Market-based variables point to a mini boom in the new year.
Despite the historic expansion of the federal government’s involvement in, intervention in, and control of the economy -- including Bailout Nation; takeovers of banks, car companies, insurance firms, Fannie, Freddie, AIG, GM, Chrysler, and GMAC; large-scale tax threats; overregulation; an attempted takeover of the health-care sector; ultra-easy money; a declining dollar; and unprecedented spending and debt creation -- despite all the things that would be expected to destroy the economy -- all this socialism lite and the degrading of incentives and rewards for success -- despite all this, the U.S. economy has not been destroyed.
In fact, it is coming back. In 2009, the stock market had one of its greatest rebounds in history. And in 2010, we’re likely to witness a mini boom in economic growth.
If you believe in miracles, as I do, this looks like a miracle. If you have faith in free-market capitalism, as I do, then somehow this faith is being rewarded by a more durable and resilient free-enterprise capitalism than many of us thought possible only one year ago.
If you believe in the supply-side model of growth, including low marginal tax rates, a reliable King Dollar, and limited government, yes, you have very little to cheer about. Yet market-based forecasting variables are all pointing to a stronger-than-expected economic rebound in the new year.
Stocks are signaling better economic growth. So is the steeply upward-sloping Treasury yield curve. So is the worldwide rebound in commodity markets. So is the collapse of credit-risk spreads in the bond market. Each of these market-based forecasting tools points to a significant recovery in 2010.
I’m calling it a “mini boom” because we’re likely headed toward 4 to 5 percent real economic growth. That’s not as good as the 7 to 8 percent boom that followed the similarly deep recession of the early 1980s. Then again, Reagan slashed tax rates and Volcker stabilized the dollar. That’s not happening now. Gold has jumped from around $700 to $1,100, signaling higher inflation in 2010 and even more price increases in 2011.
But we know from recent data on retail sales, personal income, corporate profits, industrial production, business investment, and jobless claims that the economic patient is healing.
The most recent release from the Chicago Purchasing Managers is boom-like, with the best gains in nearly four years being registered for business activity, production, new orders, and even employment. Meanwhile, the housing sector is stabilizing and consumer confidence is gradually improving.
The biggest source of economic stimulus is not the $800 billion Obama spending package. It’s the $4.6 trillion of capital gains thrown off by the stock market over the past three quarters. This is investment money, and it also enhances consumer spending. As a result, jobs are likely to start rising early in 2010.
The second-biggest stimulus is the Fed’s zero-interest-rate policy and ballooning balance sheet that has poured about $1.5 trillion into the economy. How the Fed exits from this remains to be seen. The longer it waits, the more inflation-prone the coming boom will be. So there’s a false prosperity here, or at least one that raises skepticism about the longer term.
And with marginal tax rates going up in 2011, the top 5 percent of successful earners and investors are going to bring their income forward next year in order to beat the tax man. That’s even more false prosperity.
But the fact remains that businesses large and small, along with family households, have performed the necessary belt-tightening and deleveraging corrections made necessary by the Great Recession and its bubbled-up speculations. These free-enterprise actions have led to great productivity in our mostly free economy. Again, the results will show in next year’s mini boom.
A political belt-tightening also has been taking place. The Tea Party movement came on the scene in 2009 to revolt against big-government spending, taxing, and controlling. This movement is so reminiscent of California’s Prop 13 tax revolt of 30 years ago, which led to the Reagan revolution. It may well be the backbone of an anti-Washington revolution in 2010, ushering in a much more conservative Congress and a chastened Obama White House.
It remains to be seen whether this political revolt can stop the big-government assault on free enterprise. But I have as much faith in the political markets turning the ship of state around as I have in rising year-end Treasury bond-market rates forcing the Bernanke Fed to shape up and ship out of its wild money-printing ways.
In other words, free people and free markets have always been the best guarantors of American economic growth. Because I believe this, I am an optimist going into the new year.
Wednesday, December 30, 2009
Scanners In Every Airport?
Should these security scanner machines be in every airport? A look at body scanners currently on the market, with Ajay Mehra, Osi Systems executive v.p. and Cherif Rizkalla, Smiths Detection, security and inspection president.
Tuesday, December 29, 2009
On CNBC's Kudlow Report Tonight
This evening at 7pm ET:TERROR LATEST
Are more al Qaeda attacks in the works?
CNBC’s Hampton Pearson reports from Washington.
THE NEXT GENERATION OF AIRPORT SCANNERS
On to discuss:
*Cherif Rizkalla, Security & Inspection President Smiths Detection
*Ajay Mehra, Executive V.P., OSI Systems and President, Rapiscan Systems
ALL SIGNS POINTING TO A MINI-BOOM?
-U.S. Consumer confidence
-Hope in the housing market?
-A firmer dollar and drop in gold.
CASE-SHILLER SHOWING SIGNS OF LIFE
Joining us to discuss will be Robert Shiller, Economics Prof, Yale School of Mgt's Int'l Ctr for Finance; Chief Economist Macromarkets.
IS THE FED MOVING CLOSER TO AN EXIT STRATEGY?
*Peter Navarro, "The Coming China Wars" Author; University Of California - Irvine Business Professor
*Daniel Indiviglio, The Atlantic Staff Editor & Blogger
KUDLOW'S HOTLINE
Give us a call! 800-800-CNBC. Phone lines open up at 7pm ET.
Please join us. The Kudlow Report. 7pm ET. CNBC.
Altucher's 2010 Top Ten List
Last night James Altucher joined me with a look ahead at what might be in store for the 2010 stock market and economy.
Monday, December 28, 2009
On CNBC's Kudlow Report Tonight
Get your questions ready folks...we're taking live calls on this evening's Kudlow Report. The number is 800-800-CNBC.
Phone lines will open at 6pm ET.
On tonight's program:
* Terrorism expert Steve Emerson will offer his take on the thwarted Christmas Day bombing attempt on Flight 253.
* Investment whiz James Altucher from Formula Capital will offer his 2010 stock market picks and predictions.
* Clusterstock's John Carney will opine on the latest Fannie/Freddie controversy.
Please join us! 7pm ET. CNBC.
Wednesday, December 23, 2009
On CNBC's Kudlow Report Tonight
This evening at 7pm ET:Obama's First Year
*Brian Mooar, NBC reporter
Did Obama Rescue the Financial System?
*Steve Moore, WSJ senior economics writer
*Bob Shrum, Democratic Strategist
Stimulus Waste
*CNBC's Brian Shactman
Fed Watch
*Peter Morici, Univ. of Maryland professor
*Vincent Reinhard, AEI Resident Scholar
*Andy Busch, BMO Capital Markets
Who is Ayn Rand?
*CNBC's Hampton Pearson
Why is Ayn Rand So Popular?
*Don Luskin, Trendmacrolytics CIO
*Jerry Bowyer, CNBC Contributor
Larry's Last Word
Please join us. The Kudlow Report. 7pm ET. CNBC.
Tuesday, December 22, 2009
The Yield Curve Is Signaling Bigger Growth
What’s a yield curve and why is it so important?
Well, the curve itself measures Treasury interest rates, by maturity, from 91-day T-bills all the way out to 30-year bonds. It’s the difference between the long rates and the short rates that tells a key story about the future of the economy.
When the curve is wide and upward sloping, as it is today, it tells us that the economic future is good. When the curve is upside down, or inverted, with short rates above long rates, it tells us that something is amiss -- such as a credit crunch and a recession.
The inverted curve is abnormal, the positive curve is normal. We have returned to normalcy, and then some. Right now, the difference between long and short Treasury rates is as wide as any time in history. With the Fed pumping in all that money and anchoring the short rate at zero, investors are now charging the Treasury a higher interest rate for buying its bonds. That’s as it should be. The time preference of money simply means that the investor will hold Treasury bonds for a longer period of time, but he or she is going to charge a higher rate. That is a normal risk profile.
The yield curve may be the best single forecasting predictor there is. When it was inverted or flat for most of 2006, 2007, and the early part of 2008, it correctly predicted big trouble ahead. Right now it is forecasting a much stronger economy in 2010 than most people think possible.
So there could be a mini boom next year, with real GDP growing at 4 to 5 percent, perhaps with a 6 percent quarter in there someplace. And the unemployment rate is likely to come down, perhaps moving into the 8 percent zone from today’s 10 percent.
The normalization of the Treasury curve is corroborated by the rising stock market and a normalization of credit spreads in the bond market. I note that as the curve has widened in recent weeks, gold prices have corrected lower and the dollar has increased somewhat. So the edge may be coming off the inflation threat. If market investors expect the economy to grow, inflation at the margin will be that much lower as better growth absorbs at least some of the money-supply excess created by the Fed. My hunch is that inflation will range 2 to 3 percent next year.
It also could be that the health-care bill about to pass in the Senate is less onerous from a growth standpoint -- and certainly less onerous than the House bill. For example, the Senate bill does not contain a 5.4 percent personal-tax-rate surcharge, which also would apply to capital gains. So if the Senate bill becomes the final bill, it will be less punitive on growth. That could explain the fall in gold and the rise in the dollar. We’ll still be stuck with a tax hike from the expiration of the Bush tax cuts, but at least we won’t have a tax hike on top of that. That’s the optimistic view, at any rate.
But really, pessimists have missed the big rise in corporate profits, the resiliency of our mostly free-market capitalist economy, and the monetarist experiment from the easy-money Fed. The optimal policy mix on the supply-side is low tax rates and King Dollar. We don’t have that. So as good as 2010 may be, with investors moving to beat the tax man, it could be a false prosperity at the expense of 2011.
But let’s cross that bridge when we get there. Right now, rising stocks and a wide and positive yield curve are spelling strong economic growth in the new year.
Well, the curve itself measures Treasury interest rates, by maturity, from 91-day T-bills all the way out to 30-year bonds. It’s the difference between the long rates and the short rates that tells a key story about the future of the economy.
When the curve is wide and upward sloping, as it is today, it tells us that the economic future is good. When the curve is upside down, or inverted, with short rates above long rates, it tells us that something is amiss -- such as a credit crunch and a recession.
The inverted curve is abnormal, the positive curve is normal. We have returned to normalcy, and then some. Right now, the difference between long and short Treasury rates is as wide as any time in history. With the Fed pumping in all that money and anchoring the short rate at zero, investors are now charging the Treasury a higher interest rate for buying its bonds. That’s as it should be. The time preference of money simply means that the investor will hold Treasury bonds for a longer period of time, but he or she is going to charge a higher rate. That is a normal risk profile.
The yield curve may be the best single forecasting predictor there is. When it was inverted or flat for most of 2006, 2007, and the early part of 2008, it correctly predicted big trouble ahead. Right now it is forecasting a much stronger economy in 2010 than most people think possible.
