Friday, May 2, 2008

Donald Luskin

Don Luskin, so-called CIO Trend Macrolytics /Propagandist
Enemy of Freedom? You decide.

Ironically, this guy has his blog, titled...
Chronicle of the Conspiracy:
Join us as we discover, document, expose and challenge the bad people, the bad institutions and the bad ideas that stand in the way of wealth creation -- and show you how to fight back!

2006-09-22: Economic Mythology
Yet many investors seem to believe that the consumer has only been spending because of gains in real estate during the so-called "housing bubble" of the last three years. They believe that when the value of your home rises, you experience a "wealth effect" — you are willing to spend more money, simply because your house is worth more. Economists have studied the "wealth effect" in depth. Based on these studies, most economic models say that when the value of your house goes up by $100, you are willing to spend an additional $3 every year.

So how big is the "wealth effect" for housing? According to data from the Federal Reserve, the value of real estate held by households grew by $1.7 trillion over the last four quarters. Three percent of that is $50 billion.

So out of the $555 billion in spending growth over the last four quarters, the housing "wealth effect" explains only $50 billion. But what needs explaining in the first place? Simple income growth already explains all but $5 billion of the spending gains.
So who needs a housing "wealth effect?"

Another often-heard reason for doom-and-gloom about the consumer is high energy prices. Is that story any more true than the one about the housing wealth effect? Nope.

2006-12-15: All the Data Point to More Rate Hikes
But the forces of pessimism that have fought against this current economic expansion from the day it began have seized on the housing slump as yet another of their reasons to foretell disaster. What else has it been over the last five years of growth: war, scandals, hurricanes, energy prices, outsourcing, deficits, you name it. All wrong, then and now.

2006-12-29: Pundits Misread Bonds in '06
Except that the economy just refuses to act anything like the bond market is supposedly predicting. Even the worst-performing sector of the economy — residential real estate — gives every sign of stabilizing. While a supposed "housing crash" is going on, homebuilding stocks have been steadily rallying for the last five months. I think real GDP in the fourth quarter of this year will come in about 3% — and that meets anyone's definition of a strong economy.

2007-07-27: Market Correction
If you're looking to buy, the so-called collapse of the so-called housing bubble is great news. Your dream home just went on sale! Attention all you Kmart shoppers.

2008-05-04: Housing Near Bottom?
I'm not here to tell you that home prices are at absolute bottom this very moment. But I can argue pretty persuasively that they might be. Or that they are close.

2008-05-04: Mish Rebuttal to Previous Moronic Article

Big shout out to 'msaghirmd'.

Don Luskin - Propagandist

Tribute to Peter Schiff
Listen to Luskin at 2:55. This guy is insane.
"Billions of peasants around the world are willing to work in poorly lit and poorly ventilated factories just to get our paper money, because it's that precious."

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