

  9. Ross commented on Mar 11

    Have a little patience with wage inflation, it’s coming.

    When workers no longer get/want stock options, watch their retirement funds decline, no longer think their house is an investment, get their HELOCS withdrawn, they will ask for…….ta da, cash! The investor-homeownership economy was a lie.

    I’ll say again, you cannot outsource your plumber, firefighter, teachers, civil servants.

    At best you will get Soviet style wage inflation. “They pretend to pay us. We pretend to work.”

  10. wally commented on Mar 11

    “wingnut fantasy”… I like that phrase. And how does a guy like Malpass get into a highly-paid position? Evidently it is not through intelligence.

  11. 12th Percentile commented on Mar 11

    It is not fantasy based, it is “faith based economics”

  12. Vermont Trader.. commented on Mar 11

    BR – what do you think would happen if the President announced a large release from the strategic petroleum reserve?

    I know it won’t happen but I think it would probably cause a rout in the oil pits (at least for one day) and a rally in the sectors of the market that have been beat up.

    I just feel that this would be more effective than any monetary action.

  13. Ross commented on Mar 11


  14. VennData commented on Mar 11

    Since Bush’s post-9/11 call from the bully pulpit to ‘get out there and shop’ he’s left folks scratching their heads.

    And Bush’s comments to the Saudi’s on his ‘historic’ visit – where they held hands and swapped gifts – yielded zero change in Saudi pumping plans. So why should this be any different? Bush is going to make currency speculators buy bucks?

    Marginal inflation (and currency destruction) is everywhere and always a fiscal problem. Stop the seven years of Keynesian madness and you might have something.

    Bush’s Zero-money-down real estate loan bills of 2004 was just another harebrained loser begetting wealth destruction. Have you looked at your 401(k) vis-a-vis the dollar index, lately?

    The MBA President…

  15. scorpio commented on Mar 11

    Wall St welfare queens

  16. Old Ari commented on Mar 11

    You can either write that which you are told to write either explicitly, or implicitly, or you can look for another job. The main problem is your Leader is out of control, and it’s difficult under your system to get rid of him, with so much power in his hands, he can and does ignore the limitations placed on his power.

  17. JustinTheSkeptic commented on Mar 11

    This most recent FED Action, should eventually scare the hell out of the market. How can things possibly be any good, when such drastic steps are being taken?

  18. Ross commented on Mar 11

    Who the hell is driving this economy?


  19. lurker commented on Mar 11

    What are they smoking over there at Bear???
    Oh wait. We know the answer to that one…

  20. kennycan commented on Mar 11

    I agree with your concusion but differ slightly on the premise that leads you there.

    10 years ago LTCM had 3-4bn in losses and 30 bn of assets and the crisis was deep enough to nearly take the whole market down. Today Citi has 22 bn of losses and is just one of many in the 11 digit loss range. We’ve already had a S&L industry crisis worth of losses. How much friggin’ money must they have been printing these past 10 years?

    Don’t fool yourself. Money printing is the culprit. The additional budget deficits of 100 bn per year over what they would have been had we had a President Gore or Kerry (and I’m being kind to your viewpoint as I don’t necessarily believe they would have been any more fiscally prudent, but I’ll concede your argument on that point) is a drop in the bucket compared to the monetary excesses.

    The Fed and not the Federal Government is the main culprit for the dollar’s fall, inflation’s resurgence and the financial calamity we are facing.

  21. cinefoz commented on Mar 11

    In case any bank regulators are reading this, here is a good idea to work over …

    Regarding mortgage loan teaser rates and adjustable mortgages: set the qualification rules so that the borrower must qualify for rates that equal 50% of the maximum rate the loan could rise to.

    Banks that don’t intend to sell their loans can set them as they please. But to be able to package the investment in some way, make adjustable rate loans available only to the best risks, as opposed to the weakest risks … as it appears to be today.

    Instead of qualifying at the minimum, variable rate loans should assume a midrange, and move the qualifications to that point.