So there could be a mini boom next year, with real GDP growing at 4 to 5 percent, perhaps with a 6 percent quarter in there someplace. And the unemployment rate is likely to come down, perhaps moving into the 8 percent zone from today’s 10 percent.
The normalization of the Treasury curve is corroborated by the rising stock market and a normalization of credit spreads in the bond market. I note that as the curve has widened in recent weeks, gold prices have corrected lower and the dollar has increased somewhat. So the edge may be coming off the inflation threat. If market investors expect the economy to grow, inflation at the margin will be that much lower as better growth absorbs at least some of the money-supply excess created by the Fed. My hunch is that inflation will range 2 to 3 percent next year.
It also could be that the health-care bill about to pass in the Senate is less onerous from a growth standpoint -- and certainly less onerous than the House bill. For example, the Senate bill does not contain a 5.4 percent personal-tax-rate surcharge, which also would apply to capital gains. So if the Senate bill becomes the final bill, it will be less punitive on growth. That could explain the fall in gold and the rise in the dollar. We’ll still be stuck with a tax hike from the expiration of the Bush tax cuts, but at least we won’t have a tax hike on top of that. That’s the optimistic view, at any rate.
But really, pessimists have missed the big rise in corporate profits, the resiliency of our mostly free-market capitalist economy, and the monetarist experiment from the easy-money Fed. The optimal policy mix on the supply-side is low tax rates and King Dollar. We don’t have that. So as good as 2010 may be, with investors moving to beat the tax man, it could be a false prosperity at the expense of 2011.
But let’s cross that bridge when we get there. Right now, rising stocks and a wide and positive yield curve are spelling strong economic growth in the new year.
On CNBC's Kudlow Report Tonight
This evening at 7pm ET:Is There A Mini Boom In the Cards?
*Brian Wesbury, First Trust Advisors chief economist
*Michael Farr, president Farr, Miller & Washington
Economic & Stock Market Update:
*Ken Heebner, Capital Growth Management portfolio manager
Dividend Stocks for 2010
*Jeff Krumpelman, Hilliard Lyons Capital portfolio manager
Housing Discussion with Suze Orman
Breast Cancer Warning on Cell Phones?
*Brian Mooar, NBC reporter
*Maine Rep. Andrea Boland
*Stewart Fleishman, MD
Please join us. The Kudlow Report. 7pm ET. CNBC.
Monday, December 21, 2009
On CNBC's Kudlow Report Tonight
This evening at 7pm ET:The Next Decade for Investors
*Steve Forbes, Forbes Chairman & CEO
Stocks For The Long Run?
*Alison Deans, CNBC contributor
*Joe Battipaglia, Stifel Nicolaus market strategist
The Latest on Healthcare Bill with NBC News Brian Mooar
Healthcare Debate
*Robert Reich, former Labor Secretary and UCal, Berkeley Professor
*Steve Moore, WSJ senior economics writer
Tax Attack from Botox to Tan-Tax
*Dan Humiston, President of Indoor Tanning Association
Economic Outlook -- interest rates, jobs, inflation debate:
*David Goldman, First Things Magazine senior editor
*Vincent Reinhart, AEI resident scholar
Bonds vs. Bond Funds with Suze Orman
Please join us. The Kudlow Report. 7pm ET. CNBC.
Friday, December 18, 2009
Without Bipartisan Support, Bernanke Should Withdraw
Helicopter Ben Bernanke passed his reconfirmation vote in the Senate Banking Committee this week. But he passed by 16 to 7. Most of the Republicans voted against Bernanke, as did one Democrat, Sen. Jeff Merkley of Oregon. The reconfirmation now goes to the floor of the Senate, where it’s going to be held up for a while. (Sen. Jim DeMint and others are insisting that a vote on the Government Accounting Office’s audit of the Fed occur first.) But when the final vote happens, I think Bernanke could be in trouble.
Mirroring the Banking Committee vote, most of the 40 Senate Republicans may vote against Bernanke, and they will be joined by a number of Democrats. If Bernanke were to be opposed by as many as 35 or 40 votes, it would substantially undermine his credibility.
Whether it’s his past inflationary-bubble monetary performance, or the bank bailouts, or the AIG bailout, or the end to secrecy at the Fed, senators on both sides of the aisle are blaming Bernanke, fingering him as the wrong guy at the wrong time. And somewhere in that mix of opposition -- led by senators Richard Shelby, Jim DeMint, Jim Bunning, and others -- Republicans are gradually moving back to a Ronald Reagan–type, King Dollar, hard-money position that is in strong contrast to Bernanke’s dollar declinism.
Aside from the fact that Bernanke doesn’t look at gold or the dollar as price signals to guide his policy, we have witnessed a complete reversal of the Fed’s intellectual framework. By that I mean, for 20 years or so, first under Paul Volcker and then during Alan Greenspan’s first three terms, the Fed argued that the tax-cut effects of low inflation would spur economic growth and low unemployment. This period lasted roughly from the early 1980s until the end of the century. But since Bernanke came on the scene, the sound-money, stable-dollar argument has disappeared.
For most of this decade, the Fed has been fighting unemployment by pumping in easy money. And it keeps telling us this will not cause inflation. With the CPI hitting nearly 5 percent in 2006 and almost 6 percent in 2008, Bernanke was dead wrong. And the fact remains that more money creation from the Fed produces inflation -- not jobs or long-term economic growth. The housing and oil bubble, which led to the Great Recession, corroborates this.
Bernanke sees deflation and depression threats everywhere. That’s one of his biggest problems. He cut his academic teeth on studying the Depression, which seems to have blinded him from the modern use of sophisticated financial-market signals in our new, globalized, high-tech, rapid-information world.
The mostly free-market economy has made its adjustments for better business profitability and consumer-balance-sheet corrections. Because of that -- and along with close to $4 trillion in new capital gains from the massive stock market rally as well as the Fed’s ultra-easy free-money policy -- economic recovery is picking up steam. GDP growth will surprise on the upside in the quarters ahead.
But Bernanke’s zero-interest-rate policy and continued money creation through the expansion of the Fed’s balance sheet continues to fight an emergency that ended this past spring. Given the end of the emergency and the onset of recovery, a still easy 1 or 2 percent federal funds rate would be more appropriate than zero.
According to Rasmussen, the public doesn’t trust Bernanke anymore. Only 21 percent of Americans favor his reappointment as Fed chair, while over 40 percent want a new face at the helm of the central bank. If that sentiment is echoed in the Senate, and if Bernanke receives 35 or more votes against him in the floor vote, it will not have been a truly bipartisan reconfirmation. And without that, I don’t see how he can effectively govern as Fed chairman.
Paul Volcker suffered 16 nay votes in his reconfirmation in 1983. But Bernanke could get hit by more than twice that number. This has never happened before in history.
I don’t think the Fed chairman understands just how vulnerable his political position is. So his task right now is to re-canvas senators across-the-board -- Republicans and Democrats. He’s going to have to wear down some shoe leather and make his bipartisan peace with the Senate if he expects to survive.
It’s more than Bernanke’s neck that’s at stake. Without bipartisan confidence, he will be totally ineffective as a Fed leader. And that very ineffectiveness will wear down the dollar and come at the expense of the country.
Bernanke and his advisors need to make a sober assessment of all this. If Bernanke cannot garner truly bipartisan support, he should spare the country a lot of agony and withdraw his name from consideration.
Mirroring the Banking Committee vote, most of the 40 Senate Republicans may vote against Bernanke, and they will be joined by a number of Democrats. If Bernanke were to be opposed by as many as 35 or 40 votes, it would substantially undermine his credibility.
Whether it’s his past inflationary-bubble monetary performance, or the bank bailouts, or the AIG bailout, or the end to secrecy at the Fed, senators on both sides of the aisle are blaming Bernanke, fingering him as the wrong guy at the wrong time. And somewhere in that mix of opposition -- led by senators Richard Shelby, Jim DeMint, Jim Bunning, and others -- Republicans are gradually moving back to a Ronald Reagan–type, King Dollar, hard-money position that is in strong contrast to Bernanke’s dollar declinism.
Aside from the fact that Bernanke doesn’t look at gold or the dollar as price signals to guide his policy, we have witnessed a complete reversal of the Fed’s intellectual framework. By that I mean, for 20 years or so, first under Paul Volcker and then during Alan Greenspan’s first three terms, the Fed argued that the tax-cut effects of low inflation would spur economic growth and low unemployment. This period lasted roughly from the early 1980s until the end of the century. But since Bernanke came on the scene, the sound-money, stable-dollar argument has disappeared.
For most of this decade, the Fed has been fighting unemployment by pumping in easy money. And it keeps telling us this will not cause inflation. With the CPI hitting nearly 5 percent in 2006 and almost 6 percent in 2008, Bernanke was dead wrong. And the fact remains that more money creation from the Fed produces inflation -- not jobs or long-term economic growth. The housing and oil bubble, which led to the Great Recession, corroborates this.
Bernanke sees deflation and depression threats everywhere. That’s one of his biggest problems. He cut his academic teeth on studying the Depression, which seems to have blinded him from the modern use of sophisticated financial-market signals in our new, globalized, high-tech, rapid-information world.
The mostly free-market economy has made its adjustments for better business profitability and consumer-balance-sheet corrections. Because of that -- and along with close to $4 trillion in new capital gains from the massive stock market rally as well as the Fed’s ultra-easy free-money policy -- economic recovery is picking up steam. GDP growth will surprise on the upside in the quarters ahead.
But Bernanke’s zero-interest-rate policy and continued money creation through the expansion of the Fed’s balance sheet continues to fight an emergency that ended this past spring. Given the end of the emergency and the onset of recovery, a still easy 1 or 2 percent federal funds rate would be more appropriate than zero.
According to Rasmussen, the public doesn’t trust Bernanke anymore. Only 21 percent of Americans favor his reappointment as Fed chair, while over 40 percent want a new face at the helm of the central bank. If that sentiment is echoed in the Senate, and if Bernanke receives 35 or more votes against him in the floor vote, it will not have been a truly bipartisan reconfirmation. And without that, I don’t see how he can effectively govern as Fed chairman.
Paul Volcker suffered 16 nay votes in his reconfirmation in 1983. But Bernanke could get hit by more than twice that number. This has never happened before in history.
I don’t think the Fed chairman understands just how vulnerable his political position is. So his task right now is to re-canvas senators across-the-board -- Republicans and Democrats. He’s going to have to wear down some shoe leather and make his bipartisan peace with the Senate if he expects to survive.
