Second Half of a ‘W’-Shaped Recession?

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The obverse of “irrational exuberance” is unwarranted pessimism, and market bears run the risk of discrediting themselves by continually warning of a meltdown. Excuse me if you’ve already seen this video of the online stock-market seminar guy who got ridiculously excited about that temporary 1,000-point Dow drop last week:

OK, so that guy was pathetic. However, as to the question of whether trends of the past year represent (a) promising recovery from a “V”-shaped recession, or (b) a dead-cat bounce prior to the onset of the second downturn in a “W”-shaped recession, I’ve always said (b). 

Bearish pessimism is looking a lot smarter these days. The DJIA has lost more than 800 points since closing April 26 at 11,205, while the Greek debt crisis threatens to suck the banking system down the drain:

Europe’s government debt crisis is starting to infect the bank funding system, driving borrowing costs higher from Asia to the U.S. and threatening to slow the global economic recovery.
The interest rate that financial companies charge each other for three month loans in dollars is the highest since August, while traders are paying record amounts to hedge against losses in European bank bonds. . . .
European Union finance ministers pledged to stop a sovereign debt crisis from shattering confidence in the euro as they held an emergency summit over the weekend to hammer out a lending mechanism for deficit-stricken nations. The sovereign debt crisis may end up costing governments more than $1 trillion . . .
“Whether the markets completely unravel depends on whether politicians can stabilize the peripheral government market,” said James Gledhill, who helps manage about 58 billion pounds ($85 billion) as head of fixed income at Henderson Global Investors Ltd. in London. “The tail risk is the stress on banks which stops them from lending to corporates and feeds through to become a real economy problem.”

Translation: Government demand for additional credit, to cope in the short term with the sovereign-debt crisis, will siphon capital away from the private sector and impede recovery.

To repeat what I wrote a year ago:

The stimulus-and-bailout policies have not addressed the fundamental problems of the economy — namely, an excess of debt and a shortage of capital to spur job creation — while the entitlement trainwreck of Social Security and Medicare looms immediately ahead. By piling on new trillion-dollar deficits, at a time when the recession will result in significant tax revenue shortfalls, the Democrats are steering the economy into a stagflation trap.

The extreme neo-Keynesian interventions of the past two years were the exact opposite of sound policy, and I repeatedly predicted in 2009 that the bond market would eventually bring about a reckoning. Investors now sense that this reckoning is much closer, and the latest attempt to prop up the Eurozone won’t change the underlying gloomy prospect.

This doesn’t mean that the Dow will lose another 200 points Monday. For all we know, the DJIA might stage a rally and end the week +500. But real-estate problems continues to weigh down the economy. The FDIC closed four more banks Friday, bringing the total number of U.S. bank failures this year to 68, and we’re likely to see another 100 or so banks go belly-up before the end of the year.

All of this, while the Fed has spent the past 16 months pumping currency at zero interest, meaning that interest rates can only go up from here. Optimists who think we’re already out of the woods and moving inexorably toward the sunny uplands of recovery are idiots.

Lawrence Taylor, a $300 Jailbait Hooker and a Pimp Named ‘Rasheed’ Walk Into a Tabloid Scandal . . .

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OK, I probably should have continued to ignore the statutory rape prosecution of NFL legend Lawrence Taylor, but I just happened to see this story at the New York Post:

The teenage hooker allegedly raped by Lawrence Taylor in a sleazy Rockland County hotel room told The Post yesterday about how her alleged pimp brutally forced her to have sex with the Giants great after she initially refused.
“I told him I wasn’t going to the hotel, and he said, ‘You’re f—ing this up, it’s $300,” the frightened Bronx girl, 16, said Rasheed Davis, 36, screamed at her early Thursday. . . .
Davis then dragged her to the Holiday Inn to meet with the Hall of Fame linebacker, barking instructions at her along the way, she recalled.

Wait a minute. You’re Lawrence Taylor, considered by many football commentators to be the greatest linebacker in the history of the game, and you’re meeting a pimp named Rasheed at a Holiday Inn to pay $300 for a hooker from the Bronx?

Entirely leaving aside the moral and legal issues surrounding LT’s situation . . . Dude. What’s with the bargain-basement approach here?

Yeah, sure, Tiger Woods shagged cocktail waitresses and other low-rent bimbos, but those were freebies. An entirely different calculus applies, if you’re actually going to pay for it. Prostitution is one market in which shopping for discounts probably isn’t a good idea.

Maybe LT’s investments took a hit in recession, but he’s still got his NFL pension. If the guy just can’t do without hookers, he would certainly be better off cutting back on the quantity, rather than sacrificing quality.

Better to do it twice a year with $2,000-a-night high-end call-girls, than to do it once a month with $300-a-night Bronx girls from Skanks-R-Us.

Call it the “Eliot Spitzer Rule.”