    If borrowers don’t like this, they can go for a conventional fixed rate loan. If they can’t qualify for that, then they shouldn’t be buying a home at this time. Or they can buy on contract via seller financing and keep the risk out of the public credit markets.

  22. Larry Kudlow commented on Mar 11

    Don’t be dissing my pal David! He’s a nice guy, and you should be more empathetic to someone whose stock options have been so totally crushed.

  23. SPECTRE of Deflation commented on Mar 11

    Ross, I read an article on CA yesterday which makes me doubt that we have wage inflation ahead. The state will lay off thousands of teachers at the end of this year. You will just be expected to work harder if ya can believe that nonsense.

    Here’s hoping I’m completely wrong, and the American worker finally gets some real buying power to pay off all the crap we bought.

  24. SPECTRE of Deflation commented on Mar 11

    El Presidente’ Bush now matches the approval ratings of Congress. LOL!

  25. john commented on Mar 11

    I read this piece this morning with total astonishment. Can this guy be serious. Here we have a president with approval ratings that have been in the low thirties for years, who is totally ignored at home and abroad, whose circulocutions on matters of foreign policy and economics are a wonder to behold, and it’s suggested a little speech by him is going to reverse the mountain of sound economic reasons for the dollars accelerating decline. It’s hard to believe this guy is occupying an important position on wall street. It’s even harder to believe the WSJ ed page has any pretensions to credibility publishing this sort of drivel. Astounding.

  26. shalagarsamy commented on Mar 11

    Let’s see – $200 billion in direct loans to banks. There are 300 million people in the US. So that means that each and every taxpayer in the US is loaning $666.67 to the banks. Well, there goes my $600.00 freebie check from the government. Oh wait, I even qualify for that.

  27. larster commented on Mar 11

    LA Times out w/ UCLA survey today that says that recession will not hit CA. No mention of Malpass consulting on this fantasy or maybe Fed has seperate bailout for CA in the works. How can we be close to a bottom, if “respected” educators publish head in the clouds drivel like this.

  28. Marcus Aurelius commented on Mar 11

    How Enronesque.

    If Bush says buy dollars, it’s time to buy foreign currencies and gold. That’s what he’s doing. He’s shorted everything he’s ever pumped.

    I hope the members of the Economic Club of New York follow his advice.

  29. Marcus Aurelius commented on Mar 11

    Oh yeah, and I love this:

    “The best thing he could do would be to state clearly that he wants a stronger dollar…”

    If this was the only thing he had to say, he’ screw it up.

    “Our dollar needs to be more strongerer…”

  30. Jay commented on Mar 11

    I have David Malpass speaking on a panel in May that I put together. It will be interesting if the audience will bring up the same points raised here.

  31. PureGuesswork commented on Mar 11

    Euro bottomed out against the dollar at 82.25 cents about 2 weeks before the 2000 presidential election. When Bush took office in early 2001, the euro had recovered to about 95 cents. Now, in the last year of Mr. Bush’s presidency the euro has traded near $1.55. That is a 47% debasement (so far) of the American currency accomplished by the Bush administration. Nice work. But of course a speech in New York could turn that all around (not.

  32. SPECTRE of Deflation commented on Mar 11

    From PaperMoney Blog. An e-mail exchange between said blogger and Barney Frank (D-MA). Ya Frank is definitely drinking the Kool-Aid:

    The following is a sequential exchange between Representative Barney Frank (D-MA), Chairman of the House Committee on Financial Services, and yours truly.

    Hopefully the dialog will continue…


    January 24, 2008

    Representative Frank,

    I’m writing to voice my concern over the recently announced homeowner bailout initiative.

    Although the cash refunds and other business investment components of the proposal may qualify as a sound fiscal response to the current economic turmoil, the increasing of the GSE conforming loan limits to $730K is a gross misapplication federal regulatory powers and will continue to perpetuate and even exacerbate the unsustainable conditions that have come about in many of our nation’s metro housing markets.