It’s more than Bernanke’s neck that’s at stake. Without bipartisan confidence, he will be totally ineffective as a Fed leader. And that very ineffectiveness will wear down the dollar and come at the expense of the country.
Bernanke and his advisors need to make a sober assessment of all this. If Bernanke cannot garner truly bipartisan support, he should spare the country a lot of agony and withdraw his name from consideration.
On CNBC's Kudlow Report Tonight
This evening at 7pm ET:IRANIANS SEIZE IRAQI OIL WELL
Joining us will be CNBC contributor John Kilduff, energy analyst and partner at Round Earth Capital.
AN EYE ON KING DOLLAR
-Why's the dollar going up?
-A look at the relationship between the dollar and the stock market.
*Marc Chandler, Brown Brothers Harriman Global Head of Currency Strategy
*Zach Karabell, CNBC Contributor/River Twice Research President
NEW BOFA CEO BRIAN MOYNIHAN
CNBC’s Maria Bartiromo will bring us all the latest from her interview with Ken Lewis’ replacement.
TIME WARNER VS. FOX - CLASH OF THE MEDIA TITANS
NBC News correspondent Brian Mooar reports.
THE CARBON CHALLENGE
CNBC chief Washington correspondent John Harwood will report.
OBAMA-NOMICS
Is big business in bed with big government?
"Obamanomics" author Tim Carney will be aboard.
THE FUTURE OF AMERICA
CNBC’s Suze Orman will join us.
Please join us. The Kudlow Report. 7pm ET. CNBC.
Thursday, December 17, 2009
Should Helicopter Ben Withdraw His Name?
Helicopter Ben Bernanke passed the Senate Banking Committee vote on his reconfirmation. But he passed by 16 to 7. Most of the Republicans voted against Bernanke, as did one Democrat, Sen. Jeff Merkley of Oregon. The reconfirmation now goes to the floor of the Senate, where it’s going to be held up for a while as Sen. Jim DeMint and others insist that the GAO Fed audit be voted on before Bernanke’s final vote.
That audit, by the way, would reveal the Fed’s FOMC policy discussions after six months, rather than the current-law five years. This is a good thing. More prompt disclosure. The public has a right to know, especially since Bernanke (as Alan Greenspan’s right-hand man) was instrumental in creating the easy-money housing and energy bubble that sank the economy, and since Bernanke (as Fed chairman) has provided unbelievable, ultra-easy, free-money, zero interest rates for too long.
Even with the recent modest corrections, rising gold and the declining dollar tell the story that Bernanke knows how to ease but not how to tighten. The emergency is long past, but he is still operating an emergency policy of ultra-easy, excess-dollar creation.
Aside from the fact that Bernanke doesn’t look at gold or the dollar as price signals to guide his policy, we have witnessed a complete reversal of the Fed’s intellectual framework. By that I mean, for 20 years or so, first under Paul Volcker and then during Alan Greenspan’s first three terms, the Fed argued that the tax-cut effects of low inflation would spur economic growth and low unemployment. This period lasted roughly from the early 1980s until the end of the century. But since Bernanke came on the scene, the sound-money, stable-dollar argument has disappeared.
For most of this decade, the Fed has been fighting unemployment by pumping in easy money. And it keeps telling us this will not cause inflation. With the CPI hitting nearly 5 percent in 2006 and almost 6 percent in 2008, Bernanke was dead wrong. And the fact remains that more money creation from the Fed produces inflation — not jobs or long-term economic growth.
Bernanke sees deflation and depression threats everywhere. That’s one of his biggest problems. He cut his academic teeth on studying the Depression, which seems to have blinded him from the modern use of sophisticated financial-market signals in our new, globalized, high-tech, rapid-information world.
So I think Bernanke’s reconfirmation could be in trouble on the Senate floor. I’m going to bet that most of the 40 Republicans will vote against him, and that they will be joined by a number of Democrats. If Bernanke were to be opposed by as many as 35 or 40 votes, it would substantially undermine his credibility.
Bernanke’s term extends to the end of January. I wonder if he realizes just how much opposition he may have. Unless he thinks he can garner a truly bipartisan vote in the weeks ahead, I wonder if he should consider withdrawing his name.
That audit, by the way, would reveal the Fed’s FOMC policy discussions after six months, rather than the current-law five years. This is a good thing. More prompt disclosure. The public has a right to know, especially since Bernanke (as Alan Greenspan’s right-hand man) was instrumental in creating the easy-money housing and energy bubble that sank the economy, and since Bernanke (as Fed chairman) has provided unbelievable, ultra-easy, free-money, zero interest rates for too long.
Even with the recent modest corrections, rising gold and the declining dollar tell the story that Bernanke knows how to ease but not how to tighten. The emergency is long past, but he is still operating an emergency policy of ultra-easy, excess-dollar creation.
Aside from the fact that Bernanke doesn’t look at gold or the dollar as price signals to guide his policy, we have witnessed a complete reversal of the Fed’s intellectual framework. By that I mean, for 20 years or so, first under Paul Volcker and then during Alan Greenspan’s first three terms, the Fed argued that the tax-cut effects of low inflation would spur economic growth and low unemployment. This period lasted roughly from the early 1980s until the end of the century. But since Bernanke came on the scene, the sound-money, stable-dollar argument has disappeared.
For most of this decade, the Fed has been fighting unemployment by pumping in easy money. And it keeps telling us this will not cause inflation. With the CPI hitting nearly 5 percent in 2006 and almost 6 percent in 2008, Bernanke was dead wrong. And the fact remains that more money creation from the Fed produces inflation — not jobs or long-term economic growth.
Bernanke sees deflation and depression threats everywhere. That’s one of his biggest problems. He cut his academic teeth on studying the Depression, which seems to have blinded him from the modern use of sophisticated financial-market signals in our new, globalized, high-tech, rapid-information world.
So I think Bernanke’s reconfirmation could be in trouble on the Senate floor. I’m going to bet that most of the 40 Republicans will vote against him, and that they will be joined by a number of Democrats. If Bernanke were to be opposed by as many as 35 or 40 votes, it would substantially undermine his credibility.
Bernanke’s term extends to the end of January. I wonder if he realizes just how much opposition he may have. Unless he thinks he can garner a truly bipartisan vote in the weeks ahead, I wonder if he should consider withdrawing his name.
On CNBC's Kudlow Report Tonight
This evening at 7pm ET:BERNANKE SQUEAKS THROUGH SENATE BANKING COMMITTEE
CNBC’s Hampton Pearson reports from Washington.
Also…Sen. Jim Bunning (R-KY) member of the Senate Banking Committee will join us.
CAN YOU BANK ON BERNANKE?
Gold; dollar; jobs debate
*Steve Liesman, CNBC senior economics reporter
*Arthur Laffer, Chief Investment Officer, Laffer Investments; Fmr. Reagan Economic Advisor
CITI RAISES BILLIONS TO REPAY TARP
Should Glass-Steagall be reinstated?
*Peter Wallison, Sr fellow at the American Enterprise Institute; Former Reagan Official; Fmr. Treasury Dept. General Counsel
LARRY'S ECONOMIC UPDATE
FedEx’s Fred Smith optimistic on U.S. economy; leading indicators up again; Philly Fed, etc
WHY ARE HEALTH CARE STOCKS BOOMING?
*Dave Shove, BMO Capital Markets Sr. Healthcare analyst
*Vince Farrell, CNBC Contributor/Soleil Securities Chief Investment Officer
CAN GOLF SURVIVE WITHOUT TIGER?
CNBC’s Darren Rovell reports.
Please join us. The Kudlow Report. 7pm ET. CNBC.
Time for a New Glass-Steagall?
Sen. John McCain (R., Ariz.) thinks so. We spoke last night on The Kudlow Report.
Wednesday, December 16, 2009
On CNBC's Kudlow & Company Tonight
This evening at 7pm ET:SPOTLIGHT ON THE FED, BERNANKE & THE ECONOMY
Panel:
*Tony Crescenzi, senior market strategist at Pimco
*Andy Busch, BMO Capital Markets; CNBC Contributor
*Wayne Angell, Fmr. Federal Reserve Governor
SHOULD GLASS-STEAGALL BE REINSTATED?
Sen. John McCain (R-AZ) will join us this evening for an exclusive interview.
CITI'S $38 BILLION TAX BREAK
*Jimmy Pethokoukis, Reuters Money & Politics Columnist
*Peter Morici, Univ of Maryland Robert H. Smith School of Business Professor; U.S. International Trade Commission Fmr. Chief Economist
FTC VS. INTEL
CNBC’s Jim Goldman reports.
*Jim Miller, Fmr. Reagan OMB Director, Husch Blackwell Sanders
*David Balto, fmr. policy director of the Bureau of Competition of the Federal Trade Commission; Senior Fellow at Center for American Progress
THE MARKET
How do you play the Fed indecision; FTC lawsuit, etc.?
*Jason Trennart, Strategas Research Partners; Chief Investment Strategist & Managing Partner
*Dan Fitzpatrick, StockMarketMentor.com President & CEO/Senior Contributor, RealMoney.com
Please join us. The Kudlow Report. 7pm ET. CNBC.
Cash for Caulkers, Obamanomics At Its Worst
President Obama thinks insulation is sexy stuff. It saves money. But it also costs at least $23 billion dollars. And that's already on top of “Cash for Clunkers” which cost at least $3 billion dollars, though no one knows for sure.This is Obamanomics at its worst. Spend money in order to save it? Really?
If weatherization and insulation is a good thing, then American families will make their own choices and do it alone. We the people. You see, it's our money. People seem to forget this. Let us spend it as we see fit.
Free market forces have increased energy efficiency by over 50% in the last couple of decades. This came about without the heavy hand of big government central planners, greenie-regulators and industrial policy targeters.
Here's a thought from Harvard economist Greg Mankiw in Sunday's New York Times: Tax cuts might accomplish what spending hasn't. Mankiw cites numerous studies covering 21 nations in the OECD, over 91 episodes since 1970 involving fiscal stimulus.
And I quote: "The results are striking. Successful stimulus relies almost entirely on cuts in business and income taxes. Failed stimulus relies mostly on increases in government spending."
In other words, we the people, on the supply-side.
Never forget: It's our money.
Tuesday, December 15, 2009
On CNBC's Kudlow Report Tonight
This evening at 7pm ET:IS THE FED FIGHTING THE WRONG BATTLE?
Why are they fighting deflation?
Panel:
*Vincent Reinhart, American Enterprise Institute Resident Scholar
*Lee Hoskins, Pacific Research Institute Senior Fellow; Fmr. Cleveland Federal Reserve Bank President; Fmr. Chairman of Huntington National Bank
*Peter Navarro, "The Coming China Wars" Author; University Of California - Irvine Business Professor
OBAMA'S "CASH FOR CAULKERS"
NBC’s Steve Handelsman has the story.
