It is a holiday so just a fun post.
Yesterday Arianna Huffington was on CNBC and had an old fashion slap fight with Larry Kudlow. She was on because of this article from the Huffington Post about taking money out of the big banks and putting it in community banks. Shout out to my buddy Kirk Kinder for pointing this article out before the CNBC segment.
Larry didn’t think much of Huffington’s idea and Huffington almost immediately went after Larry’s track record for being a perma bull and while I am not sure it seemed like it may have caught Larry off guard. Then she came back at him in a second segment with a quote from the Wall Street Journal from 1999. It did not appear that Kudlow called for Dow 50,000 like she said in the first segment but he did say that Dow 10,000 would be a small blip.
Kudlow’s defense, in part was that he has always been pro-American and a free market capitalist and he criticized her for flip-flopping from a conservative to a liberal. Poor Brian Shactman was in the middle trying to keep both segments on track.
Well I do not know Huffington’s politics but Kudlow’s defense (and again I think he may have been caught off guard) seems to imply that patriotism and objective analysis are mutually exclusive. If we assume that he truly believes every forward looking economic statement he has ever made then he missed the tech bubble and subsequent fallout and then completely missed the worst financial crisis in his lifetime.
I gave up on Kudlow shortly after the tech bubble. Morning Call is on at the same time as European Closing Bell (that show was not on yest) and I never watch his primetime show. I used to have to go to Phoenix more frequently than I do now and so on those days I would hear his afternoon show and back then he never saw the crisis coming. With what very little I saw of him in late 2007 and 2008 he seemed to not see it then either. I’m not sure when he finally threw in the towel (assuming he conceded at some point it was bad but not sure how late) but you can be patriotic and an objective economist.
Anyone actually taking his comments to heart could have been badly hurt by this financial event. I took from his reply to Huffington that he will never change his point of view so then if that is what he means then he is saying he will never be an objective economist and so never provide any sort of warning that trouble might be looming.
A point I have made before is that portfolios need to be protected from the things that Kudlow (and while we’re at it Brian Wesbury and Jim Paulson) apparently cannot see. Portfolio’s do not need protection from the bullish case of the day. There is always a bull argument and there always a bear argument and occasionally the bear case wins out and there is nothing un-American about it.
I hope everyone has a healthy and Happy New Year!
