My shiny new IBM T-41 laptop has gone on the fritz after only four solid years of hard usage, for business and pleasure, in dozens of cities and at least three continents (does the Sinai count in Africa or Asia?). So I'm cleaning up the backed up files for transfer to my new desktop 'puter (since I'm planning on being a bit more of a shut-in over the next coupla years), and I ran across this excerpt from something I wrote in
Jan '07:
Kudlow should be more careful in how he argues. His relentless cheerleading for higher stock prices could be damaging to his credibility despite the fact that he’s been clearly, relentlessly right over the last three months. My main beef with his commentary is that he trots out every up-day in the markets as illustrative proof of conservative triumph. That’s been a wonderful if facile argument while the bull run has continued, but what will it mean when the market corrects?
Notice I didn’t say “if” the market corrects. The market (as measured by the S&P 500) hasn’t gone down 10% in more than three years. That’s a record low in volatility, but it won’t continue forever. There are many, many warning signs of trouble—the huge decline in the dollar’s value, the collapse in copper prices, and the almost criminal understatement of new house purchase cancellations. Even if the world economy successfully avoids any major difficulties over the next few years, it doesn’t take an anti-free-market ideologist to see that it’s at least possible that growth and profitability will slow considerably from today’s very high rates. Even in Kudlow’s rosiest view of current economic conditions, the business cycle of growth-recession-recovery will continue to exist and above-average corporate earnings will eventually moderate.
So when the inevitable slowdown occurs, what will that say about Kudlow’s ideas? Will the free-market suddenly be proved wrong? Will Marx and Krugman finally be proven right that capitalism is doomed, doomed, doomed? By Kudlow’s current logic, it’s hard to make an argument against it.
Predictions were not too bad, considering. But it's funny to see what has happened with Kudlow's "THE GREATEST STORY NEVER TOLD" meme since he endlessly trotted it out after each up day in the market. Now he writes like he expected a recession and drools on about how the Fed needs to provide more liquidity, never once offering the slightest explanation for why he was so blinded by ideology that he shrugged off all the warning signs until it was way too late. The irritating thing is that, with his big brain all covered in Ivy, he should know better.
I see this in finance all the time: whenever you're right it's because you're a genius, but when you're wrong it's because markets are 'acting irrationally.' Whatever, dude. How many of your readers lost money because they bought into your rosy, overly politicized rationalizations? In markets, unlike punditry, you don't get paid to be ideological. You get paid to make people money, or at least, to not lose it for them.
Oh, and by the way, Larry? NOBODY knows why markets go up or down on any given day. All your blather about politics, monetary policy, blah blah, is just rationalization. Read the Enquirer, like Victor Niederhoffer, and you'll know just as much as you would by watching the MoneyHoney on CNBC.
UPDATE:
ROTFLMAO - Looks like the bear ate Goldilocks!
