The Economic Nationalist

Barack Obama, the new, improved George McGovern, won yesterday evening’s Mississippi debate against John McCain. Mr. Obama won comfortably. It was not even close. (more…)

Last week’s spectacular market action has set the cat down among the pigeons, has it not? Politicians and commentators of every stripe are running hither and yon, desperately searching out a coherent narrative—any coherent narrative, be it truth or fantasy—to blame an opposing party for last week’s market crash. Well, there shall indeed be blame to assign, and, indeed, in the end we ought properly to assign it; but before blame must come analysis, and before analysis must come understanding, and before understanding must come observation. It is time to observe.

This writer does not sense immediate financial catastrophe. The Crash of 2008 appears, first and foremost, to be a liquidity crisis. For better or for worse (probably for better), the Fed is providing the needed liquidity. If so, then the crisis will pass.

Congressmen should vote down all bailout bills they do not understand, and should especially vote down the $ 700 billion bill rushing to the House floor this week. Now, admittedly, some might misjudge such advice to vote down the bailout to conflict with the previous point regarding liquidity; but you and I should not commit the error of comparing the Crash of 2008, a paper crisis, to a physical crisis like an invasion or flood. The Crash of 2008 is a serious matter, indeed, but it is not that sort of matter. The hard assets the furious scraps of Wall Street paper in question refer to will still be right there three months from now; they are not going anywhere, even when the papers are aflame. Ignoring greedy cries of panic from Wall Street, Congress can afford to take the time to solve this problem right.

For, if Congress panics and solves this problem wrong, Congress could create thereby a crisis much broader than the one we already face.

Partly changing the subject: if you do not currently own a home but can afford one, then right now would seem to be an outstandingly good time to buy. Now is no time to get fancy (if there ever was such a time), but do consider buying as much home as you do need. Market crashes tend to panic sellers and to freeze competing buyers, so offer now and offer low. This writer owns no crystal ball, of course, but housing inventories though dropping remain flush, prices are down, and banks are lending today to qualified borrowers at 6 percent. Present market conditions are nothing if not unique. If this is not the moment you have been waiting for, then what moment would be?

Last week’s events present The Economic Nationalist a gilded opportunity to make a fool of itself by premature interpretation. The Economic Nationalist declines the opportunity. The present crisis is not obviously closely connected with the blog’s chief economic concern, America’s trade deficit (even though the crisis could conceivably snowball into a larger crisis that did involve the trade deficit). Therefore, other than suggesting that you buy a house now to the extent that you need one and can afford one, we shall watch and wait for the time being. There will be no rush to judgment here.

HJH

[P.S. It is well to note that Mitt Romney, who almost certainly understands the mechanics of the Crash of 2008 better than most politicians and commentators do, appears to have offered little or no public comment on it. I think that it is safe to assume that Mr. Romney has not lacked for media invitations to express his opinion. Evidently, he has turned such invitations down. If Mr. Romney remains silent for the moment, then maybe you and I should heed his implied warning against premature interpretation. —HJH—]

[Update, Thursday, Sept. 25: Some pretty convincing arguments have been advanced by smart, experienced people in favor of the $ 700 billion bailout bill. The bailout really might be a good idea, it really might actually make money for the U.S. treasury, and this writer feels considerable sympathy for the Keynesian reasons underlying it, but were this writer a member of Congress he would nonetheless vote against the bill. To bet $ 700 billion of the taxpayer’s money in a panic on an unproven financial theory simply is not the kind of thing conservatives do. Fed chairman Ben Bernanke and Treaury secretary Hank Paulson are smart, capable men, but if they were smart and capable enough to price and to manage this unprecedented bailout, then—are we not entitled to ask—would they not have foreseen the crash before it occurred? Sorry, regrettably, no deal.

[The kind of manipulative thinking that justifies the bailout closely resembles the kind of manipulative thinking that got us into this mess in the first place. Put simply, if we had handled our money more soberly all these years, then no bailout today would be needed. Admittedly, this may be irrelevant—manipulation may actually be called for in the present emergency—but this writer does not trust the motion enough to back the manipulation so soon, if ever.