But don’t take my word for it, LT. Just ask the New York Post‘s advice columnist. She’s an expert, you know.

Truth Will Out

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by Smitty (via Miss Cellania)

Our New York blogging sweat shop stands exposed. *sigh*. There may be a slight downturn in posting while we find another target-rich environment with lots of people who are reasonably good English speakers but have nothing better to do.

Skepticism and Independence: Bad!

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That’s the essential thrust of Mark Lilla’s lengthy essay in the New York Review of Books:

[W]e need to see [the Tea Party movement] as a manifestation of deeper social and even psychological changes that the country has undergone in the past half-century. Quite apart from the movement’s effect on the balance of party power, which should be short-lived, it has given us a new political type: the antipolitical Jacobin. The new Jacobins have two classic American traits that have grown much more pronounced in recent decades: blanket distrust of institutions and an astonishing—and unwarranted—confidence in the self. They are apocalyptic pessimists about public life and childlike optimists swaddled in self-esteem when it comes to their own powers.

Lilla cites an interesting example of what he means:

A million and a half students in the United States are now being taught by their parents at home, nearly double the number a decade ago, and representing about fifteen students for every public school in the country.11 There is nothing remarkable about wanting to escape unsafe schools and incompetent teachers, or to make sure your children are raised within your religious tradition. What’s remarkable is American parents’ confidence that they can do better themselves.

Remarkable, perhaps, but not mistaken. What almost every beginning home-schooling parent quickly discovers — by accident — is how much that goes on in the modern public education system is simply wasted time. Mom at the kitchen table can generally accomplish more with three hours of direct instruction as a public elementary school does in an entire day.

What few critics (or even advocates) of home-schooling fail to grasp is the extent to which its popularity reflects the democratization of education. More Americans are college-educated than ever before. Why should a mother with an Ivy League MBA suppose that she is less capable of teaching her children arithmetic than a state-school graduate with a BS Ed.? (As a proud alumnus of Jacksonville State University, I don’t intend this as a put-down of state-school graduates.)

Studies indicate that home-schooling parents generally have higher-than-average levels of education, and might therefore presumably are qualified to judge the adequacy of the education provided by public schools. If these parents reject the public system as inferior to what they can provide their own children at home, why should Lilla presume them incompetent to make that decision?

Yet Lilla’s more general target is libertarianism:

We are experiencing just one more aftershock from the libertarian eruption that we all, whatever our partisan leanings, have willed into being. For half a century now Americans have been rebelling in the name of individual freedom. . . .
Now an angry group of Americans wants to be freer still—free from government agencies that protect their health, wealth, and well-being; free from problems and policies too difficult to understand; free from parties and coalitions; free from experts who think they know better than they do; free from politicians who don’t talk or look like they do (and Barack Obama certainly doesn’t). They want to say what they have to say without fear of contradiction, and then hear someone on television tell them they’re right. They don’t want the rule of the people, though that’s what they say. They want to be people without rules . . .

An exaggeration, of course, but you sense the source of liberal Lilla’s frustration. What was the point of the Left’s “long march through the institutions” if, having captured those institutions, they can’t use them to tell everybody else what to do?

UPDATE: An excellent rejoinder to Lilla at Red State.

UPDATE II (Smitty): Insta-lanche!

What Will We Do With Census Workers To Keep Unemployment Down?

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by Smitty (via Digg)

After the Census is taken, the job numbers would be likely to tank. Would be, that is, if Hugo Chavez wasn’t leading the way:

Hugo Chavez, president of Venezuela, who only recently signed up to Twitter, has rapidly risen up the rankings to become the top tweeter in the country, despite having previously described the service as a “tool of terror.” The leader has also hired hundreds of staff to reply to tweets.

Chavez (“Presidente de la República Bolivariana de Venezuela. Soldado Bolivariano, Socialista y Antiimperialista” according to his bio), has, at the time of writing 239,994 followers and enjoys inclusion on 7,538 lists. Presumably some of which list people who are “threats to the open web“.

The fact that these are not jobs in any ‘delivering products to customers’ sense wouldn’t matter. All that is needed is a number to use to spin the unemployment figures. Additionally, these ‘workers’ could spend time thinking of ways to demonize Bush, Cheney, and Rove. So that’ll be a big help.

Update: Fausta suggests Chavez is having trouble managing his Tweeter.  As long as he doesn’t have to pass through an airport x-ray in mid-Tweet, he should be OK.

The Green Hills Of Tyrol

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by Smitty

They say the Highland Pipe is in the key of the human heart. Gateway Pundit links a BBC clip of the 3 Rifles and 1 Scots cruising the Royal Mile. The tune the band is playing in the clip is “The Green Hills Of Tyrol”. Now, the band no doubt played an awful lot more than that during the parade, but this selection is mildly ironic, since that march refers to a corner of Austria. The song “A Scottish Soldier” resolves the tension.

