Yeah, That Worked Out Well

The latest installment (the first one is here). Some readers are probably familiar with Don Luskin. I rarely watch financial TV, but as I click through the channels he seems to be on fairly frequently. His profile was pretty high a few years ago during the debate over Social Security reform. Luskin holds himself out as someone worth listening to, and he's not shy about calling others "always wrong."

I got curious about Luskin's own record. How'd he do on the subprime crash, one of the most important chapters in the history of financial markets? I took a look at his stuff from the past year to find out (note the dates, which are important). As I explain at the end of the post, there's a special reason why Luskin's calls deserve scrutiny:


April 27, 2007: This earnings season is especially sweet for me, and not just because I love to see bloviating blowhard bears on television make fools of themselves. ...There virtually can't be a recession on the horizon. The world is awash in financial liquidity. Anything that goes wrong — like the housing slowdown or the subprime mess — is easily absorbed by the massive amount of money available in the world.

June 29, 2007: Through the end of the year, it's going to be great for stocks. With no contagion from subprime, and the Fed on the sidelines, there's nothing to stop the economy from growing a lot faster than "moderately," which means that corporate earnings are going to keep growing, too. So abstracting from the occasional correction here and there, stock prices should pretty much keep making new all-time highs through the end of the year.

July 6, 2007: ...I appear on CNBC about once a week, usually on a panel with other experts. ...And in my expert opinion, the bears — permanent and otherwise — are in for another big disappointment here. Consider the facts behind my belief. Earnings are cheap compared to interest rates, which are still low. The economy is re-accelerating and earnings are booming. Liquidity is plentiful. The Fed is on the sidelines.

And the best fact of all is the bears themselves. The very fact that they keep worrying fills me with confidence and optimism. They're always wrong, it seems. The only calamity they're going to get is the reputation damage of being wrong, once again.

July 27, 2007: So what words are left to describe a really big down day like Thursday? How about, "Stocks became a better bargain than ever!"

August 3, 2007: While it's been a turbulent couple of weeks for stocks, the resiliency of the market in the face of rampant panic and pessimism has been very encouraging.

That means two things. First, at these prices, even though stocks are still near all-time highs, they are nevertheless bargain-priced. Second, the credit crisis that has triggered the recent volatility really isn't all that threatening. ...

So it's a mess to be sure. But it's not a real mess — it's just a psychological mess. ...

Stocks will have to live with a little uncertainty, while we see just how "brief" this brief period of adjustment is. But the credit markets will repair themselves and stocks will be at new highs before you know it.

August 24, 2007: Everyone's saying that the financial system is "broken" thanks to losses in subprime mortgages, and the collapse of exotic loan securitization structures like collateralized debt obligations, or CDOs. So how come the financial sector of the S&P 500 has performed better than the overall market during this alleged meltdown?

Guys and gals, take a stress pill and count to 10. This is nothing. At least for most investors. ...

This is like Hurricane Katrina. If you lived in New Orleans when it hit, then it was a profound personal tragedy. Thousands of such personal tragedies added up to lots of money, call it $100 billion plus. But in the grand scheme of things in the overall economy, it doesn't even register on the radar.

To paraphrase Humphrey Bogart in "Casablanca," the troubles of a few thousand little people don't amount to a hill of beans in this crazy economy. ...

Bernanke is no politician. He's an academic, and a serious student of monetary policy. He's not thinking about the cover of Time. That's why he hasn't cut the fed-funds rates, and why he's not going to. ...

So here's the play: Buy stocks on dips. There will plenty of dips while the panic plays itself out. But the bottom is in, and I think you can buy with confidence now.

August 31, 2007: It's hard to find any fellow bulls out there anymore. And oddly enough, those few that I encounter all base their bull case on something I totally disagree with. They think that the Fed is going to save the markets by slashing interest rates. I disagree. I don't think the Fed will cut interest rates at all. ...

There will be no rate cut. And stocks will be at new all-time highs by the end of the year.

You heard it here first!

October 26, 2007: Right now everyone thinks the credit markets are dead, dead, dead. ...

No one expects Wall Street to get right back up on its feet and start up a new credit cycle, with all the profits — yes, and all the risk and all the foolishness — that such a thing implies.

Yet I think there is a decent chance that some version of that will happen, and quite soon.

