The Daily View: Consumer Spending, Malcom Gladwell, Financial Crisis

America’s economy is still booming as retail sales keep making new highs:

But isn’t the consumer supposed to be maxed out, says the left? How do they keep spending? This is not supposed to happen, because the libs say wealth inequality is too high, so consumers should not be able to spend as much. So much for that.

From Barry:

Consider the various narratives that have been used as an excuse for a correction. The downgrade of U.S. debt by Standard & Poor’s was going to be a deathblow; it wasn’t. Treasuries rallied on the downgrade, just to prove that no one knows nuthin’. The sequestration of government spending was sure to cause a slow down in markets; it didn’t. Rising interest rates, the Federal Reserve’s taper, earnings misses, and of course, our winter of discontent, were all cited as triggers for corrections. And did I mention the Hindenburg Omen?

The left turns molehills into mountains, because they want economic contraction so the rich lose money. The republicans were right about the sequester or the debt downgrade not being a big deal. American exceptionalism is why yields are so low.

During the IQ wars, on Reddit and elsewhere, commenters overwhelmingly sided with Steven Pinker over Malcom Gladwell. Gladwell recently did a Reddit ‘Ask Me Anything’, and the most highly up-voted comment was one that called him out on his hypocrisy:

794 upvotes. That’s a lot of people that think Gladwell is full of crap.

Few of Galdwell’s own comments received nearly as many up-vote as his critics, because the smartest generation knows he’s intellectually dishonest, and his books are full of unscientific anecdotes, shoddy research and cherry-picked data, all neatly packaged and professionally marketed, to tell readers what they want to hear – that IQ is not important or talent doesn’t exist, and with enough ‘deliberate’ practice, anything is possible – rather than the cold, hard truth, such as that IQ does not have diminishing returns past a score of 120, or that double digit IQ people cannot master cognitively demanding tasks no matter how hard they practice. Perhaps there isn’t much of a market for books that tell the truth (compare sales figures for Gladwell and Murray), but if you’re going to pass pseudo science as fact or consensus with reckless disregard for scholarship, prepare for a backlash by anyone with at least an modicum of common sense. We need more people like Steven Pinker and Charles Murray to disabuse the lies these false-hope peddlers.

The neocons and neoliberals are right: wealth inequality is byproduct of biology, and in a free market capitalist system, no amount of wasteful social programs will change this.

As Italy enters a triple dip recession, we’re seeing the rise of the west and the demise of the rest. So much for the ‘post America’ era that the liberals predicted would define the world in the aftermath of the 2008 financial problem. As Europe struggles with sluggish growth, America is bigger, more powerful and more important than ever. From migrant workers to smart students to high tech founders, everyone wants to come to America, and America – but most specifically the Silicon Valley – has become the center of the universe and an epicenter of innovation.

From Salon Greed destroyed us all: George W. Bush and the real story of the Great Recession

We will never know the true cause, nor will there ever be an explanation that bridges the stark political divide on the issue. The good news is mortgage application requirements have gotten much more stringent. Leverage has declined considerably. For the nation’s biggest banks, near the peak of the crisis, for every $20 of assets, roughly $19 were borrowed. Now it’s only half that.

Nonetheless, the bulk of the blame for the crisis must be assigned to the Bush administration’s fiscal policy and the Greenspan Fed’s monetary policy.

Hmm, but has anyone ever considered the alternative scenario? It’s easy to Monday night quarterback, but after 911, the recession and the dotcom crash, perhaps not lowering rates to 1% would have caused more harm – even with the financial problem. Armchair pundits, unlike policy makers, don’t have to deal with the actual problems as the unfold in real time. They can pontificate years after the dust has settled about how they could have done things differently. Since the 2000’s, the insatiable demand for low yielding debt by foreign and national institution and governments gives the fed the luxury to leave rates lower than in in any previous economic cycle. This is unprecedented in the history of macroeconomics. Greenspan is discussed in more detail in the 2011 essay on Dyseconomics