It's Not The Economy, Stupid.

[Gordon B]

James J. Cramer's, in Paul B's favorite newspaper, the WSJ, wrote a pretty good opinion piece today.

It's short, so I'll print the entire column.

Bush's Rising Stock

By JAMES J. CRAMER

To listen to the critics of President Bush's economic policies, you'd think that the nation's on the brink of economic catastrophe. Not a single Democratic candidate is willing to accept, even for a moment, that the president might be on the right economic track with large deficit spending and lower income and investment taxes. Now Paul O'Neill, arguably the worst Treasury secretary in memory, fills the airwaves with prideful attacks on the administration for reckless spending and reckless tax cuts that produced disastrous deficits.

Wait a second. I'm a Democrat, one who helped raise hundreds of thousands of dollars for Democratic candidates nationally in the last two decades. I voted for Al Gore.

But I'm also an objective financial commentator. With stocks at two-year highs and interest rates, as represented by the 10-year treasury, hovering near all-time lows, I can't help reach a different conclusion from Mr. Bush's critics: The economic policies pursued by this president have been a stunning empirical success.

If you'd told me two years ago, in the wake of 9/11 and the collapse of the stock bubble, that we could have 8% GDP growth, I'd have laughed. Most commentators, even the optimistic ones, were worried about the U.S. repeating Japan's post-bubble-incredible-shrinking-GDP-depression-experience. If you'd told me we could have 8% GDP growth and long-term rates at 4%, I'd have said that such a combination was impossibly Pollyannaish, a proverbial smooth concoction of oil and water. And if you'd told me that we could have a robust stock market, with a broad array of 52-week highs in dozens of sectors, I'd have told you that you were dreaming. Not after the battering this country's equities had taken.

Yet that's exactly what we have right now. I'd give the critics their due if 10-year rates had spiked to 6% or even 5%, something they privately assured you'd have had to have happen by now. I'd also bless the naysayers if the Dow were still at 7500, and the Nasdaq were still mired in the 1300-1400s, their residences a year ago. But for crying out loud, you can sell billions of dollars in bonds or stocks at these great prices, and that's evidence enough for this grizzled trader that the U.S. is booming without inflation.

Of course, we don't yet have job growth. However, economic recoveries don't traditionally produce job growth until one year after interest rates bottom. That means March of 2004. From my perch, discussing hiring plans with dozens of companies in industries as varied as smokestackers, financials and tech, we're right on schedule for robust job creation.

So, critics, keep baying against the policies. Keep calling for higher taxes or fiscal responsibility. But as someone who's stuck looking at the daily scorecard as represented by the impossible-to-manipulate markets themselves, the judgment's already in: The Bush economic policies have worked beyond what anyone could have hoped for. Or, to put it in parlance my party might understand, This time it's not the economy, stupid.

Mr. Cramer is host of CNBC's "Kudlow & Cramer" and a commentator for TheStreet.com.

[color=sky blue]The Center for American Progress[/color]

• Bush’s Fiscal Meltdown
  The Effects of Big Budget Deficits on Family Finances
  
  January 14, 2004
  
  A new bipartisan report by former Treasury Secretary Robert Rubin, Brookings Institution Senior Fellow Peter Orszag, and CEO and Chief Global Economist of Decision Economics, Inc., Allen Sinai, warns that the Bush Administration’s record deficits will have “severe adverse consequences” for all Americans. “The U.S. federal budget is on an unsustainable path,” they write, adding, “In the absence of significant policy changes, federal government deficits are expected to total around $5 trillion over the next decade.” What does this mean for hard-working American families and individuals?
  
• When the Bush check comes due, younger generations can expect a weaker job market, fewer public services, and a declining standard of living. To put the deficits in perspective, five years from now the average family’s share of the national debt will be more than $84,000, compared to a projected $500 per family when Bush took office._ The picture for America’s children is grim. Large, sustained deficits eventually suck up national savings, meaning less money for education and training of young people and workers and lower investment in other economic sectors. As deficits continue, huge chunks of taxpayer dollars will be diverted from education and health programs to service the national debt. Interest rates will rise and living standards will decline._
  
• Big deficits today affect family budgets tomorrow. As the Rubin report shows, Bush Administration economic policies are sharply increasing the chance of financial chaos._ “Taken to the extreme, such a path could result in an economic crisis. Foreign investors could stop investing in U.S. securities, the exchange value of the dollar could plunge, interest rates could climb, consumer prices could shoot up, or the economy could contract sharply,” according to a 2003 Congressional Budget Office report. Just last week, the IMF issued a strong warning about U.S. fiscal policies stating, “large U.S. fiscal deficits also pose significant risks for the rest of the world.”
  
• We can change course – the President’s tax cuts for the very wealthiest must be repealed now. The Bush Administration believes spending cuts alone will cure its ballooning deficits but economists agree that’s wishful thinking. By repealing the tax cuts for the top 1 percent of earners, and letting other tax cuts expire, the U.S. can begin restoring fiscal discipline and begin preparing for the huge expenses of the coming Baby Boomer retirement._

Daily Talking Points_is a product of the Center for American Progress, a non-partisan research and educational institute committed to progressive principles for a strong, just and free America.