On to debate:
*Christian Weller, Center For American Progress
*Dan Mitchell, CATO Institute Senior Fellow
BOEING 787 TAKES FLIGHT
CNBC’s Phil LeBeau reports.
RENTECH/AIRLINES SYNTHETIC FUEL
Joining us to discuss will be Rentech CEO Hunt Ramsbottom.
THE NEW NORMAL FOR STOCKS?
Vince Farrell, Soleil Securities Chief Investment Officer; CNBC Contributor will be aboard.
SUZE ON THE FUTURE OF AMERICA
Optimism & stocks for the long run?
Suze Orman, Financial Guru; host of "The Suze Orman Show"
Please join us. The Kudlow Report. 7pm ET. CNBC.
More Data Confirm that Bernanke Is Wrong
The Fed is fighting the wrong battle. Helicopter Ben Bernanke still believes that deflation is an economic threat. As a result, tomorrow’s FOMC meeting is not likely to produce any shift in the key phrase “extended period,” which has been used by the central bank to signal a continuation of its free-money, zero-interest-rate policy.
The economic data show that Bernanke is wrong. Today’s producer price report for business wholesale inflation unexpectedly jumped 1.8 percent. That leaves a 6.3 percent annual rate over the past three months and a 2.4 percent rate over the past year.
Taking out food and energy — which really shouldn’t be taken out — today’s PPI jumped 0.5 percent. Wholesale prices for consumer goods climbed 2.3 percent in the November report, and 0.6 percent excluding food and energy. Tomorrow’s CPI report also might disappoint on the high side.
Of course, until very recently, gold has been soaring and the dollar declining. Commodity baskets also have been rising. These market-price indicators are not signaling deflation. They’re suggesting a higher inflation rate at the end of 2009 and spilling over into next year.
Meanwhile, industrial production for November surged 0.8 percent, leading to an annual rate of 5.6 percent over the past three months. This is a key economic-recovery indicator. The industrial report registered strong gains for durables, non-durables, consumer goods, business equipment, and construction supplies. There’s also the strong retail-sales report for November that came out last Friday. Business sales are rising, as are inventories.
Former Fed governor Wayne Angell, a dedicated commodity-price-rule advocate, believes that real economic growth in the next few quarters could run 5 to 7 percent, with 2 to 3 percent inflation. And he notes that with the clear warning from commodity indicators, there is simply no reason for the Fed to let inflation drift higher. He believes Bernanke should start an exit strategy immediately. That includes tomorrow’s policy meeting, where the Fed should remove the extended-period language and mark the beginning of the end of ultra-easy money.
Personally, I think the Fed’s target rate should be 0.5 percent right now, not zero. And I think the Fed should be moving toward 2 percent next year. The Fed should quit printing money by putting an end to the mortgage purchase program.
In the midst of Ben Bernanke’s reconfirmation vote — which is still up in the air in terms of its timing, with powerful voices like Senator DeMint and Senator Bunning raising serious questions about monetary policy — it is extraordinary to think that the Fed is tilting at the exact wrong windmill. Growth and inflation are going to beat the Bernanke Fed’s forecasts. And if it doesn’t change its easy-money stripes, it’s going to repeat the same easy-money mistake that has plagued the Fed for ten years. Why is it that these central bankers always err on the side of ease? And why do they seem completely disinterested in making dollars scarce?
As Wayne Angell has taught me down through the years, scarce money increases the greenback’s value. That keeps inflation near zero, and that’s a tax cut for economic growth.
Tomorrow’s FOMC announcement will be at 2:15 p.m. I’m not excited about the outcome.
The economic data show that Bernanke is wrong. Today’s producer price report for business wholesale inflation unexpectedly jumped 1.8 percent. That leaves a 6.3 percent annual rate over the past three months and a 2.4 percent rate over the past year.
Taking out food and energy — which really shouldn’t be taken out — today’s PPI jumped 0.5 percent. Wholesale prices for consumer goods climbed 2.3 percent in the November report, and 0.6 percent excluding food and energy. Tomorrow’s CPI report also might disappoint on the high side.
Of course, until very recently, gold has been soaring and the dollar declining. Commodity baskets also have been rising. These market-price indicators are not signaling deflation. They’re suggesting a higher inflation rate at the end of 2009 and spilling over into next year.
Meanwhile, industrial production for November surged 0.8 percent, leading to an annual rate of 5.6 percent over the past three months. This is a key economic-recovery indicator. The industrial report registered strong gains for durables, non-durables, consumer goods, business equipment, and construction supplies. There’s also the strong retail-sales report for November that came out last Friday. Business sales are rising, as are inventories.
Former Fed governor Wayne Angell, a dedicated commodity-price-rule advocate, believes that real economic growth in the next few quarters could run 5 to 7 percent, with 2 to 3 percent inflation. And he notes that with the clear warning from commodity indicators, there is simply no reason for the Fed to let inflation drift higher. He believes Bernanke should start an exit strategy immediately. That includes tomorrow’s policy meeting, where the Fed should remove the extended-period language and mark the beginning of the end of ultra-easy money.
Personally, I think the Fed’s target rate should be 0.5 percent right now, not zero. And I think the Fed should be moving toward 2 percent next year. The Fed should quit printing money by putting an end to the mortgage purchase program.
In the midst of Ben Bernanke’s reconfirmation vote — which is still up in the air in terms of its timing, with powerful voices like Senator DeMint and Senator Bunning raising serious questions about monetary policy — it is extraordinary to think that the Fed is tilting at the exact wrong windmill. Growth and inflation are going to beat the Bernanke Fed’s forecasts. And if it doesn’t change its easy-money stripes, it’s going to repeat the same easy-money mistake that has plagued the Fed for ten years. Why is it that these central bankers always err on the side of ease? And why do they seem completely disinterested in making dollars scarce?
As Wayne Angell has taught me down through the years, scarce money increases the greenback’s value. That keeps inflation near zero, and that’s a tax cut for economic growth.
Tomorrow’s FOMC announcement will be at 2:15 p.m. I’m not excited about the outcome.
Deficits Are Bad, But the Real Problem Is Government Spending
My old friend Dan Mitchell, senior fellow at the Cato Institute, emailed me his latest video earlier this morning. It's timely, informative, and definitely worth a look.
Why Don't Women Have Sex Scandals Like Tiger?
Last night Kellyanne Conway, president & CEO of the polling company, offered her take on why women don't have sex scandals like Tiger Woods.
Monday, December 14, 2009
On Tonight's Kudlow Report
This evening at 7pm ET:THE BANKERS MEET OBAMA
“Fat Cat Bankers”? What about Fat Cat Government?
NBC’s Steve Handelsman reports.
Forbes president and editor-in-chief Steve Forbes will lend his perspective.
BOOM-TIME IN THE BELTWAY
*Chris Edwards, director of tax policy at the Cato Institute
*David Goodfriend, Fmr. Clinton W.H. Official; "Left Jab" Co-Host; Air America Co-Founder
TIGER WOODS LATEST
CNBC’s Darren Rovell reports.
Pollster Kellyanne Conway will also join us.
EXXON'S $41 BILLION BID FOR XTO
A look at the deal’s significance and the future of energy.
*Larry Nichols, Devon Energy CEO
*John Kilduff, partner at Round Earth Capital
THE NEW NORMAL: RISING STOCKS AND A RISING DOLLAR
*Joe Battipaglia, investment strategist at Stifel Niclaus
*Steve Forbes, Forbes president and editor-in-chief
Please join us. The Kudlow Report. 7pm ET. CNBC.
Friday, December 11, 2009
On Tonight's Kudlow Report
This evening at 7pm ET:THE U.S. ECONOMY & WEALTH IN AMERICA
*Steve Moore, Wall Street Journal senior economic writer
*Steve Liesman, CNBC senior economics correspondent
HOUSE VOTES TO OVERHAUL FINANCIAL REGULATION
BOOM TIMES IN THE BELTWAY…
Six figure salaries soaring for federal employees
Debate:
*Chris Edwards, director of tax policy at the Cato Institute
*Jessica Klement, government affairs director for the Federal Managers Association
BERNIE MADOFF - ONE YEAR LATER
Why haven't others been busted?
Will we ever learn more about this story?
CNBC’s Scott Cohn reports.
*Andrew Kirtzman, "Betrayal: The Life and Lies of Bernie Madoff" Author
*Tom Curran, securities lawyer
SIGNS OF ECONOMIC OPTIMISM?
*Jim Lacamp, portfolio manager, Macroportfolio Advisors
*Zach Karabell, principal of investment firm River Twice
TIGER WOODS - WILL HE PLAY GOLF AGAIN?
CNBC’s Darren Rovell reports.
Please join us. The Kudlow Report. 7pm ET. CNBC.
More Good Economic News (Is Helicopter Ben Listening?)
There’s more good news on the economic recovery that everybody loves to hate.
Following a 1.1 percent rise in October, retail sales totally beat Wall Street estimates with a huge 1.3 percent gain in November. Meanwhile, core retail sales, which feed into the GDP report, have increase 5.6 percent at an annual rate over the past three months. These gains included general merchandise and department store sales (though apparel fell slightly).
Backing up these reports of better consumer spending, the Michigan Sentiment Index popped 6 points to 73.4, also much higher than expected. And business sales were up 1.1 percent in the month of October (the latest data), and have jumped 10.1 percent annually over the past three months.
Incidentally, business inventories -- led by manufacturing -- also rose in October. This is a signal that fourth-quarter real GDP could come in at 4 percent or stronger. And the powerful rise in business sales that have been leveraged off big productivity gains suggest a very strong profits picture.
Profits are the mother’s milk of stocks and the economy -- the only true form of stimulus. Profit naysayers have argued that only severe cost-cutting and downsizing have led to better earnings. But the rise in business sales spells top-line revenues, a very positive sign.
These economic-recovery signals should put some pressure on Helicopter Ben Bernanke to stop his free-money policies at the Fed. So should November import prices, which rose 1.7 percent. Driven by the declining dollar (until recently), import prices have increased in eight of the past nine months for a 10.1 percent pace. Over the past three months, import prices have gained 11.4 percent at an annual rate.
Economist John Ryding points out that import-price trends are closely related to consumer-price trends. The message? Inflation is going to pop up in 2010.
The Fed is fighting deflation because it doesn’t pay any attention to the sinking dollar and the soaring gold price. Will Helicopter Ben begin tightening sooner than people expect? Nobody knows. But if he listened to market-price signals he’d be a smarter Fed chairman.
