I am impressed that Paul Krugman, ace columnist for the New York Times, has just won the Nobel Prize for Economics. Although in graciously acknowledging this honor I can't help but feel the Nobel committee might have also considered my own stunning accuracy in predicting the Dow's plummet to the 9,100 level in a blog post many weeks ago, long before the Dow elevator passed the 9,100 floor on its way to the basement. I would quote myself, but that seems unnecessary. Also, way too much work. This is a blog, for crying out loud.
Nevertheless, there is more to maintaining a blog than simply basking in the egotistical glow that occasionally comes from a lucky guess. Not much, but a little. Thus, it seems appropriate at this point to elucidate some of the theoretical underpinnings of my theory for the benefit of a confused world.
First, unlike run-of-the-mill economists, those with jobs, for instance, I do not take seriously the "scientific" claims of economics. I think the Nobel Prize should probably be in the same general category as the one for literature. I noticed that Paul Krugman never figured out the Dow would hit 9,100 this year, the way I did. He was more "generalized" in his comments about the economy; that way, you can never tell if he's right or wrong. That's the way all these guys play the game.
Me, I believe in numbers, so I gave one. And The Formula: 14,000 - 4,900 = 9,100, where 14,000 was the Dow at its height; 4,900 was derived by halving the discretionary income of the American populace and multiplying this fraction by 70%, the percentage of the American economy attributable to buying stuff from each other, and winding up with 35% of 14,000, or 4,900. But I used letters for variables and equal signs, so the whole thing looked like algebra. My inputs were based on things I'd read, here and there, particularly Kevin Phillips and his work on the housing bubble. Americans were getting about half their money from borrowing equity out of their houses, one way or another, during the "Bush boom." All that money's gone.
I can practically guarantee you that the big rally on Monday was orchestrated by the Treasury Department and the Fed. There was nothing real about it. The Fed is printing money, giving it to the Treasury Department, and Paulson is manipulating the market with all his "discretionary spending money." I don't think they're even going through the pretense of borrowing the money from "abroad" or from American investors or anywhere else. They're running the printing press at a speed set just below the ignition point for paper money and letting 'er rip.
There is one main purpose for this elaborate theater: it buys time for the Bush Administration. George W. Bush just wants to get out of town before (a) there are huge bank runs and a reversion to a wampum-barter economy last seen in the early 1600's in Pilgrim America (the best case scenario), or (b) [Bush's true paranoid vision] millions of destitute Americans arrive at the gates of the White House with pitchforks and torches. It must be miserable for W to contemplate that after faking his way through the Presidency for almost eight full years, that he could find himself, with only 97 days to go, stuck in this awful mess. I suppose nothing much disturbs his sleep, but if a nightmare did intrude, I guess it would be that archetypal vision where he's trying to get away, struggling to elude a monster trudging after him, and he just can't get his legs to go. So he sits looking at a short-timer's calendar, dreaming of Dallas and a resumption of moderate drinking, of gaining as much weight as he wants, of not simply pretending to be folksy but of being the folksy cornball which his very limited intellect makes his natural style.
It will be bliss. And the only thing he's got to stave off for 97 days is the complete and utter collapse of Planet Earth's economic system, which has been brought on by his colossal ineptitude. Is that really so much to ask?
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