[By the way, a private e-mail has asked why this writer does not think the market crash trade-related. Answer: it may be trade-related, in the sense that it is so big that it relates to just about everything; but it does not appear to be primarily related to our trade deficit. It is tempting for any economic nationalist today to cry, “I told you so,” but the facts of this crash simply do not seem to fit our preferred theory. If Treasury yields—the interest rate at which the government can borrow money from private citizens and from abroad—should climb sharply, then this writer would reconsider, but far from climbing sharply they have dropped to practically nothing in the short term. People seem to feel that the U.S. dollar is a good bet, which means that they expect to be able to buy something of worth with the dollar later. If anything, fortunately, the crisis seems to suggest that the dollar’s unique status as the world’s reserve currency is not yet endangered by our unfavorable balance of trade. If so, then this is a very good thing; though, admittedly, in the present, unprecendented situation, there may yet exist some salient factor that this writer continues to overlook. —HJH—]

The Wall Street Journal is not given to hyperbolic rhetoric. The Journal reports:

NEW YORK—The American financial system was shaken to its core on Sunday. Lehman Brothers Holdings Inc. said it would file for bankruptcy protection, and Merrill Lynch & Co. agreed to be sold to Bank of America Corp.

(more…)

Demons of conservative surrealism and ghosts of 1812 haunt John Zmirak’s night:

For over 200 years [the Canadians] have just—sat there. Like a deeply dysthymic blind date who stares down into her cooling vichyssoise, they were waiting for us to start the conversation. To entertain them. To fill the cultural, cognitive void they created by showing up. Did we invite them? What are they doing up there? Can you think of a single thing that has happened in Canada in the course of the past 20 years? Neither can they. (Entire newspapers are printed in Windsor and Halifax containing nothing but blank pages and ads for American films.) That’s why they mostly huddle south, close to the border—eavesdropping at our door. It’s all so—unsavory—like having a Mongoloid child as a neighbor.

It really is too much to take. In fact, there are thousands of square miles we really can take—and transform those barren plains into speedway tracks where NASCAR races can extend across a continent.

The editors of the Wall Street Journal write,

First came Bear Stearns, then mortgage lenders and borrowers, followed by Fannie Mae and Freddie Mac: They’ve all looked to Uncle Sam for a bailout, and now the word around Washington is that Detroit will be next on the taxpayer supplicant list.

(more…)

Like many of you, this writer has unexpectedly strong and favorable feelings toward the national advent of Sarah Palin. We shall now see whether she lives up to her promise but—it must be said—hers has been a smashing debut, has it not?

So much interesting commentary on Mrs. Palin however has flooded the Web from every possible perspective in recent days that it seems superfluous for this writer now to add his own views, which are, essentially, that Mrs. Palin seems to be one of us, and that this is something to celebrate. I will say this, however: after a decade of unremitting national slide, things are finally turning our way. We beat that juggernaut of an immigration bill so unexpectedly last year. The U.S. Supreme Court now has four justices of such excellence that even our nation’s founders would approve. And now comes Alaska’s finest, the Blast from the North, Sarah Barracuda.

The planets are lining up. God still loves this country. He seems to be giving us one last chance.

HJH

Did you watch or listen to Sarah Palin’s acceptance speech Wednesday evening? If so, then—while the impression is still fresh on your mind—would you please tell me and other readers what you thought?

The question has two parts: (a) how do you feel about the speech and the woman that gave it? (b) how effective do you think the speech and candidate will be electorally? Part (a) interests me the more, but feel free to comment on part (b), too, if you wish.

The Economic Nationalist publishes too irregularly to hold a large audience, so I expect that the conversation here will be relatively intimate, but I very much want to find out how the kind of conservatives that read a blog like this feel about the speech, before the several days of media spin coming have muddled our true first impressions. (I remember Pat Buchanan’s convention speech in 1992. Folks’ reactions the next day did not resemble their media-spun recollections two weeks later.)

Thanks for taking the time to comment below. It is too easy to make unfounded assumptions about what people think. I would rather not do that in this case.

Howard

“Brilliant” has become overused as an adjective, so let me just characterize Srdja Trifkovic as insightful and very, very smart. (more…)