In the annals of American-style “capitalism,” today was truly an episode from The Twilight Zone.
For starters, the country’s monetary central planner – the Bernanke Fed – dropped rates 1/4%. Investors were indignant, hoping for even more candy. As the kiddies came down from their 1,000 Dow point sugar high of the last 2 weeks, their mood was agitated and whiny. The Dow dropped 300 in less than 2 hours.
Right after the “disappointing” news came out at 2:15 pm, former reporter turned fund of funds manager Ron Insana complained,
“This is a decidedly wimpy move by the Fed.”
Perhaps Insana is showing strains from running actual money in the real world. We’d be surprised if he doesn’t return to the more forgiving world of business journalism, that is, if there is anyone left hiring in the teeth of a killer bear market.
Next up: American capitalism’s folk hero, Warren Buffet, raising funds for Hillary Clinton. According the the WSJ:
The fund-raising “Conversation with Warren Buffett” drew over 1,500 people, including a mix of Silicon Valley executives such as John Doerr, a partner at venture-capital firm Kleiner Perkins Caufield & Byers… Tickets ranged from $100 to more than $2,300, drawing in around $1 million, according to the Clinton campaign.
Bizarre: The country’s prominent venture capitalists and its best known and beloved “capitalist” raising funds for a committed welfare statist and socialist. Hillary agrees with Buffett’s position to keep the inheritance tax because, in her words, America has traditionally been a “meritocracy,” and the government should play a role in preventing generational transfers of wealth. In 1995, Buffett was quoted on the subject:
I personally think that society is responsible for a very significant percentage of what I’ve earned. If you stick me down in the middle of Bangladesh or Peru or someplace, you find out how much this talent is going to produce in the wrong kind of soil… I work in a market system that happens to reward what I do very well—disproportionately well… I do think that when you’re treated enormously well by this market system, where in effect the market system showers the ability to buy goods and services on you because of some peculiar talent—maybe your adenoids are a certain way, so you can sing and everybody will pay you enormous sums to be on television or whatever—I think society has a big claim on that.
So on the one hand, Buffett realizes that the free market maximizes human potential, then turns around and supports Big Government, itself the greatest threat to free markets. Some capitalist.
Next up: Larry Kudlow, so-called supply-side “economist” who talks a good game when it comes to lower taxes and fewer regulations, but supports the very institutions that pump up Big Government most – the military-industrial complex and the Fed. Kudlow is truly conflicted, citing heroes such as Schumpeter and Mises, forgetting that they were fierce opponents of central banking. He supported the monetary madness of Greenspan in 2001 and now Bernanke and will be the last to admit their interventions caused an epic credit bubble which is now unwinding. Kudlow’s advice to CNBC viewers after the close?
I wouldn’t panic. Investors should stay in for the long-term. Goldilocks is alive and well.
Finally, this just in: Apparently, the Fed wasn’t too pleased with the tantrums of investors. Later in the day it leaked its intention to add liquidity through “alternative measures.” Wednesday morning the Dow futures are up 100 points.
Beam me up, Scotty. Still no signs of intelligent life.