Following a 1.1 percent rise in October, retail sales totally beat Wall Street estimates with a huge 1.3 percent gain in November. Meanwhile, core retail sales, which feed into the GDP report, have increase 5.6 percent at an annual rate over the past three months. These gains included general merchandise and department store sales (though apparel fell slightly).
Backing up these reports of better consumer spending, the Michigan Sentiment Index popped 6 points to 73.4, also much higher than expected. And business sales were up 1.1 percent in the month of October (the latest data), and have jumped 10.1 percent annually over the past three months.
Incidentally, business inventories -- led by manufacturing -- also rose in October. This is a signal that fourth-quarter real GDP could come in at 4 percent or stronger. And the powerful rise in business sales that have been leveraged off big productivity gains suggest a very strong profits picture.
Profits are the mother’s milk of stocks and the economy -- the only true form of stimulus. Profit naysayers have argued that only severe cost-cutting and downsizing have led to better earnings. But the rise in business sales spells top-line revenues, a very positive sign.
These economic-recovery signals should put some pressure on Helicopter Ben Bernanke to stop his free-money policies at the Fed. So should November import prices, which rose 1.7 percent. Driven by the declining dollar (until recently), import prices have increased in eight of the past nine months for a 10.1 percent pace. Over the past three months, import prices have gained 11.4 percent at an annual rate.
Economist John Ryding points out that import-price trends are closely related to consumer-price trends. The message? Inflation is going to pop up in 2010.
The Fed is fighting deflation because it doesn’t pay any attention to the sinking dollar and the soaring gold price. Will Helicopter Ben begin tightening sooner than people expect? Nobody knows. But if he listened to market-price signals he’d be a smarter Fed chairman.
Thursday, December 10, 2009
On Tonight's Kudlow Report
This evening at 7pm ET:THE GOLDMAN SACHS BONUS BROUHAHA
Class warfare? Do you buy or sell Goldman on this?
CNBC’s Simon Hobbs reports.
Panel:
*Peter Morici, business professor at the University of Maryland
*Robert Miller, professor, Tepper School of Business at Carnegie Mellon
*Andrew Ross Sorkin, New York Times columnist and author of “Too Big to Fail”
GOLD / DOLLAR / STOCKS
*Quentin Hardy, Forbes National Editor
*Dan Fitzpatrick, publisher of The Stock Market Mentor
*Gary Shilling, president of A. Gary Shilling & Co
*Andy Busch, global foreign currency strategist and public policy strategist for BMO Capital Markets
FORECLOSURE REPORT
CNBC’s Diana Olick will join us.
WASHINGTON TO WALL ST.
A new Wall St. Tax ?
Out of Control Gov’t Spending
*Steve Moore, senior economics writer at The Wall Street Journal
*Howard Dean, former chairman of the Democratic National Committee and governor of Vermont
Please join us. The Kudlow Report. 7pm ET. CNBC.
Household Healing
Another important sign of economic recovery came today from the Fed’s release of household balance sheets in the Flow of Funds report for the third quarter.
Overall, household net worth rose $2.7 trillion in the third quarter. Now, we are still $12.6 trillion below the $66 trillion peak registered in the second quarter of 2007, according to Wall Street economist John Ryding. But household wealth is nearly $5 trillion above the trough registered in the first quarter of 2009. And economist Scott Grannis says that over the past six months, household debt fell by almost $60 billion, while household real-estate holdings increased by over $600 billion. Meanwhile, thanks to a strong stock market, household financial assets have jumped by $4.2 trillion since last March.
All this good news gives consumers just a bit more spending power. And the same is likely true for small businesses, which are owner-operated.
Incidentally, despite various debt warnings from Dubai, Greece, Spain, Ireland, and elsewhere, the U.S. stock market is holding close to the high ground. And believe it or not, the beleaguered U.S. dollar has stabilized — at least for the moment.
As a footnote to the economic-repair story, bullish Wall Street economist Joe LaVorgna is now predicting up to 300,000 new jobs per month in the first quarter. He bases this on recent monthly gains in temporary work hires and a jump of more than 200,000 new jobs in the small-business household survey released last week. If LaVorgna is close to being right, the unemployment rate has in fact peaked and is likely to decline in the months ahead.
Score one for the mostly free-market economy and the healing of businesses and the stock market. Despite bearishness over the dollar, an improving jobs picture in the months ahead is more likely to raise the value of the greenback. It’s not exactly King Dollar, but then again, if the Fed would quit printing free money, King Dollar could be rethroned.
Overall, household net worth rose $2.7 trillion in the third quarter. Now, we are still $12.6 trillion below the $66 trillion peak registered in the second quarter of 2007, according to Wall Street economist John Ryding. But household wealth is nearly $5 trillion above the trough registered in the first quarter of 2009. And economist Scott Grannis says that over the past six months, household debt fell by almost $60 billion, while household real-estate holdings increased by over $600 billion. Meanwhile, thanks to a strong stock market, household financial assets have jumped by $4.2 trillion since last March.
All this good news gives consumers just a bit more spending power. And the same is likely true for small businesses, which are owner-operated.
Incidentally, despite various debt warnings from Dubai, Greece, Spain, Ireland, and elsewhere, the U.S. stock market is holding close to the high ground. And believe it or not, the beleaguered U.S. dollar has stabilized — at least for the moment.
As a footnote to the economic-repair story, bullish Wall Street economist Joe LaVorgna is now predicting up to 300,000 new jobs per month in the first quarter. He bases this on recent monthly gains in temporary work hires and a jump of more than 200,000 new jobs in the small-business household survey released last week. If LaVorgna is close to being right, the unemployment rate has in fact peaked and is likely to decline in the months ahead.
Score one for the mostly free-market economy and the healing of businesses and the stock market. Despite bearishness over the dollar, an improving jobs picture in the months ahead is more likely to raise the value of the greenback. It’s not exactly King Dollar, but then again, if the Fed would quit printing free money, King Dollar could be rethroned.
Wednesday, December 09, 2009
On CNBC's Kudlow Report Tonight
This evening at 7pm ET:SOVEREIGN DEBT WORRIES
-Greece, Dubai & Spain going down?
-Is the U.S. next?
-What does dollar & gold reveal?
*David Goldman, Senior Editor First Things Magazine
*Tom Sowanick, Chief Investment Officer and Co-President of OmniVest Group
UK’S 50% BANKERS’ BONUS TAX
Is it coming to America?
CNBC’s Simon Hobbs reports.
U.S. JOB GROWTH IN Q1?
*Joe LaVorgna, Deutsche Bank Chief U.S. Economist
*David Goldman, Senior Editor First Things Magazine
WASHINGTON TO WALL STREET
-Is Obama a supply-sider?
-TARP as a political credit card…
-Deficit concerns
-A task force for fiscal responsibility?
*Sen. Judd Gregg (R-NH) Budget Cmte. Ranking Member
*Sen. Kent Conrad (D-ND) Budget Cmte. Chair
ARE THE HOUSE FLIPPERS BACK?
*Damon Lines, Executive at PostedProperty.com
*Chad Rogers, star of Bravo’s hit TV show Million Dollar Listing
TIGER WOODS FEELS THE SCREWS
CNBC’s Jane Wells reports.
Please join us. The Kudlow Report. 7pm ET. CNBC.
Is Obama Going Supply-Side?
In NRO’s coverage of Obama’s jobs speech at the Brookings Institution yesterday, I have yet to see any mention of supply-side tax cuts. The president’s jobs proposal includes a zero capital-gains tax-rate for small-business investors, and full cash-expensing for small-business investment in plant and equipment. These are potentially powerful incentives for the job-creating small-biz sector. They may only last for a year or so, depending on the mark-up. But they are good things in and of themselves, and they suggest that Obama is aware of incentive effects on economic growth.
I have perused all the NRO posts on the subject so far, and can find no mention of these supply-side tax cuts.
Sure, the new spending is all wrong. That won’t create jobs, and will only bloat the deficit. But Obama’s language was on the supply-side, even in addition to the tax-cut proposals. He said growth will bring in revenues to cut deficits.
And there’s more. CNBC is reporting that the administration will dedicate $175 billion of TARP money to deficit reduction. This will leave about $140 billion of unused TARP money for spending — or for incentive tax cuts.
Now just think what would happen if a zero capital-gains tax rate were applied economy-wide for all investors. Or if Obama’s new supply-side thinking leads him to leave the cap-gains tax rate right where it is at 15 percent.
Are the markets sniffing out a more centrist, pro-growth Obama? The dollar is rising, and gold is falling, so that might be the case. Growth solves inflation, and it can restore King Dollar to its throne. Growth can absorb Ben Bernanke’s free-money balance-sheet cash creation.
Is it possible that we are looking at a supply-side solution to the economy and the deficit? Strange, but wonderful, thoughts.
I have perused all the NRO posts on the subject so far, and can find no mention of these supply-side tax cuts.
Sure, the new spending is all wrong. That won’t create jobs, and will only bloat the deficit. But Obama’s language was on the supply-side, even in addition to the tax-cut proposals. He said growth will bring in revenues to cut deficits.
And there’s more. CNBC is reporting that the administration will dedicate $175 billion of TARP money to deficit reduction. This will leave about $140 billion of unused TARP money for spending — or for incentive tax cuts.
Now just think what would happen if a zero capital-gains tax rate were applied economy-wide for all investors. Or if Obama’s new supply-side thinking leads him to leave the cap-gains tax rate right where it is at 15 percent.
Are the markets sniffing out a more centrist, pro-growth Obama? The dollar is rising, and gold is falling, so that might be the case. Growth solves inflation, and it can restore King Dollar to its throne. Growth can absorb Ben Bernanke’s free-money balance-sheet cash creation.
Is it possible that we are looking at a supply-side solution to the economy and the deficit? Strange, but wonderful, thoughts.
Tuesday, December 08, 2009
On Tonight's Kudlow Report
This evening at 7pm ET:OBAMA ON JOBS & TARP
CNBC chief Washington correspondent John Harwood reports.
SHOULD TARP GO BACK TO TAXPAYERS?
*Sen. Bob Corker (R-TN)
*Rep. Jeb Hensarling (R-TX)
OBAMA'S TARP PLANS:
Should we use TARP to pay down the deficit?
Why not cut taxes for businesses?
On to debate:
*Robert Reich, Fmr. Labor Secretary; Author, "Supercapitalism"; CNBC Contributor; Univ. of CA., Berkeley, Prof. of Public Policy
*Peter Navarro, "The Coming China Wars" Author; University Of California - Irvine Business Professor
WILL THE GOVERNMENT ALLOW BANKS TO PAY BACK TARP?