Here is a slightly cleaner recording of the march:

Bagpipes have got sack.

Raquel Welch Agrees With Me

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Da Tech Guy seems surprised:

Raquel Welsh echoing Robert Stacy McCain?

Yet we should not be surprised that even a legendary bombshell would acknowledge self-evident truth:

One significant, and enduring, effect of The Pill on female sexual attitudes during the 60’s, was: “Now we can have sex anytime we want, without the consequences. Hallelujah, let’s party!”
These days, nobody seems able to “keep it in their pants” or honor a commitment! . . . [Marriage] is the cornerstone of civilization, an essential institution that stabilizes society, provides a sanctuary for children and saves us from anarchy.
In stark contrast, a lack of sexual inhibitions, or as some call it, “sexual freedom,” has taken the caution and discernment out of choosing a sexual partner, which used to be the equivalent of choosing a life partner. Without a commitment, the trust and loyalty between couples of childbearing age is missing, and obviously leads to incidents of infidelity. No one seems immune.

So she agrees with me. And other guys in funny hats, like Paul VI.

UPDATE: Of course, not everyone agrees with Raquel and me. A commenter at Hot Air, for example:

I’m married. My wife is on the pill. It beats the hell out of condoms. Cheaper too. When we want another child, she’ll stop taking it.
This article is a bunch of generalizations, loose connections, and statistical bullsht . . . which has no basis in fact or reality, but simply in emotional prejudice. . . .
Is it to make the pill illegal? Is it to ban the choice altogether based on morality, backed by the power of Government?
Or is it to spread the word and hope to educate people about something so they adjust their lifestyles to what you approve?

This type of objection — “How dare you criticize my choice!” — is a logical consequence of the very cultural shift under discussion. Welcome to the Empire of Choice. We may summarize the commenter’s implicit syllogism thus:

  • You criticize Practice A.
  • I engage in Practice A.
  • Ergo, you are attacking me personally.

I have often encountered such emotional reactions over the years as an advocate of home schooling and critic of the public education system. Criticize public schools in general, and you will quickly discover that some people think it a sufficient refutation to say, “Well, I graduated from public school and I’m OK,” or, “My kids attend public school and it’s just peachy keen.”

Heaven forbid you should cite evidence (e.g., education majors, on average, have the lowest SAT scores of all college students) that the teaching profession is nowadays dominated by intellectual mediocrities. Then you will catch holy unshirted hell from some teacher, or a teacher’s spouse or child, accusing you of defamation.

Contrary to the commenter’s mischaracterization of my essay, what I sought to assert was that:

  • The Pill is mindlessly celebrated by the media, which downplays or ignores the potential health risks;
  • The advent of The Pill, and the public-relations campaign with which it was introduced, gave rise to the Contraceptive Culture;
  • The Contraceptive Culture has had disastrous consequences, very much confirming the warnings of Humanae Vitae; and
  • Among the consequences of the Contraceptive Culture is a greater frequency of infertility, depriving women of the opportunity for motherhood.

Nowhere did I urge that The Pill should be made illegal, nor do I suppose that my essay would compel people to “adjust their lifestyles to what [I] approve.”

My approval is as irrelevant as the commenter’s indignation. What is relevant, however, is the extent to which Americans have been indoctrinated with the beliefs of the Contraceptive Culture. If the indignant commenter had followed the link in that essay to my July 2009 post, “Big Money and the Culture of Death,” he would have seen this quote from Bill Buckley:

In the hands of a skillful indoctrinator, the average student not only thinks what the indoctrinator wants him to think . . . but is altogether positive that he has arrived at his position by independent intellectual exertion. This man is outraged by the suggestion that he is the flesh-and-blood tribute to the success of his indoctrinators . . .

No well-informed person can deny that such indoctrination has been integral to the advance of the Contraceptive Culture, and one of the central tenets of that culture is the imperative of nonjudgmentalism: “Thou Shalt Not Criticize Thy Neighbor’s Lifestyle.”

Every reader of this blog is free to engage in whatever lifestyle suits them, without regard to whether I approve. I have at various times criticized cosmetic surgery, and yet I suspect that Raquel Welch has benefitted from surgical enhancement. Am I guilty of condemning Raquel Welch? No. And it may well be that Raquel Welch disapproves of cigarette smoking. Does this imply any insult to me? Not at all.

Yet such is the nature of discourse in the Empire of Choice that many people believe that any general criticism (“Tattoos are tacky”) amounts to a personal putdown (“My mother has a tattoo! How dare you insult my mother!”).

Well, I don’t like tattoos. I also don’t like modern art or cats or rap music. It’s a free country, and if people want to waste their money on Picasso prints, pedigreed cats or hiphop CDs, I can’t stop them. But it’s not my fault that some people so crave approval that they feel personally insulted by even the most general criticism.