    It’s important to keep in mind that the majority of the housing bubble conditions occurred in metro areas where the now well known era of dangerously lax lending standards resulted in home prices that are completely disconnected from the basic market fundamentals that guided and regulated affordability for many decades as well as a large cohort of homeowners that cannot afford their homes even under the best conditions.

    This is NOT a subprime issue. Understand that “prime” Jumbo homeowners are almost as significantly over-leveraged as the now vilified subprime borrower.

    By increasing the conforming loan limits so substantially the federal government is merely perpetuating this unsustainable situation and prohibiting the orderly deflating of the nation’s home price bubbles.

    If this feature of the proposal is allowed to become law it will unquestionably result in continued speculative behavior and inevitably a harder and more substantial housing price crash in the near future.


    << March 5, 2008 We disagree on the question of raising the loan limit for Fannie Mae and Freddie Mac. First, I should note that the loan limit does not go to $730K across the board. In fact, the major problem, in my judgment, intellectually as well as economically with the current limit is that it sets one maximum price for the whole country, when in fact house prices vary greatly geographically. If we have a maximum limit for loans that make sense in Nebraska, it cannot be sensible for parts of California, Massachusetts, Illinois and New York. For Massachusetts, the limit will be $516K- hardly a luxury price in much of Massachusetts. I do agree that we should be welcoming some deflation of house prices, but the pace at which this happens is very important, and having a very rapid decline exacerbated by a freeze in the credit markets for houses in the $400K to $516K range seems to me unwise. I agree that this is not a subprime issue. But it is an issue that was brought about by the subprime crisis, and by an excessive reaction to it. Your assertion that people who own homes in Eastern Massachusetts that are worth between $417K and $516K are as over-leveraged as subprime borrowers is not accurate according to any of the data I've seen. BARNEY FRANK >>

    March 11, 2008

    Representative Frank,

    Thank you for responding to my initial protest of the Government Sponsored Enterprise (GSE) conforming loan limit increase provision of the recently enacted economic stimulus package but I would like to respectfully challenge some elements of your response.

    First, although under prior regulation the Office of Federal Housing Enterprise Oversight (OFHEO) set $417,000 as the maximum sized loan a GSE could purchase for a single family home located in all states and regions except Alaska, Hawaii, Guam and the U.S. Virgin Islands, your assertion that a single limit poses a regulatory dilemma for the nation’s diverse housing markets is incorrect.

    It’s important to remember that this limit was intended not to satisfy a sense of fairness for participants in any particular local housing market but rather to ensure the security of the GSEs and prevent unsafe and unsound practices that would run contrary to their statutory charters.

    In states and regions where the prior limit of $417,000 was far greater than the typical median single family home price (i.e. Nebraska in your example) homes would still have to meet basic appraisal and other loan qualifying guidelines (also set out by existing statute) thus prohibiting the wholesale distribution of the maximum principal amount.

    In states and regions where the prior limit was less than the typical median home price, the $417,000 combined with a healthy 20% down-payment provided for a significant $520,000 home purchase and homebuyers who needed more would be expected to be of the means not requiring affordable housing assistance.

    Keep in mind that, as a basic guide, only 12 of the 145 metro area home markets tracked by the National Association of Realtors (NAR) has EVER recorded median home values in excess of $417,000.

    Next, it’s important to consider that under the strict interpretation of prior regulatory guidelines the conforming loan limit should have, in fact, decreased for 2007 and again for 2008 as the Federal Housing Finance Boards (FHFB) national average house price declined on a year-over-year basis for both preceding October results.

    In the face of the national price declines though, OFHEO took it upon itself to devise a new and substantially more complex strategy for determining the conforming loan limit that sought to mitigate any potential market instability that could arise from an abrupt decrease.

    But even under the new guidelines the limit IS scheduled to decrease for 2009 and in all likelihood will continue to require a downward adjustment as the FHABs October average home price continues to decline.