[Gordon B]

Chris, I bet you are the type that answers a question with another question.

The idea that the future generations are going to have a lower standard of living due to today's budget deficits is a canard. As long as Real GDP growth is positive over 20 year horizons, the next generation will live better than the previous one. This has been true throughout the history of this country.

Was there a question?

[BFrank]

I used to like Cramer, but when he became a TV personality, full-time, he turned into a characature of himself and I stopped paying attention.

[Monte Smith]

[stonemonkts]

I can't stand Cramer, but I have to agree with him this time. I find the knee-jerk and uninformed jabs at the economy a bit tiresome.

Cramer was a big supporter and friend to Gore, so he is certainly not biased to the right.

EDIT: I wanted to add that I do NOT think any credit for the economy should be afforded the Bush administration. That too is a very naive assumption. Cramer's not a dope, so I'm surprised he took that particular slant. Sometimes the best thing a government can do economically is nothing. The tax breaks were a mistake, IMO, and will be paid for by future deficits and/or tax hikes of some stripe or other. Bush is tax-obsessed, after his Daddy fucked up his campaign promises on them.

I wish someone would explain to Cramer that microphones--when correctly placed--do a splendid job of giving the human voice presence.

[moneyp]

Of course, we don't yet have job growth. However, economic recoveries don't traditionally produce job growth until one year after interest rates bottom. That means March of 2004. From my perch, discussing hiring plans with dozens of companies in industries as varied as smokestackers, financials and tech, we're right on schedule for robust job creation.

Fine, let's check back in March 2004.

[Monte Smith]

I agree, Mone. That’s pretty ballsy of Cramer to put out a goal like that. We’ll have to see how good a prognosticator he is. One must note that just today, initial jobless claims for the week were down, exceeding expectations. In fact every single report since October has shown an improving job situation, though not with the big numbers we are looking for.

[moneyp]

Originally posted by Monte Smith
I agree, Mone. That’s pretty ballsy of Cramer to put out a goal like that. We’ll have to see how good a prognosticator he is. One must note that just today, initial jobless claims for the week were down, exceeding expectations. In fact every single report since October has shown an improving job situation, though not with the big numbers we are looking for.

Didn't that recent article posted here state that while jobless claims were down, it wasn't because people were actually finding jobs? Either the claims are just running out or people have stopped looking (begging the question.... what the hell are these people doing to survive, then?). I'm living off of a couple of retainers and tons of freelance work, but technically I'm unemployed. I think I'm the exception rather than the rule, though.

Only 1,000 new jobs created during December. Twenty per state! I'm sure some company out there laid off at least twice that much in the past couple of months. I hope he's right. I'd like insurance and benefits, thank you.

[moneyp]

Just answering my own question, Earthlink laid off 1700 employees, completely demolishing the progress our economy made last December. Damn you, Earthlink!

But those recently-unemployed should take heart. Unemployment insurance should carry them through March when the job boom begins!

[Gordon B]

I recommend the following column called "Manufacturing confusion."
column

More of the usual Sowell blather. I see nothing in that piece of doubletalk that sheds any light on the current situation. Sowell has always seemed woefully out of touch with reality, and this piece is no exception.

[moneyp]

I read it, Gordon. He's a bit short on facts himself.

[Pete C]

I'm guessing the J.P Morgan Chase/Bank One merger will lead to many more jobs lost.

[Gordon B]

Mone, care to elaborate on your statement?
Chris, your prime method of disputing an opinion piece that doesn't dovetail with your views is to insult the writer. Can't you do better?
Pete, there may be layoffs but not very many because JP Morgan Chase and Banc One have very little overlap. As far as Sowell's article, I did not think that Sowell was insensitive towards people who lose their jobs through job exporting yet explained why it's bad to stop the flow of jobs out and in.


"Mark Morgan, a bank analyst at Standard & Poor's, said it isn't likely that the merger will result in many branch closures because there's little overlap between the two institutions' operations. The only significant branch overlap might be in Texas, where J.P. Morgan Chase has a large presence, he said.

Layoffs could be minimal in the wake of the merger, analysts said. However, J.P. Morgan Chase has already been trimming its ranks and cutting costs. In October, for example, J.P. Morgan Chase moved 1,000 jobs from its customer service operation on Long Island to Canada and three other states.

While J.P. Morgan Chase is very visible in the New York area, with 300 branches in the state, Bank One maintains only a small local presence, mostly confined to an investment banking operation in Manhattan."

[moneyp]

Originally posted by Gordon B
Mone, care to elaborate on your statement?

He says that many unemployed people go on to find new jobs. Of course they do, but do they go on to find equitable paying jobs? Also, do the jobs coming into the country make up for the jobs going overseas in terms of the jobs being exported, either in terms of numbers or dollar amounts? A former Network Ops guy I know has resorted to doing clerical work for $15 an hour after two years of being mostly unemployed. Yeah, he's employed now, but that isn't a sign of a healthy economy.