November 30, 2007: The bottom is in. Yes, I know I've been too early in saying to buy stocks during the correction from the October highs. But all the classic signals of a durable bottom are in place now.

December 7, 2007: On Wall Street, vultures don't go after dead things. They go after things that are alive and very cheap. And right now, they're going after troubled financial stocks in a big way, which means it's time to move in. ...

The fact that all these deals are taking place says that the assets that have been thought to be most at risk during the credit crisis of the last six months have finally hit rock bottom. And that, in turn, says some very positive things about the economy and the stock market in general. ...

The vultures have come in and set a floor for the value of existing debt. Now the uncertainty has been resolved as to where that floor is, and it's all upside from there.

December 28, 2007: Bearish expectations that lending will necessarily contract because of damaged bank capital structures suffer from a fallacy of static analysis...

As long as investors, businesses and consumers have good reasons to keep borrowing, I think that the banking system will continue to be fully able to keep lending.

January 18, 2008: I admit that I've been very wrong. I've been saying to buy stocks all the way down since the October highs. I was wrong. I repeat: I was wrong.


I don't know if Luskin's involved in money management these days, but if you don't know what happened a few years ago, take a look.

By the way, your wallet has an interest in Luskin's record. He's an economic advisor to John McCain -- the candidate who admits he doesn't understand the economy as well as he should. Ready for these guys to take a crack at "fixing" Social Security?

Weary, Indeed

Note the use of "weary" instead of "wary" in the last graf of this AP article. A bit of sloppiness by a distracted wire service editor? Or a knowing wink to readers who are tired of subsidizing private-sector mistakes?

Smear Factor

If you didn't see it last week, here's a McClatchy piece on the winks, nods, and slurs that are part of the campaign against Obama. I found this part interesting:

One practitioner in Virginia, who hates Obama like a dog hates cats, led a reporter through his efforts. Because the man is a retired clandestine CIA officer, identifying him could endanger officers or operations that remain classified, so McClatchy will not reveal his name. In late 2006, convinced that an Obama presidency would be disastrous for America, he decided to start an anti-Obama operation. He combed the public record on Obama. He used a couple of allies and informants — half-jokingly dubbing his group "The Crusaders" — to learn about Obama's background, especially his Africa connection and how he came to be the editor of the Harvard Law Review. He assembled a dossier on Obama, including allegations that Obama attended a madrassa, or Islamic religious school, in his youth in Indonesia. Then the retired spook tried to get Israeli intelligence officials interested in his Obama dossier. They weren't, to his chagrin. He also shopped it to some foreign reporters. Again, no luck.

Assuming that's not just tall talk from a former spook who misses the game, what part of the CIA officer's professional experience led him to believe Israeli intelligence would be interested in an anti-Obama dossier? And what did he think Israel would do with the information?

"As A Primitive People Believed In Magic"

Describing the hyperinflation in his country during the early 1920's, German publisher Leopold Ullstein wrote:

People just didn't understand what was happening. All the economic theory they had been taught didn't provide for the phenomenon. There was a feeling of utter dependence on anonymous powers -- almost as a primitive people believed in magic -- that somebody must be in the know, and that this small group of 'somebodies' must be a conspiracy.

Now read this news report. Anything sound familiar there?

Let's try an experiment. I've already done a stint with the clipboard and gathered some data in the field (results at the end of this article). Now it's your turn. Ask a friend or two this question: "What's the main reason for the high price of gas?" Try to ask someone as average-Joe as possible (i.e., not someone who has a voodoo doll of Ben Bernanke on the nightstand). If you believe, as I do, that real change will come only when the public (at least at the margin) stops praying at the gas pump, debating gas tax holidays, and blaming "conspiracies of somebodies" and instead starts to understand why prices are going up, then the question is an important one.

Post or email me the responses you get.

When "Dynamic" Is Too Slow...

FedEx's Alan Graf explains the company's most recent profit warning:

"While we have dynamic fuel surcharges in place, they cannot keep pace in the short-term with rapidly rising fuel prices."

Translation: If FedEx was a restaurant, it wouldn't be able to change the prices on the menu fast enough.