    How does Congress intend on accounting for this phenomenon?

    Aside from the folly of maintaining a regulatory guideline that only gets amended up and never down, Congress has created a scenario whereby 125% of a greatly decreased median home price may in fact soon be materially LESS than the original $417,000.

    Lastly, what I believe Congress and the President have done by enacting this provision is to introduce a substantial amount of uncertainty into an already wounded and fragile marketplace for agency securities.

    Investors in agency securities not only know that the changes that have been enacted are unsound, they are now beginning to recognize the significant credit losses that will inevitably be associated to securities produced under even the prior, more restrictive, regulatory environment.

    This recognition of instability has already affected GSE operations resulting in the highest yields on agency securities seen in 22 years thus driving up costs for all home-borrowers.

    Although Congressional and Executive mandate apparently provide a dynamic and flexible environment for generating regulatory statute that suits the perceived whim of constituents (particularly in an election year), the “law of unintended consequences” remains largely rigid as it appears now quite clear that the main focus of Congress and the Administration later this year will be the federal bailout of Fannie Mae and Freddie Mac.


    P.S. As for $417,000 to $516,000 being suitable for eastern Massachusetts remember that the conforming loan limit was $300,700 in 2000 and $359,650 in 2005 and that GSE loans combined with “piggyback” second liens provided plenty of stimulus for our local market bubble.

    Massachusetts is not immune and in fact will undergo substantial socio-economic stress in the coming years as home prices don’t deflate slowly as you suggest but in fact continue to re-price sharply downward.

  33. ECONOMISTA NON GRATA commented on Mar 11


    If I may call you Barry.

    When people are desperate, they will say anything…. Poor guy….

    Best regards,


  34. Bob A commented on Mar 11

    and remember… the Wall Street Journal is above all else.., “Fair and Balanced”

  35. Jdamon commented on Mar 11

    Can someone explain to me how our national debt impacts the value of the dollar? Haven’t we had a pretty decent sized national debt over the last 10 – 20 years? Why the dollars freefall now? Is the dollars fall really more a story of the rest of the worlds growth? What can the Fed do? I mean the yen is strengthing against the dollar and what are rates in Japan 25 basis points?

    I am not buying the politicalization of the dropping dollar (especially by blatant liberals disguised as independents – you know who you are Barry :-).

  36. DonKei commented on Mar 11

    The dollar’s decline reflects much more than a lack of jawboning. Here’s a few reasons:

    1) Massive trade imbalances (IMO, far and away the most important factor);
    2) A international realignment of economic power and vitality away from the US and the west in general and towards the developing world. Growth is opportunity, and real growth in the west is very slow relative to the rapidly developing countries (say the BRIC’s).
    3) Too many dollars, at least since about 2001/2, as all the commodities markets, priced in dollars, indicate.
    4) Irresponsible fiscal policies. (Deficit spending for everything from bad investments in mortgages–Fannie/Freddie’s implied backstop–to war and occupation of foreign lands). It would be perhaps a different matter if we weren’t so incompetent at investing our treasure, but we are. We basically print dollars, buy stuff w/ our printed dollars, and then destroy it and thereby them.
    5) Uncertainty surrounding the presidential election. For the first time at least since Clinton, it is not clear in which direction the likely new president will lead, nor is it clear who that will be.

    There are more, but these are enough. No amount of denying truth makes truth any less real.

  37. CreativePotato commented on Mar 11

    Now remind me, when was it the President ordered the current weak dollar?

  38. Guy Bazanos commented on Mar 11

    I’ll give Malpass the benefit of the doubt, and assume that when he says that Bush should state a preference for a strong dollar, he means that a shift in policy, probably through coordinated currency intervention, will follow.

    Currency intervention would stop the dollar and commodity momentum trades that have exacerbated the dollar slide while the Fed and ECB interest rate policies have been divergent.

