When the late-night program “The Jon Stewart Show” was cancelled in 1995, Stewart took to the air one last time to say, “To all those people who said my show wouldn’t last, I have only one thing to say: Good call!” And to all of the pessimists and Democrats (I’d be grateful to anyone who can explain the difference) who predicted 18 of the last three capitalist meltdowns: good call! Take a bow. Bask in the warmth of the mushroom cloud, do the backstroke in the lake of fire.
Last weekend’s Wall Street Journal report on the banking crisis, which any normal person would perceive as grim bordering on terrifying, was described as “pretty hilarious” on the blog of the New York Times columnist Paul Krugman. Krugman has good reason to make merry on, for instance, the “Larry King Show,” upon which he appeared last week while wearing sandals. Why not a Hawaiian shirt?
Legg Mason stock picker Bill Miller, whose mutual fund, where I park a lot of what used to be my money, delivered returns that beat the S&P 500 average for 15 straight years, now finds his team has become the Miami Dolphins of investors. He notes dryly in a letter to his remaining clients that if news stories said oil was going up, he could bet on oil – “this is the only market I have seen where you could just read the headlines in the papers, react to them, and make an excess return.” One more shocking headline: JOURNALISTS TURN OUT TO BE RIGHT.
It’s as if Katrina times Ike hit the financial markets, skipping over the trailer parks to whack the country clubs and penthouses. Also, the Yankees are going to miss the playoffs for the first time since 1994. Coincidence?
When disaster strikes, Democrats always leap into action with an immediate response, and the response is always, “I told you so.” Does the Democrats’ crashenfreude really fit in with the rest of their worldview? Their line is that the rich frolic while (because?) the rest of us suffer, and that the Republican government is their enabler. It didn’t look that way this week.
The Lehman Brothers building became a virtual crematorium on Monday. On Thursday, shares in Lehman Brothers were down 99.8% from their peak value. Bad time to be a master of the universe.
But not such a bad time to be a mailman or a grocer or even a pundit. If the rich are robbing from the poor, how come the guys in the custom shirts are the ones lining up for unemployment? (The national unemployment rate is 6.1%, lower than the average in the 1980s.) Compare Hurricane Lehman to Katrina. Few disputed that the residents of New Orleans suddenly became wards of the state for no other reason than the disaster, despite the many unwise choices made by victims (failing to buy insurance, living in a danger zone, refusing to evacuate) that exacerbated the crisis. No one except a few hard-core free market types applied (correctly) the term “moral hazard” – gambling with someone else’s chips.
N.O. residents counted on free insurance courtesy of the federal government, and got it. (Last year the CBO estimated federal Katrina allocations at $95 billion.) Yet the Bush administration let Lehman go glug, glug. So it looks like Republicans are more than kind to the poor and the black, heartless to capitalists. Isn’t that what Democrats want?
It is a trickle-down economy and when Lehman lays a rotten egg the stench will hit shoeshine guys and cab drivers. The basic cause of the crisis, though, is the housing market, which now looks like the pebble that became the snowball that became the avalanche. Nobody’s home has lost 99.8% of its value. The National Association of Realtors says median home prices are up 8.5% from the bottom. Joe Sixpack may be scrambling to pay his mortgage, but Lehman’s house just burned down.
After the Jon Stewart market crashed in 1995, it took a few years, but things came roaring back. You might say it was because his fundamentals were sound.