Joining us to discuss will be Andrew Ross Sorkin, The New York Times Deal Book Editor; NYTimes Chief Mergers & Acquisitions Reporter; "Too Big to Fail" Author.
MORTGAGE MODIFICATIONS
CNBC real estate correspondent Diana Olick reports.
THE MARKET
Panel:
*Byron Wein, Blackstone Advisory Services Incoming Vice Chairman
*Don Luskin, CNBC Contributor/Trend Macro Chief Investment Officer
*Michael Farr, CNBC Contributor; Farr, Miller & Washington President
TIGER LOSES GATORADE?
CNBC’s Darren Rovell will be aboard.
Please join us. The Kudlow Report. 7pm ET. CNBC.
TARP = Democratic Slush Fund?
Sen. John Thune (R-SD) joined me last night to discuss what we ought to do with the $200 billion in unused TARP funds.
The interview begins at the 1:40 mark.
The interview begins at the 1:40 mark.
Monday, December 07, 2009
The Climate-Gate Controversy
Sen. James Inhofe (R-OK) recently joined me on the Kudlow Report to discuss whether global warming is a real issue and how Congress ought to handle environmental policy.
On Tonight's Kudlow Report
This evening at 7pm ET:SHOULD TARP GO BACK TO TAXPAYERS?
Sen. John Thune (R-SD), chairman of the Republican Policy Committee, will join us.
TARP DEBATE
Should we steal this money & put it into more welfare projects or give it back to the taxpayers?
On to debate:
*Jimmy Pethokoukis, Reuters Money & Politics Columnist
*David Goodfriend, Fmr. Clinton W.H. Official; "Left Jab" Co-Host; Air America Co-Founder
Also aboard… Vince Reinhart, American Enterprise Institute Resident Scholar; Fmr Dir of the Federal Reserve Board's Division of Monetary Affairs
We’ll also debate the economic tradeoff of attempting to curb global warming.
Please join us. The Kudlow Report. 7pm ET. CNBC.
Friday, December 04, 2009
A Good Jobs Report (Courtesy of Our Mostly Free-Market Private Sector)
Even with massive tax, spending, and regulatory threats facing the economy, our mostly free-market private sector is generating economic recovery. Led by a profitable and productive business sector, today’s jobs report for November registered only an 11,000 decline in nonfarm payrolls, the smallest loss in two years. The unemployment rate dropped to 10 percent from 10.2 percent, the first two-tenths decline in that measure since September 2006 (when it fell to 4.5 percent from 4.7 percent).
Noteworthy is an upward revision of 159,000 jobs for September and October, meaning that the losses were that much less. Bolstering this good news, the small-business household survey rose by 227,000 while the ranks of the unemployed fell by 325,000.
This good news follows yesterday’s jobless claims report, which showed another drop to nearly 450,000 from about 650,000 last winter. Following revisions, it’s quite possible that the November payroll report might show a positive number of jobs gained.
I think that because businesses have become much healthier, the layoffs are about over. There may even be a labor shortage. Temporary workers increased by 52,000, the largest gain in five years and the fourth-consecutive monthly gain. Just as important, the work week expanded significantly, as did hours worked.
So the next step before long will be new job hiring as part of the overall economic rebound.
Interestingly, gold prices dropped $50 on the employment news while the exchange rate of the dollar increased significantly, both on expectations that the Fed may restrain its balance sheet and raise its target rate sooner than people think. That’s the big market debate right now. Although Bernanke is targeting the unemployment rate -- which is still very high at 10 percent -- it’s clear that the economy is trending higher and that inflation-sensitive market-price indicators are telling the Fed to tighten money.
Right now, I think the Fed’s target rate should be somewhere between 50 basis points and a full percentage point, rather than zero. And the Fed should quit buying all the mortgages that have created $400 billion in excess dollars since June, thereby fueling the massive gold rally until today’s correction.
This economy looks self-sustaining. It’s not going to be an 8 percent recovery, as it should be after the very deep recession. But it may be turn out to be stronger than the pessimists expect.
Noteworthy is an upward revision of 159,000 jobs for September and October, meaning that the losses were that much less. Bolstering this good news, the small-business household survey rose by 227,000 while the ranks of the unemployed fell by 325,000.
This good news follows yesterday’s jobless claims report, which showed another drop to nearly 450,000 from about 650,000 last winter. Following revisions, it’s quite possible that the November payroll report might show a positive number of jobs gained.
I think that because businesses have become much healthier, the layoffs are about over. There may even be a labor shortage. Temporary workers increased by 52,000, the largest gain in five years and the fourth-consecutive monthly gain. Just as important, the work week expanded significantly, as did hours worked.
So the next step before long will be new job hiring as part of the overall economic rebound.
Interestingly, gold prices dropped $50 on the employment news while the exchange rate of the dollar increased significantly, both on expectations that the Fed may restrain its balance sheet and raise its target rate sooner than people think. That’s the big market debate right now. Although Bernanke is targeting the unemployment rate -- which is still very high at 10 percent -- it’s clear that the economy is trending higher and that inflation-sensitive market-price indicators are telling the Fed to tighten money.
Right now, I think the Fed’s target rate should be somewhere between 50 basis points and a full percentage point, rather than zero. And the Fed should quit buying all the mortgages that have created $400 billion in excess dollars since June, thereby fueling the massive gold rally until today’s correction.
This economy looks self-sustaining. It’s not going to be an 8 percent recovery, as it should be after the very deep recession. But it may be turn out to be stronger than the pessimists expect.
An Interview with John Boehner
House Minority Leader John Boehner joined me last night to discuss President Obama's jobs summit, the estate tax, TARP and more.
Thursday, December 03, 2009
No Solid Gold Performance from Bernanke
Fed head Ben Bernanke got hammered today during his reconfirmation hearing in front of the Senate Banking Committee. Jim Bunning was Bernanke’s toughest critic, followed by Richard Shelby, Jim DeMint, and yes, Chris Dodd, the beleaguered committee chair who in all likelihood will be defeated in Connecticut next year.
But unfortunately no one directly asked Bernanke why the current gold price has surged to over $1,200, and what that might mean for future inflation and the U.S. economy.
The Wall Street Journal editorialized this morning that “the country needs a new Fed chief.” The editors went on to say that while the Fed chair knows how to ease money, there’s no evidence during his tenure as Fed chief (or formerly as Alan Greenspan’s copilot) that he knows how to make money sufficiently scarce in order to protect the dollar and prevent inflation.
Surely the steadily depreciating dollar and the surging gold price are bad omens for the future economy. In fact, inflation rates have been edging higher in recent months and will likely continue upward in the months ahead. Import prices channeled through the weak dollar have been rising. So while many of us hoped the Fed chair would be forced to address the gold question, he never did.
Bernanke did respond to questions on the declining dollar exchange rate, but as he always does, he insisted that it doesn’t matter as long as inflation is low. Huh? If you print more dollars than the rest of the world requires, surely this means too much money chasing too few goods. And as Art Laffer has pointed out, the exchange-rate mechanism is itself a transmitter of higher domestic prices.
Time and again Bernanke argued that the Fed was not to blame for the ultra-easy money that created the housing and commodity bubble which got us into this soup in the first place. He insisted that bankers were to blame for their “risky” lending policies, and he acknowledged that the Fed should have been tougher as a bank regulator.
But the point that escapes Bernanke is that negative real interest rates and excess money-creation trigger a chain of consequences throughout the financial system. Mistakes were made left and right that might never have been made had the dollar been sound and the inflationary bubble never appeared.
In effect, you get what you pay for. The Fed paid for easy money, and we all got the recessionary credit-crunching consequences of the Fed’s mistake.
By failing to heed the message of financial and commodity prices, future Fed decisions are likely to be just as flawed as past ones. It isn’t that Bernanke lacks the brains. It’s that he’s employing the wrong monetary model. Targeting the unemployment rate means always erring on the side of ease. On the other hand, targeting market-price signals would get us back to the financial and economic stability of most of the 1980s and 1990s.
The economy is improving, however slowly. And market-price indicators are telling the Fed to curb its balance sheet and let its target rate float upward. Regrettably, until the dollar and gold vigilantes punish the central bank even more, Bernanke will continue to stubbornly resist this message.
Heck, even Tiger Woods fessed up and came clean. Now it’s time for the Fed chief to do likewise.
But unfortunately no one directly asked Bernanke why the current gold price has surged to over $1,200, and what that might mean for future inflation and the U.S. economy.
The Wall Street Journal editorialized this morning that “the country needs a new Fed chief.” The editors went on to say that while the Fed chair knows how to ease money, there’s no evidence during his tenure as Fed chief (or formerly as Alan Greenspan’s copilot) that he knows how to make money sufficiently scarce in order to protect the dollar and prevent inflation.
Surely the steadily depreciating dollar and the surging gold price are bad omens for the future economy. In fact, inflation rates have been edging higher in recent months and will likely continue upward in the months ahead. Import prices channeled through the weak dollar have been rising. So while many of us hoped the Fed chair would be forced to address the gold question, he never did.
Bernanke did respond to questions on the declining dollar exchange rate, but as he always does, he insisted that it doesn’t matter as long as inflation is low. Huh? If you print more dollars than the rest of the world requires, surely this means too much money chasing too few goods. And as Art Laffer has pointed out, the exchange-rate mechanism is itself a transmitter of higher domestic prices.
Time and again Bernanke argued that the Fed was not to blame for the ultra-easy money that created the housing and commodity bubble which got us into this soup in the first place. He insisted that bankers were to blame for their “risky” lending policies, and he acknowledged that the Fed should have been tougher as a bank regulator.
But the point that escapes Bernanke is that negative real interest rates and excess money-creation trigger a chain of consequences throughout the financial system. Mistakes were made left and right that might never have been made had the dollar been sound and the inflationary bubble never appeared.
In effect, you get what you pay for. The Fed paid for easy money, and we all got the recessionary credit-crunching consequences of the Fed’s mistake.
By failing to heed the message of financial and commodity prices, future Fed decisions are likely to be just as flawed as past ones. It isn’t that Bernanke lacks the brains. It’s that he’s employing the wrong monetary model. Targeting the unemployment rate means always erring on the side of ease. On the other hand, targeting market-price signals would get us back to the financial and economic stability of most of the 1980s and 1990s.
The economy is improving, however slowly. And market-price indicators are telling the Fed to curb its balance sheet and let its target rate float upward. Regrettably, until the dollar and gold vigilantes punish the central bank even more, Bernanke will continue to stubbornly resist this message.
Heck, even Tiger Woods fessed up and came clean. Now it’s time for the Fed chief to do likewise.
On CNBC's Kudlow Report Tonight
This evening at 7pm ET:A 2ND TERM? BERNANKE IN THE HOT SEAT
CNBC’s Hampton Pearson reports.