So the printing presses ran, and once they began to run, they were hard to stop. The price increases began to be dizzying. Menus in cafes could not be revised quickly enough. A student at Freiburg University ordered a cup of coffee at a cafe. The price on the menu was 5,000 Marks. He had two cups. When the bill came, it was for 14,000 Marks. "If you want to save money," he was told, "and you want two cups of coffee, you should order them both at the same time."

George Goodman (pen name Adam Smith), Paper Money, 1981

Ghost Town

Some haunting photos of present-day Chernobyl (scroll all the way down for the second set). Yes, you can take a guided tour.

"Training Camps"

Phil Giraldi:

There is considerable speculation and buzz in Washington today suggesting that the National Security Council has agreed in principle to proceed with plans to attack an Iranian al-Qods-run camp that is believed to be training Iraqi militants. The camp that will be targeted is one of several located near Tehran. Secretary of Defense Robert Gates was the only senior official urging delay in taking any offensive action. ...

Full post here. More on this from a financial markets perspective over the weekend.

History's Rhyme

In this post almost three years ago, when inflation and economic distress weren't exactly hot topics in the news, I drew parallels to another period in history when their destructive effects fed populist rage about "greedy money changers" and inspired a nation's collective madness.

During the past few days, one of this country's most popular leaders has emphasized her willingness to use nuclear weapons to "totally obliterate" another nation, ominously promised to "go right at OPEC", and -- yes -- railed against "Wall Street money brokers."

It's tempting to write all this off as silly-season pandering. But Hillary Clinton is nothing if not intuitive; she knows the fear and anger out there are not transitory by-products of the campaign trail or a specific candidate. In her say-anything drive to win, she's not only giving shape to the public's impulses, but legitimizing their worst manifestations -- thus the grudging respect from the titular Right, which has spent the last seven years trying to do the same thing. Regardless of who wins in November, I suspect future political and social historians will focus on the outbreak of a virulent, early twenty-first century strain of jingoistic populism in which latter-day lebensraum ("go right at OPEC") meets pitchfork-wielding townsfolk ("Wall Street money brokers") meets post-9/11 hysteria ("totally obliterate").

At least this time the newsreels won't be in black and white.

Faith-Based Fill-Ups

AFP:

At a Shell gas station in Washington, Rocky Twyman and an unusual group of activists were mad as hell about soaring fuel prices. "Last week, this station was 3.51 dollars. Now it's practically 3.60. So it's gone up nine cents in one week," Twyman said as he pumped five dollars' worth of gas into his thirsty American car. "Someone's making a lot of money and it's really, really wrong," added Twyman, who founded the Prayer at the Pump movement last week to seek help from a higher power to bring down fuel prices, because the powers in Washington haven't. The half-dozen activists -- Twyman, a former Miss Washington DC, the owner of a small construction company and two volunteers at a local soup kitchen -- joined hands, bowed their heads and intoned a heartfelt prayer. "Lord, come down in a mighty way and strengthen us so that we can bring down these high gas prices," Twyman said to a chorus of "amens". "Prayer is the answer to every problem in life... We call on God to intervene in the lives of the selfish, greedy people who are keeping these prices high," Twyman said on the gas station forecourt in a neighborhood of Washington that, like many of its residents, has seen better days. "Lord, the prices at this pump have gone up since last week. We know that you are able, that you have all the power in the world," he prayed, before former beauty queen Rashida Jolley led the group in a modified version of the spiritual, "We Shall Overcome". "We'll have lower gas prices, we'll have lower gas prices..." they sang. At the weekend, Twyman had led a group of around 200 people in prayer at pumps in San Francisco, where gas is touching the four-dollars-a-gallon mark. ... Americans have turned to prayer because the earthly powers-that-be don't seem to give a hoot, said Judy Dugan, a research director at Consumer Watchdog, a non-profit group based in California. She described Prayer at the Pump as "the ultimate Hail Mary." "It's what you do when you feel you have no one on your side, and they certainly don't have the US government on their side on this," Dugan said. At the Shell station, Twyman had dire words of warning for those who are raking in profits from high gas prices. "Woe be unto those people that are really greedy and taking advantage of American families," he proclaimed from his pump pulpit. "These prices will come down, just like the walls of Jericho came down in the Bible," he said, as another chorus of amens punctuated the sound of cash flowing out of the gas pumps.

