Update: if you only have time for one post today, read my Econlog post instead.
Here’s Tim Worstall in Forbes, discussing my skepticism about the existence of bubbles:
His example at one point was the housing market. You can go long housing: go buy a house. You can be neither long nor short housing: don’t buy one. But it’s very difficult indeed to go short housing.
And here’s Wikipedia:
John Alfred Paulson (born December 14, 1955) is an Americanhedge fund manager and billionaire who headsPaulson & Co., a New York-based investment management firm he founded in 1994. He has been called “one of the most prominent names in high finance” and “a man who made one of the biggest fortunes in Wall Street history”.
His prominence and fortune were made in 2007 when he earned “almost $4 billion” personally and was transformed “from an obscure money manager into a financial legend” by using credit default swaps to effectively bet against the U.S. subprime mortgage lending market.
So why didn’t lots of wealthy investors short the market like Paulson? Because no one knew if it really was a bubble. If you look around the world you’ll see lots of countries where house prices soared between 2000 and 2006. In some cases they leveled off, in some cases they then fell, in other cases they went still higher. It’s a crap shoot.
And now for some red meat for Trump haters. It turns out that yesterday I was too kind to Chris Christie, he was not too cowardly to attack Trump. Today he endorsed him, as the GOP train wreck spirals ever further out of control. Some Republicans say Trump must be stopped because he can’t win. (I made that mistake earlier). That’s exactly wrong. Trump must be stopped because the betting markets say he can win, indeed he has a 30% chance of winning, conditional on getting the nomination.
Ezra Klein says the GOP tried to stop Trump and failed. If they did try, it was a pretty pathetic attempt. In the future, people are going to look at this in much the way they looked at the Joe McCarthy fiasco—who had the guts to oppose him? (In fairness, Trump’s not as bad as McCarthy, he’s far worse. Anti-communism is actually an honorable cause, far more honorable than anti-McCarthyism. McCarthy’s sins were recklessness and dishonesty in a good case. In contrast, Trump is recklessly and dishonestly promoting evil causes like xenophobia.)
In 1964, lots of top Republicans endorsed Johnson. In 1972, lots of top Democrats endorsed Nixon. Both Goldwater and McGovern were seen as unacceptable. Yet they were each paragons of virtue compared to Trump. If the GOP establishment had truly wanted to stop Trump (instead of just being worried about losing) they would have taken a similar position to the pro-Nixon Dems, and done it months ago. Congressmen and Senators, Governors, conservative media and pundits, etc., etc., should have almost unanimously indicated that they would vote for Hillary over Trump. But that assumes these are honorable men and women, which is obviously not the case, as you can tell by Christie’s pathetic attempt to angle for the VP spot. I will give the National Review credit for criticizing Trump, but that’s not enough, you need to say that the GOP Establishment will vote for Hillary over Trump. And say it loud.
Some say that doesn’t matter, as the GOP voters hate the Establishment. Yes, but Trump only gets about 50% in head to head polls against people like Rubio. He can’t win in the general election without the Establishment voters.
The betting markets say that both Trump and Rubio have a chance of winning in a general election, with Rubio at over 40%. I believe in the EMH, but I admit to being mystified by this. When was the last time that a political party won an election after self-immolating just months before? (Or as Senator Graham puts it; “My party has gone batshit crazy.”) I can’t imagine any Republican with half a brain voting for a guy that Rubio correctly calls a con man, nor can I imagine Trump telling his people to vote for Rubio, if he somehow got the nomination. This looks like a complete train wreck to me, and yet perhaps I’m missing something. After all, Berlusconi was elected in Italy, and I’m not sure American voters are any more sensible than Italians.
Some say that Trump’s not that bad on some of the issues, indeed in some cases better than the mainstream candidates. Talk about missing the point! This isn’t about what Trump says he favors, it’s about what he is. It’s comical that people actually believe that Trump’s positions on the issues are anything more than negotiating tactics to “close the deal.” I actually have commenters telling me to defend my claim that Trump is a demagogue. I don’t know how to do that. Nor do I know how to convince you that the sky is blue. If you don’t see it, and apparently tens of millions do not, then there is really nothing to say. Does he need to sport a little black mustache?
I know what how are thinking, Sumner’s unhinged, next thing you know he’ll compare Trump to Hitler. No, I have no plans to compare him to “Hitler”, who is the ultimate symbol of evil, due to WWII and the Holocaust. Instead I’d like to compare him to Mr. Hitler, just another nationalist politician participating in democratic elections in Germany during the early 1930s. This Hitler was a politician that (according to the NYT at the time) would certainly moderate his positions as he got closer to power, in the opinion of most experts. But (you are thinking) this comparison is absurd, because that politician was contemptuous of democractic principles, like freedom of the press. In contrast. . . . oh wait, this is hot off the press:
Republican presidential front-runner Donald Trump said on Friday that if elected he would “open up” libel laws to make suing the media easier.
Speaking at a rally in Fort Worth, Texas, Trump said the change was necessary to combat what he described as the “dishonesty” of major American newspapers.
No, Trump’s nothing like the “Hitler” we know and hate. But he’s a lot like the hundreds of nationalists who started out like Mr. Hitler the politician, asking for your votes, and never ended up becoming “Hitler”. Like a Juan Peron. Or perhaps his good buddy Putin (who recently grabbed the Sudetenland, err, I mean Crimea), and even that’s perhaps an overstatement—libel suits are not as bad as being assassinated.
At a Dec. 23 appearance in Grand Rapids, Michigan, he joked about killing journalists as the crowd thundered applause.
But he certainly doesn’t excuse Putin’s actions. Well, not very much:
After Russian President Vladimir Putin called Donald Trump “very talented,” the GOP frontrunner has defended Putin against suspicions that Putin kills journalists who don’t agree him.
It started on MSNBC’s Morning Joe last month when host Joe Scarborough asked about it.
Trump responded, “He’s running his country, and at least he’s a leader, unlike what we have on this country. I think our country does plenty of killing also, Joe, so you know.”
Yes, we know. But at least he doesn’t favor concentration camps, he’s undecided:
Republican presidential frontrunner Donald Trump told TIME that he does not know whether he would have supported or opposed the internment of Japanese Americans during World War II.
But at least he doesn’t think the IRS favors Jews over Christians. Or does he?
I’m always audited by the IRS, which I think is very unfair — I don’t know, maybe because of religion, maybe because of something else, maybe because I’m doing this, although this is just recently,” Trump said in an interview with CNN’s Chris Cuomo immediately following the 10th GOP debate on Thursday night.
Cuomo cut in: “What do you mean religion?”
“Well, maybe because of the fact that I’m a strong Christian, and I feel strongly about it and maybe there’s a bias,” Trump said.
Cuomo cut in again: “You think you can get audited for being a strong Christian?”
“Well, you see what’s happened,” Trump said. “You have many religious groups that are complaining about that. They’ve been complaining about it for a long time.
Perhaps the IRS is controlled by “the Jews”.
But at least . . . oh I give up, I’m just persuading more and more people to vote for Trump. The worse he gets, the more they like him.