*Sen. Richard Shelby (R-AL) Banking Cmte. Ranking Member will be aboard.
BERNANKE: SHOULD HE STAY OR SHOULD HE GO?
Panel:
*Peter Navarro, "The Coming China Wars" Author; University Of California - Irvine Business Professor
*Andy Busch, BMO Capital Markets; CNBC Contributor
*Lyle Gramley, Former Federal Reserve Governor; Stanford Washington Research Group Senior Economic Advisor
OBAMA’S JOBS SUMMIT
NBC’s Steve Handelsman reports.
*Rep. John Boehner will join us with his perspective.
DEBATE: WHAT'S THE RIGHT WAY TO GET AMERICA BACK TO WORK?
*Robert Reich, Fmr. Labor Secretary; Author, "Supercapitalism"; CNBC Contributor; Univ. of CA., Berkeley, Prof. of Public Policy
*Steve Moore, Sr Economics Writer for the Wall Street Journal Editorial Board; "The End of Prosperity" Co-Author
TIGER TROUBLES
The price of being in the public eye
Daily Beast Chief Investigative Reporter Gerald Posner will join us.
Please join us. The Kudlow Report. 7pm ET. CNBC.
An Interview with John McCain
Sen. John McCain (R., Ariz.) joined me last night to discuss the Obama surge, healthcare, the White House jobs summit and other hot topics on Capitol Hill.
Wednesday, December 02, 2009
On CNBC's Kudlow Report Tonight
This evening at 7pm ET:AN INTERVIEW WITH JOHN MCCAIN
Obama's War Plan, Jobs Summit & Healthcare Plan
Senator John McCain (R-AZ) will be joining us.
AN INTERVIEW WITH MARTIN FELDSTEIN
The Economy, Taxes & Obama’s Jobs Summit
Harvard economics professor and former chairman of the Council of Economic Advisers Martin Feldstein will join us.
* * *
Later in the program we'll discuss the continuing surge in gold prices, whether Ben Bernanke ought to get a second term at the Fed, and the latest in the Tiger Woods brouhaha.
Please join us. The Kudlow Report. 7pm ET. CNBC.
Obama Is Following Bush’s Playbook
Speaking as a big skeptic of U.S. military involvement in Afghanistan, and as a major critic of nation-building, I basically liked President Obama’s surge speech last night. I think he did himself some good with it. I notice today that General McChrystal spoke positively about both the speech and the policy.
Many are criticizing Obama’s so-called exit strategy, calling it a sign of weakness. But I don’t think so. Let me quote directly from the written copy of the speech: “ . . . allow us to begin the transfer of our forces out of Afghanistan in July of 2011. Just as we have done in Iraq, we will execute this transition responsibly, taking into account conditions on the ground.” [Italics mine.] I read that to mean the possibility of the beginning of a surge pullout after about a year or slightly more.
And let’s be reminded that President Bush’s Iraq surge began its pullout phase in about twelve months. So Obama is really following Bush’s playbook. The key phrase — “taking into account conditions on the ground” — is an echo of the Bush strategy. So I’m not going to harp on the exit-strategy issue.
I also liked the fact that the president specifically rejected a broad-based nation-building project. Nation-building is the part of this that bothers me the most. An open-ended commitment to Afghanistan makes no sense to me. The only reason I support the surge action, frankly, is that generals McChrystal and Petraeus believe they can stop the Taliban from taking over again, and that they apparently believe they can clear out the Taliban from the Kandahar region in the south. I do not know McChrystal, but I do know Petraeus, and I think the world of him. If Petraeus says this limited mission can be accomplished, then I am willing to support it.
In the long run, I still think Afghanistan is a hopelessly corrupt place — a place where we don’t want to get bogged down forever. But taking out al-Qaeda and the Taliban are clearly national-security imperatives. And if that’s what Obama is saying, then I support him on this.
On the negative side of this speech, there was too much reliance on Pakistan and unfortunately no mention of India and China — especially India, which can help us in Afghanistan and the entire region. Our relationship with India is absolutely vital. President Bush built up and strengthened that linkage, but so far Obama has run it down. This point, by the way, was made last evening on CNBC by Christopher Hitchens, and I think Hitchens is dead right.
Many are criticizing Obama’s so-called exit strategy, calling it a sign of weakness. But I don’t think so. Let me quote directly from the written copy of the speech: “ . . . allow us to begin the transfer of our forces out of Afghanistan in July of 2011. Just as we have done in Iraq, we will execute this transition responsibly, taking into account conditions on the ground.” [Italics mine.] I read that to mean the possibility of the beginning of a surge pullout after about a year or slightly more.
And let’s be reminded that President Bush’s Iraq surge began its pullout phase in about twelve months. So Obama is really following Bush’s playbook. The key phrase — “taking into account conditions on the ground” — is an echo of the Bush strategy. So I’m not going to harp on the exit-strategy issue.
I also liked the fact that the president specifically rejected a broad-based nation-building project. Nation-building is the part of this that bothers me the most. An open-ended commitment to Afghanistan makes no sense to me. The only reason I support the surge action, frankly, is that generals McChrystal and Petraeus believe they can stop the Taliban from taking over again, and that they apparently believe they can clear out the Taliban from the Kandahar region in the south. I do not know McChrystal, but I do know Petraeus, and I think the world of him. If Petraeus says this limited mission can be accomplished, then I am willing to support it.
In the long run, I still think Afghanistan is a hopelessly corrupt place — a place where we don’t want to get bogged down forever. But taking out al-Qaeda and the Taliban are clearly national-security imperatives. And if that’s what Obama is saying, then I support him on this.
On the negative side of this speech, there was too much reliance on Pakistan and unfortunately no mention of India and China — especially India, which can help us in Afghanistan and the entire region. Our relationship with India is absolutely vital. President Bush built up and strengthened that linkage, but so far Obama has run it down. This point, by the way, was made last evening on CNBC by Christopher Hitchens, and I think Hitchens is dead right.
Tuesday, December 01, 2009
On CNBC's Kudlow Report Tonight
This evening at 7pm ET:THE COST OF OBAMA'S AFGHANISTAN PROPOSAL
Taxing rich people to fund the war?
Panel:
*Christopher Hitchens, Vanity Fair columnist
*Gen. Barry McCaffrey, Fmr. US Drug Czar; U.S. Army (RET.); NBC News Military Analyst
*Peter Beinart, Prof of Journalism & Political Science, City Univ of NY; New America Foundation; Sr Pol. Writer, Daily Beast
GM NEWS: FRITZ HENDERSON IS OUT
CNBC’s Phil LeBeau reports.
MARKETS, ECONOMY, DOLLAR & GOLD
*Alison Deans; Fmr. CIO Neuberger Berman Private Asset Management
*Kevin Kerr Editor, Kerr Trading International President & Chief Trading Officer
GE/COMCAST DEAL- INTERNET VS. CABLE - CAN THIS WORK?
*Michael Wolff, CNBC Contributor; Vanity Fair Media Critic; "The Man Who Owns The News: Inside the Secret World Of Rupert Murdoch" Author
*Jon Fine, Media Columnist; BusinessWeek Magazine
OBAMA'S AFGHANISTAN DECISION
Col. Jack Jacobs will join us.
Please join us. The Kudlow Report. 7pm ET. CNBC.
Monday, November 30, 2009
An Open Letter to Tiger Woods
Fess up, clear the air, and seek redemption.Fess up, Tiger. If you don’t, the tabloids are gonna kill ya.
The storyline so far is that for some reason your apparently furious wife Elin teed you up inside your Florida mansion with one of your Nike golf clubs, and that you sought escape by hot-footing it outside at two-thirty in the morning to your Cadillac Escalade in the driveway. But Elin kept coming at you. So you tried to slam the SUV down the driveway in racecar fashion, something you’ve probably done hundreds of times before. Only this time, for some reason, you hit a fireplug and wrapped the car around a tree.
But Elin still kept coming at you, slammin’ the club into the rear windshield. She must have had a long iron in her hand. Hell hath no fury like a woman scorned.
How you got your face scratched and wound up on the side of the road is still a mystery. But the tabs are saying a woman named Rachel Uchitel is the alleged home-breaker. That you have some kind of relation ship with her. And that story is not going to die until you put it to rest one way or another by fessing up and telling the truth.
Adding fuel to these flames, you have pulled out of your very own tournament, the 2009 Chevron World Challenge, which is scheduled for this week. Tiger, my friend, one thing you need to consider is the business angle to this narrative.
The Daily Beast is running a story about your $100 million car crash. Investigative reporter Gerald Posner estimates that even if you take a 10 percent hit on your endorsement income, this incident could cost you $10 million a year, totaling $100 million over the next decade. At risk could be your contracts with Nike, Gatorade, and AT&T. There’s also Accenture and the EA video-game series.
So, my friend, marital infidelity just doesn’t pay.
South Carolina governor Mark Sanford tried stonewalling, but it didn’t work out too well for him. His career is now finished. Another bad case is that of former North Carolina senator and unsuccessful presidential candidate John Edwards. He really had a bad time of it, with the tabloids literally chasing him into the bathroom. His career is finished, too. On the other hand, Nevada senator John Ensign did fess up -- about one half step ahead of the tabloids -- and he may well live to see another reelection day.
And then there’s Bill Clinton, who stonewalled about his affair with Monica Lewinsky. Woaaah! That caused one heck of a blow up, including impeachment proceedings in the House. Remember when he said that it “depends on what the meaning of the word ‘is’ is”? This was the worldwide sex-cover-up stonewalling attempt to end all marital-infidelity sex-cover-up stonewalling attempts.
Tiger, you don’t want to go there. That could be you. There are lessons to be learned about coming clean as fast as possible.
Even though I personally have only one-ten-thousandth of your media and business impact, perhaps my story will be helpful. Over 15 years ago, after missing a big speech and resigning from my career on Wall Street, the New York Times came after me with a story of serious alcohol and drug abuse. They were right. I believed then as I do now that honesty is a virtue, and I fessed up. I got sober. My saintly wife and I recently celebrated our 22nd marriage anniversary. And today I am fully employed at CNBC (for which I am eternally grateful). People forgave me. God redeemed me.
But in your case, if there is no alcohol, drugs, or infidelity, and if there is a better-sounding, truthful explanation of your events, you’ve gotta get out there and say it. As you know, your clean, serious, sober, near-perfect, golden-boy bloom is already off the rose. And if you insist on stonewalling, from now on it’s damage limitation. And that will be no fun at all. Your bottom will be lower than anything you ever imagined.
Fans love the way you play, and so do I. Sunday afternoons are a treat watching you. But you’re in a heap of trouble right now. Stonewalling, whether in business or politics, seldom pays.