A nation in debt, foreclosed on, and armed to the teeth with nuclear weapons gets Biblical at the pump. Meanwhile, as I predicted at the top of this post a month ago, the Federal Reserve has just expanded the scope of what was already the largest monetary stimulus in the history of financial markets.

If you feel like someone's watching you, it's probably the rest of the world's wary eyes.

Shocking Headline

The beginning of reality-based reporting on the oil-dollar link? Or a mistake by a young headline writer who then got an angry lecture from above on how "things" work? This will bear watching.

"A Shameful Thing"

John McCain's flip-flops, corrections, and red-faced clarifications are getting an increasing amount of attention. But let's not forget the mother of all memory hole shuntings. From McCain's foreword to Halberstam's The Best and the Brightest (I'm still waiting for the candidate to be asked about this):

It was a shameful thing to ask men to suffer and die, to persevere through god-awful afflictions and heartache, to endure the dehumanizing experiences that are unavoidable in combat, for a cause that the country wouldn’t support over time and that our leaders so wrongly believed could be achieved at a smaller cost than our enemy was prepared to make us pay. No other national endeavor requires as much unshakable resolve as war. If the nation and the government lack that resolve, it is criminal to expect men in the field to carry it alone.

McCain isn't running on the Spring Chicken platform; no one supports him for his youthful glow. His purported and self-described strengths are gravitas, wisdom, and experience. But on the single issue one might reasonably have expected his formative life experience to matter, his "wisdom" could be mistaken for that of a Washington first-termer half his age. If he couldn't even get Iraq right, what else will he get wrong, and of what value is his vaunted experience?

Yabba Dabba Do

I haven't done more than glance at Tom Friedman's stuff in years. But he nails this:

A few weeks ago, my wife and I flew from New York’s Kennedy Airport to Singapore. In J.F.K.’s waiting lounge we could barely find a place to sit. Eighteen hours later, we landed at Singapore’s ultramodern airport, with free Internet portals and children’s play zones throughout. We felt, as we have before, like we had just flown from the Flintstones to the Jetsons. If all Americans could compare Berlin’s luxurious central train station today with the grimy, decrepit Penn Station in New York City, they would swear we were the ones who lost World War II.

From infrastructure to culture and just about everything in between, sometime around the turn of the millennium this country got horizontal on a sofa with the remote control and a big bowl of chips on its chest. Which presidential candidate stands the best chance of changing that?

Your Lying Wallet

From the Federal Reserve's statement on Wednesday, when it cut interest rates yet again:

Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization.

Keeping in mind that individuals and businesses use these forecasts for planning purposes, let's revisit the Fed's previous predictions about inflation:

• March 18, 2008: "The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization."
  
  
• January 30, 2008: "The Committee expects inflation to moderate in coming quarters"...
  
  
• January 22, 2008: "The Committee expects inflation to moderate in coming quarters"...
  
  
• December 11, 2007: "Readings on core inflation have improved modestly this year"...
  
  
• October 31, 2007: "Readings on core inflation have improved modestly this year"...
  
  
• September 18, 2007: "Readings on core inflation have improved modestly this year"...
  
  
• August 7, 2007: "Readings on core inflation have improved modestly in recent months."
  
  
• June 28, 2007: "Readings on core inflation have improved modestly in recent months."
  
  
• May 9, 2007: "Inflation pressures seem likely to moderate over time"...
  
  
• March 21, 2007: "Inflation pressures seem likely to moderate over time"...
  
  
• January 31, 2007: "Readings on core inflation have improved modestly in recent months, and inflation pressures seem likely to moderate over time."
  
  
• December 12, 2006: "Inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand."

And excerpts from some of Bernanke's past speeches and testimony:

• 7/19/06: "FOMC participants project that the growth in economic activity should moderate to a pace close to that of the growth of potential both this year and next. Should that moderation occur as anticipated, it should help to limit inflation pressures over time...the economy should continue to expand at a solid and sustainable pace and core inflation should decline from its recent level over the medium term...our baseline forecast is for moderating inflation."
  
  
• 11/28/06: "Core inflation is expected to slow gradually from its recent level"...
  
  
• 3/28/07: "Core inflation, which is a better measure of the underlying inflation trend than overall inflation, seems likely to moderate gradually over time."
  
  
• 7/18/07: "With long-term inflation expectations contained, futures prices suggesting that investors expect energy and other commodity prices to flatten out, and pressures in both labor and product markets likely to ease modestly, core inflation should edge a bit lower, on net, over the remainder of this year and next year."