  39. Jdamon commented on Mar 11

    Why is it when someone asks a tough question on this board, all the experts decline to answer it?

    While I love reading this board, there is a ton of “herd” mentality on the Bear side here.

    Can someone really explain why the dollar is sliding so hard. It isn’t the national debt (until someone can explain exactly why it is) and it isn’t George Bush’s fault (as a wise poster mentioned above). It isn’t even interest rates as our rates are comparable with many other foreign central banks policies. So is it really just a matter of growth in other economies overtaking the US? If that is the case, what can be done? Nothing?

    1. Low treasury rates
    2. Increased money supply
    3. Federal Deficit
    4. Balance of Trade Deficit

  40. JustinTheSkeptic commented on Mar 11

    How does this FED move today, help in pricing the CDO’s, CDS’s, etc??? They are grandstanding again on CNBC…I can barely stand it. The bulls get another psydo-move to the upside.

  41. Mike G commented on Mar 11

    Bush (11/10/07): “Well, we have a strong dollar policy, and it’s important for the world to know that. We also believe it’s important for the market to set the — to set the value of the dollar relative to other currencies. And if people would look at the strength of our economy, they’d realize why, you know, I believe that the dollar will be stronger…I mean, the underpinnings are strong.”

    How could anyone NOT be inspired by such mumbled words, strung together fridge magnet-style by a disinterested simpleton who plainly doesn’t understand much about economics? The financial markets rally in excitement. Mission Accomplished.

    Harvard Business School must be so proud of this walking advertisement for legacy admissions.

  42. It’s Easy Al (stupid) commented on Mar 11

    I don’t see how you can pin the dollar slide over the last 6 years all on Bush.

    Yes the gov’t spending leading to the deficit is a minor factor. (And incidentally the Congress does approve all this spending so it’s both Bush and Dem Congress (lately)

    By far the largest factor is a weak Fed for many years under Easy Al that is more interested in popularity than doing their job (taking away the punchbowl). I can’t recall all the times that Al gave in to Wall Street (even when we had a good economy).

    The coup de grace was when he kept the Fed funds rate down at 1% when we were well out of the last recession. all that liquidity created the housing bubble (coupled with absolutely no Fed action regarding all the no doc loans, etc..yes the Fed oversees banking)

    Now the days of reckoning for the massive debt bubble that Al created are upon us.

    It will take a long time to deleverage with many bankruptcies.

    If Al had shown any courage (like Volcker) we would not be in the mess we are in today.

  43. JustinTheSkeptic commented on Mar 11

    Jdamon, the dollar has been falling off a cliff, because their has been massive amounts of money growth – 17%. And all our buddy Bennie is doing is adding more and more fuel to the fire – lower rates adds leverage, which is another form of “added money” (or will somewhere down the road,), which the markets anticipates! And our wonderful federal budget deficit doesn’t help matters either.

  44. JustinTheSkeptic commented on Mar 11

    Ok, now they (the gurus) are saying that it is good that the yeild-curve is flattening. I thought last month they were wanting it to steepen so that the banks could make money? Gee, do they really have a clue? WTF!

  45. ThatGuy commented on Mar 11

    See also Cheney’s trip to the Mideast with the explicit goal of asking for an increase in production from OPEC.

    “Pretty please, Your Eminence, and might I add that you look dashing in that keffiyeh today!”

  46. me commented on Mar 11

    “Can someone really explain why the dollar is sliding so hard.”

    Ronald Reagan bankrupted Russia, GW Bush has bankrupted the US.

    “See also Cheney’s trip to the Mideast with the explicit goal of asking for an increase in production from OPEC.”

    Remember Bush running in 2004 saying elect me, I can deal with the Arabs and the price of oil better than Kerry”?

  47. Jmay commented on Mar 11

    The dollar was decimated by design.

    Like, everything else in the Bush administration, the absurdly low interest rates were fixed around the political policy, which was war. Rock bottom the interest rates, inflate people’s housing values and make them feel rich, and they won’t notice that you are raiding the treasury to the tune of two trillion dollars to fill the coffers at Halliburton.