C’mon Tiger. Be a mench. Fess up and clear the air. If you do it soon, you will be forgiven, and this too will pass.
On CNBC's Kudlow Report Tonight
This evening at 7pm ET:TIGER WOODS: THE $100 MILLION CAR CRASH?
CNBC’s Darren Rovell reports.
*Gerald Posner, The Daily Beast
*Mike Paul, MGP & Associates PR President
DUBAI DEBT FALLOUT
What are the numbers at stake? A possible contagion? The Iran Factor
CNBC’s Erin Burnett reports.
WHAT'S THE DUBAI CONTAGION THREAT?
*Zach Karabell, River Twice Research President
*Jack Ablin, Harris Private Bank Chief Investment Officer
*Todd Thiel, McKinley Reserve/Capital Partners
*Robert Froehlich, Chairman of the Investment Committee for the Univ. of Dayton; "A Bull For All Seasons" Author
TIME TO AUDIT THE FED?
Do we need more Fed transparency?
On to debate:
*Rep. Ron Paul (R) Texas, Fmr. Presidential Candidate; House Financial Services Committee
*Peter Morici, Univ of Maryland Business Professor; U.S. International Trade Commission Fmr. Chief Economist
MONEY POLITICS DEBATE
Healthcare/Obama's Jobs Summit/Out of control Big Gov't spending
*Steve Moore, Senior Economics Writer for the Wall Street Journal Editorial Board; "The End of Prosperity" Co-Author
*Robert Reich, Fmr. Labor Secretary; Author, "Supercapitalism"; CNBC Contributor; Univ. of CA., Berkeley, Prof. of Public Policy
Please join us. The Kudlow Report. 7pm ET. CNBC.
Monday, November 23, 2009
Is It Time to Audit the Fed?
AEI's Vince Reinhart and the WSJ's Steve Moore recently joined me to discuss on CNBC's Kudlow Report.
Friday, November 20, 2009
On CNBC's Kudlow Report Tonight
This evening at 7pm ET:GEITHNER UNDER FIRE
Panel:
*Andrew Ross Sorkin, The New York Times, Deal Book Editor; NYTimes Chief M&A Reporter
*James Pethokoukis, Reuters Money & Politics Columnist
*Lurita Doan, Former GSA Administrator;"Leadership Matters" commentator on FederalNews Radio 1500 AM
*Mark Walsh , "Left Jab" Host (Sirius show); Fmr. Sr. Vice President at America Online; Fmr. Vertical Net CEO; Founding CEO at Air America; Fmr. DNC Advisor
MONEY POLITICS DEBATE
-Investors ask Goldman to be less greedy
-AIG & systemic risk
-Sen. Mary Landrieu: $100m for her healthcare vote?
The panel will debate.
FED TRANSPARENCY?
*Vincent Reinhart, AEI Resident Scholar; Fmr Dir. of the Federal Reserve Board's Division of Monetary Affairs
*Steve Moore, Sr. Economics Writer for the WSJ Editorial Board; "The End of Prosperity" Co-Author
STATUS OF OBAMA-CARE
NBC’s Steve Handelsman will report.
AN INTERVIEW WITH SEN. JON KYL
-Obama-Care
-TARP
-Fed independence
Joining us this evening will be Sen. Jon Kyl (R-Ariz.)
Please join us. The Kudlow Report. 7pm ET. CNBC.
Lou Dobbs...
Longtime CNN anchor and commentator Lou Dobbs joined me on last night's Kudlow Report to discuss Omama-nomics, Tim Geithner, the demise of the dollar, the threat of American declinism, immigration, trade policy and other hot button issues.
Thursday, November 19, 2009
On CNBC's Kudlow Report Tonight
This evening at 7pm ET:***SPECIAL***
ONE-ON-ONE WITH LOU DOBBS
The former CNN anchor will be our special guest this evening.
Topics will include:
- Today’s heated Geithner hearings
- Paying Down TARP
- Healthcare (plus a look at the mammography fiasco)
- U.S. Jobs, Economy & Growth
- Obama in China; Schumer's China Bashing
- The Stock Market
- Direction of the Country; Immigration; Afghanistan; Trying 9/11 terrorists in NYC
***Also joining us to discuss healthcare & TARP will be Sen. John Thune (R-SD)
WASHINGTON TO WALL ST. DEBATE
Free Trade; Schumer's China Bashing
*CNBC's Rick Santelli
*Robert Reich, Fmr. Labor Secretary; Author, "Supercapitalism"; CNBC Contributor; Univ. of CA., Berkeley, Prof. of Public Policy
THE STOCK MARKET
Alison Deans, Fmr. CIO Neuberger Berman Private Asset Management
Please join us. The Kudlow Report. 7pm ET. CNBC.
Wednesday, November 18, 2009
On CNBC's Kudlow Report
This evening at 7pm ET:SENATE DEMS HEALTHCARE BILL
CNBC’s Hampton Pearson reports.
BY THE NUMBER$…THE CBO BREAKDOWN
Rep. Dave Camp (R-MI) will join us.
WILL OBAMA-CARE SACRIFICE STANDARDS?
Sen. Lamar Alexander (R-TN) will join us.
IS INFLATION COMING BACK?
Does the dollar’s decline and surging gold prices show the Fed is fighting the wrong battle?
Panel:
*Judy Shelton, Economist; "Money Meltdown" author
*Vince Reinhart, American Enterprise Institute Resident Scholar; Fmr Dir. of the Federal Reserve Board's Division of Monetary Affairs
*Michael Panzner, Wall Street Trader; "When Giants Fall" Author; Financial Armageddon Blog
TAXES…
-A payroll tax to spur job growth?
-A repeal of Bush’s tax cuts?
-A Wall Street transaction tax?
*Michael Boskin, Fmr. Bush Economic Advisor; Stanford Univ. Prof. of Economics; Hoover Institution
*Steve Moore, WJS Editorial Board; "The End of Prosperity" co-author
CALIFORNIA BANS POWER-HUNGRY TVs
CNBC’s Jane Wells reports.
CARLY'S SUPPLY-SIDE RUN FOR SENATE IN CA
Former HP chairman & CEO Carly Fiorina will be aboard.
Please join us. The Kudlow Report. 7pm ET. CNBC.
An Interview with Tom Coburn
Last night I spoke with one of the Senate’s brightest lights — Sen. Tom Coburn (R., Okla.), who also happens to be one of only two physicians in the chamber. We discussed where the Democrats’ behemoth government health-care takeover bill is heading, as well as his plan to read the 2,000-plus page bill in its entirety on the Senate floor.
Tuesday, November 17, 2009
President Zero Sum Goes to Asia
Obama declinism on King Dollar and U.S. economic leadership.President Obama took his declining dollar to the Asia-Pacific economic conference, and he added to it a declinist opinion of America’s economy. His big message? Don’t count on American consumers to lead the world from recession to recovery and beyond. His second big message? In the U.S., we must save more and spend less.
Huh? This is the same limits-to-growth, central-planning wisdom we hear so often these days at home. It’s also tone deaf, to say the least. Despite a sinking greenback that is wreaking havoc among the Asian economies, and in the face of repeated currency warnings by Asian officials, Obama brought no King Dollar stabilization message to the conference.
Before getting into the currency question, let me say this: I think more saving (and investment) by U.S. citizens is a great idea. But this need not come at the expense of consumption. In a prosperous free economy, people should be able to save, invest, work, and spend as much as they like. More is better than less in each case. Grow the pie larger.
Of course, if the president and his team want more saving and investment, they should end the multiple taxation of saving and investment. Unfortunately, our system taxes saving as income, capital gains, dividends, and inheritance.
Team Obama also intends to tax wealth more by raising the top personal tax rate from 35 to 40 percent. And they apparently don’t object to Nancy Pelosi’s plan to slap another 5.4 percent tax on the incomes and capital-gains of successful earners in order to finance a government takeover of health care.
Wealth is a crucial form of saving. And the investment that comes from extra saving is used to finance the entrepreneurial start-ups that create the jobs and incomes that allow families to spend. However, by creating a zero-sum game between saving and spending, the Obama planners are falling into an austerity trap -- one that would hand the American economy a second-place finish in the global race for capital and growth.
At the same time, Obama has no plan to stabilize King Dollar, and the Asian economies don’t like it. China’s top banking regulator said the Federal Reserve’s money-creating binge was the main cause of “massive speculation.” Similar sentiments came from top officials in Hong Kong, Singapore, and Japan.
And while Ben Bernanke tried to calm dollar worries during his recent speech at the New York Economics Club, it was clear that the greenback’s value ranks low on his priority list. Nothing but dollar lip service from the Fed head.
Because of the slumping dollar, U.S. import prices have jumped 10 percent at an annual rate over the past three months, and nearly 6 percent excluding energy. This is a tax hike on consumers and businesses, and it could depress holiday sales. It’s reminiscent of the gigantic energy shock of 2008 that was caused by the dollar’s collapse.
And what’s the current U.S solution to the dollar problem? Blame China, and call for a revaluation of the yuan. But beggar-thy-neighbor protectionism never works, and it causes bad blood between the countries involved.
The powerful Asian economies actually have a better idea. They want to move toward a free-trade currency-cooperation zone -- much like the euro zone, fathered by Nobel economist Robert Mundell. This makes more sense in terms of world price stability and free capital flows. But the U.S. refuses to play.
So Japan, Singapore, South Korea, Taiwan, and others are forced to desperately buy sinking dollars in order to protect their export industries. But this only creates inflationary money expansion. The beleaguered U.S. dollar is in effect exporting U.S. inflation overseas.
President Obama did talk about entering free-trade discussions. But his Commerce secretary, Gary Locke, threw cold water on the idea in a Singapore speech. He said trade agreements have to wait because of a crowded U.S. legislative agenda. (Hat tip: James Pethokoukis.) He may have a point: The South Korean free-trade bill has been languishing for several years in the Democratic Congress.
Then there’s the massive U.S. health-care takeover plan, which is now estimated at $3trillion. This additional dollar depressant will tax the patience of China, Japan, and other would-be buyers of our massive debt creation.
We cannot spend, tax, or devalue our way into prosperity. Nor can we command the respect of other nations by telling them our economy cannot grow as rapidly in the future as it has in the past.
Ironically, these same Asian countries -- with their accelerated growth rates -- have borrowed a page from American free-market capitalism. Yet Obama makes no defense of our free-market system, and provides no leadership on the leading economic questions.
In terms of global leadership, Ronald Reagan would say, “If not us, who? If not now, when?” It’s a pity that President Obama doesn’t share the Gipper’s commitment to American leadership.
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