Polls show that inflation worries Americans more than jobs, the stock market, or declining house prices. This Fed has proven itself either willfully deceptive about inflation, or incapable of forecasting it. And some want to give even more authority to this bunch? The only thing the Fed needs more of is congressional oversight.

Convoy

AP:

Horns blaring in a deafening fanfare, a convoy of truck drivers traveled to Washington on Monday to protest record fuel prices. Members of Truckers and Citizens United circled the National Mall before parking their rigs at RFK Stadium. From there, about 100 protesters marched and took shuttles to the Capitol, where an afternoon rally was held. "The high price for oil is hurting our economy," organizer Mark Kirsch said. "It's hurting middle class people." The national average price of a gallon of regular gasoline is a record $3.51, according to a recent survey of stations by AAA and the Oil Price Information Service. The price for diesel — used to transport most food, industrial and commercial goods — is $4.20 a gallon. Dave Gares, an independent trucker from Lebanon, Pa., said the $1,400 it costs to fill up his tractor-trailer with 220 gallons of diesel fuel has been a drain on his income. William Lockridge of the Washington Metropolitan Area Truckers Association said independent truckers are barely breaking even. "If the truck stops, the economy stops," he said. The truckers are urging Congress to stop subsidizing big oil companies, release oil from the Strategic Petroleum Reserves, and end exports of oil from Alaska, among other things.

Admirable, but futile. By taking their protest to Capitol Hill instead of the Fed, those truckers missed an opportunity to rattle Bernanke's office window with their horns during a week when he'll probably lower rates yet again and inflict more pain at the gas pump. But how many of those truckers have even heard of the Federal Reserve or Ben Bernanke (or Hank Paulson, for that matter)? If they're like the drivers I interviewed at the end of this article, we know the answer. The Fed's vaunted "independence" isn't so much political (everyone knows that's a joke) as it is psychological; the arcana of monetary policy keeps the Fed off the maps of the tour bus set, and that's just fine with those who work there. Out of mind, out of sight.

Khe Sanh On The Tigris

On Afghanistan, the operative question is the one I asked in this post: If someone told you in late 2001 that Afghanistan's president wouldn't be able to leave his office in 2008 without risking a Sadat-redux assassination attempt in the heart of Kabul, would you have called the mission a success or a failure? On Iraq, if someone told you in 2003 that this would be the situation five years on, what would have been your verdict?

If John McCain wants to hitch his wagon to this madness for the next six months, Democrats should give him a carriage and all the horses he needs.

Tale Of Two Blogs

On Monday, you could have clicked through the dozens of posts on Jeremiah Wright at NRO's Corner. (As Andrew said, "If only Jeremiah Wright was running for something...the GOP would have a chance this year.") Or you could have read substantive posts like this one by Kelley Vlahos. My take on Kelley's topic is here.

Trusted Sources

What's there to say about this sort of hilarity at this point? Note the "sources" and, of course, the media outlet (along with nice little touches like "if confirmed" -- which one presumes will happen soon). They never give up, do they?

Related, did you catch last week's background briefing on Syria's "covert nuclear reactor"? PDF file on the DNI website is here. Reading it reminded me of the first question on this list. Will we ever get an answer? Or is it one of those things that everyone sort of agrees to leave in the memory hole forever?

Almost Seven Years On...

If someone told you in late 2001 that this would be the situation in 2008, would you have called the mission a success or a failure?

Militarization Watch

Yes, the problem on 9/11 was that the cops weren't armed well enough.

A wild-eyed moonbat might say that as food and fuel prices spiral higher, hoarding and rationing start, and stagflation-induced desperation builds, it's a not-so-unintentional message to the public to not get any bright ideas...

"A Nation Of Willie Lomans"

It's pretty rare that I read something I wish I'd written. The first part of this column qualifies.

Public Transportation In Kinshasa

Avoid it.

Pirates!

For those rare times when there's no "fog at U.S. ports" or "storm in the North Sea" to blame for the price of oil.

When does the average landlubber start to think about the dollar in the grocery store and at the gas pump?