    In my opinion, it’s not that Bush gets too much blame for the economy. He doesn’t get enough. People talk about the housing bust as if it’s disconnected from the war. But Joseph Stiglitz made the point perfectly — the credit bubble was created to provide cover for the war. It’s all of a piece.

  48. Francois commented on Mar 11

    “”I’ve noticed this wingnut fantasy sequence repeatedly over the past 8 years: ignore reality, jawbone the way you hope things should be, ignore the results of your words and actions, declare victory. Mission accomplished.””

    “Much like the New Deal and the Great Society, n’est-ce pas?”

    The last sentence above really sink to new lows…a difficult thing to do in the blogoshpere.

    Comparing the disastrous , full of lies presidency of Bush and Co. and the propaganda machine that supported it, to the New Deal Era just show how contemptuous you are of the facts.

    You’re not on the Yahoo! msg boards here. Please go back there ASAP and stop being an embarrassment to this community.

  49. kennycan commented on Mar 12


    Really hit a nerve I see.

    Don’t worry, Obama will reverse all those evil Bush policies and we’ll have balanced budgets, a chicken in every pot, Dow 36,000 and utopia over our National Health Care extended 100 yr lives.

    So don’t let those sweet neocons ruin your day hinting that Bush is really a liberal following liberal policies. We all know it was his fault, he alone lowered interest rates, raised the deficits (Congress was mesmerized by the silver tongued sombiatch into spending) and conned us all into into buying McMansions and SUVs. We really didn’t want to overspend our life savings, but he made it sound so enticing, that smooth talking con man. And he’s STUPID. And he’s an EVIL Genius.

    And it’s not like he wanted to make the world safe for democracy (pat pending) or something.


  50. wunsacon commented on Mar 12

    Kennycan, you know Obama can’t reverse 8 years of incompetence and fraud, both within the administration and everywhere around it. I will pay attention to his actions. But, I will not be disappointed by his “results” within the next 8 years.

    A TBP reader periodically posts this quote (which sums up my feeling):

    “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
    Ludwig von Mises

  51. wunsacon commented on Mar 12

    Kennycan, there’s more wrong with your post.

    >> So don’t let those sweet neocons ruin your day hinting that Bush is really a liberal following liberal policies.

    Although I see this suggestion around the dumber websites, please don’t suggest W is “liberal”. Tax cuts for the rich and killing a million poor in Iraq are not liberal policies. And these are W’s defining policies.

    >> We all know it was his fault, he alone lowered interest rates, raised the deficits (Congress was mesmerized by the silver tongued sombiatch into spending)

    No. He had help from the rest of the GOP Congress. And notice that makes your previous statement (“W is a liberal”) even more absurd, because it shows the policies of this administration weren’t just shared by W (“the liberal”) but by the vast majority of Republican Congress. Are they all “libruls”, too?

    >> and conned us all into into buying McMansions and SUVs.

    He got in the way of state-level consumer protection laws and didn’t take any steps to correct what was for years a problem in the making. (This problem didn’t start yesterday.)

    >> And he’s STUPID. And he’s an EVIL Genius.
    >> And it’s not like he wanted to make the world safe for democracy (pat pending) or something.

    The road to hell is paved with good intentions. I have no doubt that W and the entire GOP base have good intentions. Indeed, all my Republican friends/coworkers are good people at heart.

  52. VennData commented on Mar 12

    President George W. Bush said in an interview today with Nightly Business Report that the dollar’s fall to record lows against the euro is not a good thing and he “absolutely” wants a stronger dollar.

    David Malpass was right, and right before the talk. Now by actually tracking the dollar index you can see if Mr. Malpass was correct in his estimation of POTUS’s bully pulpitting.

  53. wholesale commented on May 8

    Great post, and I definitely agree. Thanks much for sharing!

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