What are Americans earning in comparison to the cost of living? How has that changed in the past year, the past two years, etc.? I'm willing to believe that the economy isn't as bad as what I'm seeing and hearing about, but I want some hard numbers, not statements like, "well there are jobs coming IN to the country, too!."

[Pete C]

Gordon, branches are one thing, but there's a lot of corporate infrastructure that can and will be merged and streamlined.

[Pete C]

Gordon won't get the message until he loses his job.

[SinginSumo]

I've harbored fantasies that Pete and/or Moné would create a "school" of sorts to teach the rudiments of personal computing. I know that there are many adults out there who would avail themselves of such a learning situation with either/both of them. (Maybe even one on each coast as the flagship branches...)

Originally posted by Gordon B
Mone, care to elaborate on your statement?
Chris, your prime method of disputing an opinion piece that doesn't dovetail with your views is to insult the writer. Can't you do better?

Gordon, I am very familiar with Sowell and this is not the first time I express my lack of respect for his twisted commentaries. As Mone pointed out, he is himself short on facts--that seems to be chronic. Do not expect me to take Sowell any more seriously than I do Coulter, Limbaugh, or Horowitz. Yes, he is better at veiling his gobbledygook, but he is equally agenda-driven. Read his piece carefully, Gordon, and tell me where there is even the slightest hint of original thought or insight.

Wow, thats the most eloquent non-argument that you have ever presented, Chris. Is there any chance that you could be any more reactionary?

[crawjo]

Chris,

Question for you: Who would you say, in the last 20 years, is the Republican/conservative you most admire?

[moneyp]

Originally posted by Pete C
Gordon won't get the message until he loses his job.

I thought Gordon said he had at one point.

Sumo: One of my earliest tech jobs was support for a law firm, that was undergoing a government-sponsored software training program. Part of my job duties was training people on Windows, Banyan, Microsoft Word, Excel, etc. I hated it and therefore wasn't very good at it. The constant complaint was that I went too fast, a complaint echoed by family members who I've tried to help out learning their PCs. My co-worker at the job threw together a course outline for me to follow, but I knew there was a problem when I was ready to cover stuff from the third course on Day One. I have absolutely no patience for the rudiments. If I was a math teacher, I'd be asking if the kids were ready for algebra two weeks in.

I do better in teaching people how to fix their own computers. The gf has successfully swapped out the hard drive, video card and battery and reset the BIOS on her own machine. My neighbor's ten year old daughter can point out a motherboard, hard drive, processor, heat sink, memory, video card, sound card, etc. etc., can tell you (basically) what they all do, and can troubleshoot her daddy's internet connection, from resetting the cable modem right down to knowing how to perform ping and traceroutes, all thanks to Uncle Moné's malevolent influence. Of course, she's a lot sharper than some adults I know.

but he is equally agenda-driven. Read his piece carefully, Gordon, and tell me where there is even the slightest hint of original thought or insight.

Shame you don't get along with Mr. Sowell, Chris. From what you say of him here, you two are like long lost brothers.

I don't recall admiring any Republican/conservative in the past 20 years, but I respect any politician who acts in the best interest of our country and people, and there have been times when I felt that coming from a Republican. Not lately, however. I think the polarization we see in D.C. these days is very discouraging, and it has been exacerbated by the Gingrich neocons and the Bush regime. This is not to say that Democrats have been blameless--they haven't, but the problem, as I see it, is largely brought on by the GOP, whom spineless Dems have subsequently abetted.

As you may have gathered, while I find some politicians more acceptable than others, I view them all with some suspicion.

[crawjo]

Chris,

Your answer didn't include any actual names of Republicans (other than two that you don't like).

Can you name any politicians you like, period?

I liked Wellstone and I'm ok with Kennedy, Harkin, and a few others. The problem is that so many of these politicians are so bad that even the flawed can look great standing next to them.

There have always been corrupt politicians, but I think the system of election, as it has evolved, must be changed. People ought not to be allowed to buy office--we see that happening more and more. In NYC we have a terrible mayor, Bloomberg, who literally bought the election, and we see Bush doing the same this year. We also see in the Bush gang just how ruthless and deceitful people can be in their quest for power. We brag a lot about our "democracy," but look what has happened to it! What Bush and co. have done and are doing to get that power and money is as unacceptable to decent, fair-minded people as a dictator's bloody coup. The dictator may have his military open fire on innocent civilians, which is graphic and rife for immediate headlines and world condemnation, but Bush basically does the same, albeit with a different, less immediate and dramatic approach. The means are different, but the end result is not--trampling on the down-trodden to enrich the wealthy is ugly, and when it is done under the pretense of compassion, it is uglier still.

The dictator may have his military open fire on innocent civilians, which is graphic and rife for immediate headlines and world condemnation, but Bush basically does the same, albeit with a different, less immediate and dramatic approach. The means are different, but the end result is not

A bullet in the head?

And how exactly is Bush buying the election this year? Do you know how much he intends to pay for it?