That Worked Out Well

Larry Kudlow, National Review, 11/16/04:

With the reelection of President George W. Bush, cowboy capitalism will continue and then some. Pro-growth policies on tax reform, Social Security reform, tort reform, and energy reform will all keep the capital in capitalism. Watch the U.S economy continue to outperform the other large industrial countries by a wide margin, as it has since Reagan. Which brings us back to the dollar. In order to get a piece of Bush’s ownership-society vision, foreign investors are going to have to buy dollars, not sell them. ... In narrower terms, the current guardian of dollar value is Maestro Alan Greenspan. He has spent a distinguished career at the Fed protecting greenback purchasing power and holding down domestic inflation. For those proliferating dollar bears on Wall Street, including a number of supply-siders who have turned into inflationist worrywarts, do you really think Greenspan is about to reverse his long-held convictions? Only a few years ago the rap against Sir Alan was deflation. Having corrected that mistake, do you really think he’s embarked on a massive inflation? Highly doubtful. ... ...the Fed will gradually remove the excess dollars they appropriately created following the dreadful 9/11 attacks on the U.S. As they remove this emergency liquidity and as pro-growth tax cuts are made permanent in Bush’s second-term tax-reform program, the future value of the U.S. dollar is likely to rise, not fall. ... The liberal chattering pundits of the old established media will continue to prattle on about budget deficits, trade deficits, a weak dollar, higher inflation, and a jobless recovery. But America’s economic future is vastly more optimistic than these negativists would have us believe. Both politics and policy are pointing toward non-inflationary prosperity. The U.S. dollar will share in this bounty.

Well, at least nobody reads National Review for its economic analysis.

Listen, this blog is going to start calling out this sort of stuff much more aggressively. I'm not a big fan of "archive gotcha." But for gurus and pundits with inexplicably high profiles who hold themselves out as worth listening to, past predictions are fair game -- particularly if they can impact readers'/viewers' financial health. By the way, I won't exclude myself from the microscope; watch for a report card on my own predictions soon.

Ghost Of Dolchstoss Past

Mass battlefield desertions seem to pose a special threat to the illusion:

Earlier this week, much hay was made when an Iraqi Army company deserted its position in Sadr City. The next day, the New York Times interviewed an Iraqi Army company commander, also from Sadr City, who left his unit to take leave and speculated he may not come back. In two days, the narrative for the Iraqi Army and U.S. military incursion is set: The Iraqi Army is falling apart. Both of these stories get a feature-length report, while successes of the Iraqi Army are relegated to single paragraph throwaways. ...

Bill Roggio, The Weekly Standard, 4/18/08

And so in early 1967, Joe McGinniss, then just a young reporter for the Philadelphia Inquirer, would spend a day traveling with Westmoreland to the coastal town of Phan Thiet. There a young American officer startled McGinniss by giving an extraordinarily candid briefing on how bad the situation was, how incompetent the ARVN was. Westmoreland had demanded the briefing and the young American had been uneasy about giving it, apologizing for being so frank with a reporter present, but finally it had come pouring out: the ARVN soldiers were cowards, they refused to fight, they abused the population, in their most recent battle they had all fled, all but one man. That one man had stood and fought and almost single-handedly staved off a Vietcong attack. When the officer had finished his briefing, still apologizing for being so candid, Westmoreland turned to McGinniss and said, "Now you see how distorted the press image of this war is. This is a perfect example -- a great act of bravery and not a single mention of it in the New York Times."

David Halberstam, The Best and the Brightest

Hanke On Hank

Steve Hanke:

U.S. Treasury Secretary Henry Paulson's blundering is becoming more breathtaking with each passing week. At the end of March he rolled out a grand plan to crown the Federal Reserve as the nation's new financial stabilizer. The Fed a stabilizer? That's who created the financial mess we're in. If this wasn't bad enough, Secretary Paulson then donned his cheerleader's uniform and encouraged Beijing to let the Chinese yuan appreciate against the greenback. All the while favoring in this fashion a debasement of the U.S. currency, Paulson proclaimed that we should remain calm and confident because the economic fundamentals are sound. He reminds me of the stockbroker who performed a valuable service to his partners by always being wrong.

The rest is here. In this post in January, I called for Paulson's exit based on his disastrous housing market assessment, which was either incredibly naive or willfully misleading. Hanke's a former economics professor of mine (and a good one) and his stridency in blasting the Treasury topper is noteworthy.