Usually it takes five, ten, twenty, or more years before foolery is exposed for what it is--and in the meantime the Washington Posts and the Donald Luskins of the world laugh all the way to the bank.
Not this time. Three weeks ago the Washington Post burned the remaining shreds of its journalistic integrity in a bonfire by giving a big space on the front of its week in review section not to Larry Summers or Bob Rubin or Laura Tyson or Paul Volcker or Doug Elmendorf or Nouriel Roubini or Jim Hamilton but to... Donald Luskin.
Why oh why can't we have a better press corps?
Quit Doling Out That Bad-Economy Line: By Donald Luskin. Sunday, September 14, 2008; B01: [T]he relentless drumbeat of pessimism in the media and on the campaign trail. In the past two months, this newspaper alone has written no fewer than nine times, in news stories, columns and op-eds, that key elements of the economy are the worst they've been "since the Great Depression."... Overall, the pessimists are up against an insurmountable reality: In the last reported quarter, the U.S. economy grew at an annual rate of 3.3 percent, adjusted for inflation. That's virtually the same as the 3.4 percent average growth rate since -- yes -- the Great Depression.
Why, then, does the public appear to agree with the media?... Politics. Patient zero in this epidemic is the Democratic candidate for president.... Barack Obama... during a campaign speech... said that the "percentage of homes in foreclosure and late mortgage payments is the highest since the Great Depression." At best, this statement is a good guess. To be really true, it would have to be heavily qualified with words such as "maybe" or "probably." According to economist David C. Wheelock of the Federal Reserve Bank of St. Louis, who has studied the history of mortgage markets for the Fed, "there are no consistent data on foreclosure or delinquency going all the way back to the Depression."... Moreover, MBA data show that today's foreclosures are concentrated in that small fraction of U.S. homes financed by subprime mortgages. Such homes make up only 12 percent of all mortgages, yet account for 52 percent of foreclosures. This suggests that today's mortgage difficulties are probably a side effect of the otherwise happy fact that, over the past several years, millions of Americans of modest means have come to own their own homes for the first time....
Full disclosure: I'm an adviser to John McCain's campaign.... At a campaign news conference in July, my fellow adviser Steve Forbes warned that Obama was seeking "the biggest tax increase since Herbert Hoover and the Great Depression." Factual? Almost certainly not. But at least Forbes wasn't dissing the economy -- he was dissing Obama....
So much for Obama's hyperbole about our terrible economy. But what about the media's? A housing "slump," a housing "crisis"? A "severe" price decline? According to the latest report from the National Association of Realtors, the median price of an existing home is up 8.5 percent from the low of last February.... So why keep proclaiming a "crisis" after it's over? "Turmoil" in the debt markets? Sure, but we've seen plenty worse.... Some economic indicators -- export growth and non-defense capital goods orders such as industrial machinery, for example -- are running at levels associated with brisk expansion.... There have been 11 recessions since the Great Depression. And we're nowhere close to being in the 12th one now. This isn't just a matter of opinion. Words -- even words as seemingly subjective as "recession" -- have meaning.... [A]nyone who says we're in a recession, or heading into one -- especially the worst one since the Great Depression -- is making up his own private definition of "recession." And probably for his own political purposes.
McCain campaign adviser and former U.S. senator Phil Gramm was right in July when he said that our current state "is a mental recession." Maybe he was out of line when he added that the United States has become "a nation of whiners." But when it comes to the economy, we have surely become a nation of exaggerators. Yet Gramm was pilloried for his remarks.... What does it say about our nation that it has become political suicide to state the good news that our economy is not in recession?...
[An] iron law of economics and markets: The sentiment of the majority is always wrong at key turning points. And the majority is plenty pessimistic right now. That suggests that we're on the brink not of recession, but of accelerating prosperity.
I note that Donald Luskin is still calling himself an "advisor" to John McCain, just like McCain surrogate Steve Forbes. Could we please have a statement about this from the McCain campaign? Is this really the kind of guy we want to have as Assistant Secretary for Financial Stability should McCain win the election?