Friday, August 02, 2002


Sorry, sorry, sorry. Blogging without a computer of one's own -- to change Virginia Woolf's title around a bit -- is a difficult enterprise. We come here, to this library, and we plunge into the news, and we see the stray tasty morsel -- the story from Business Week, the Nick Tosches fan site, etc. -- but trying to capture what we want from these sites is totally frustrating. Plus, we can't take off all our cloths in the library -- some screwy policy. And how can we write with cloths on? It feels unnatural.
Plus the lack of coffee.
Plus the lack of beer (after coffee).

But okay. Remember, last week, we nominated some biz journalists for the Glassman award. That prize is named after our favorite fearless forecaster, the man who co-wrote Dow 36,000 and is still ticking away, like a watch that tells the correct time once in a century, at the Washington Post. Yesterday, we were overjoyed to see this conservative pantaloon defending his thesis on the Wall Street Journal op ed page.

It takes the tiniest bit of gall to defend the ideas set forth in that 1999 book in 2002. And there's the pesky problem with the 7 to 8 trillion dollars lost in the popping of the high nineties bubble. But Glassman is having none of it. He's still forecasting that Dow 36,000, although, uh, there's no date set for it now. Rather like the launch of the starship enterprise and various of H.G. Well's scientific romances, Glassman's Dow number is set for sometime in the indeterminate future.

What is interesting is not his popcock prediction, however. It is the political coloring that he gives to investing in the stock market. With Gilder and Larry Kudlow, Glassman is a new economics conservative. Let's quote from the next to last grafs of his piece:

"If anything has changed since our book appeared, it is increasing respect for the debunked strategy of market timing. Robert Shiller, the economist whose book "Irrational Exuberance" appeared in 2000, has been celebrated as a Timer Saint. But Mr. Shiller was bearish while the market was setting new records. His theory was laid out with fanfare in 1996, when, with the Dow at 5427, he said his data "implied an expected decline in the real Standard and Poor Index over the next 10 years of 38.07 percent." But six years later, despite a long bear market, the Dow is up about 60%; the S&P, 40%.

"Our noisiest critics, Paul Krugman in the New York Times and various scribblers, willfully distort our arguments. And no wonder. If Americans continue to embrace long-term stock investing, the role of the state as dispenser of retirement benefits will shrink or disappear. And the "war" between capital and labor will be over. Unfortunately, many politicians and journalists have a vested interest in spreading fear and chasing people out of stocks -- even though stock investing is the most reliable route to accumulating wealth."

The "war" between capital and labor is one of those Old Economics things. And it was recognized by Old Economics conservatives. That's why the stereotype of the conservative, from the thirties to the sixties, was of a Taft voting, bondholding Republican. This kind of conservative wanted to stand athwart the stream of history, with a bond paying a secure dividend, and yell halt. While the difference between bonds and stocks -- and Glassman's silliness about what the stock market is about -- has a technical aspect around which Glassman, et al weave their tales, the synbolism of stock conservativism is more important.

That symbolism goes something like this: far from standing athwart the stream of history, the stock conservative wants to surf on it, as ever more technical marvels produce prosperity for all of us. The divide of class was not just a Marxist construct -- traditionally, conservativism has recognized and embraced the governing class -- the owners. Conservatives of the Burkean variety have always believed that this class isn't defined simply by their statistically greater wealth, but by such emergent qualities as leadership, a concern for order, and the guardianship of tradition.

Stock conservatives have a different dream. In this dream, the workers on the other side of the divide take on not only some small share of ownership, but the Burkean role alloted to the owners.

For this to actually occur, the workers have to operate like the owners. For instance, they have to keep their capital in stock, aligning their interests with the interests of corporate America. If they keep their money in bonds, even corporate bonds, their interest are eventually going to be aligned with the Treasury department -- that is, with the government.

This isn't a bad thing for the Burkean school. Burkeans aren't opposed to government tout court -- rather, they claim it as the natural heirs of rule.

If, indeed, the slug of losses mount so that the working class falls away from the role of owner envisioned by the stock conservatives, there will definitely be a shift in the intellectual framework of American conservative expression. The Buckleys will once again come to the forefront.

LI doesn't think this will happen. But LI, unlike Glassman, has no crystal ball in the house...

Wednesday, July 31, 2002


Dave calls LI this morning to complain about our lack of posts.

What can we say? Here we sit, in the library. Our new computer is supposedly trucking to us as we write. Our old computer, with its invaluable (at least to LI) hard drive, sits at Mac Alliance like the corpse of the family's beloved pooch, with the service people gently urging us to do the needful, bury the damn thing, etc.

But let's send out a brief recommend to this Business Week article on the failed telecosm - or did the "cosm" in George Gilder's once much quoted phrase hint at a Bataille like orgy of waste, an economy of excess that we will all have to live with, now

The first two grafs present the grim picture -- or grim for some.

"Telecom has been a disaster for just about everyone.
Investors have lost some $2 trillion as stock prices
have tumbled 95% or more from their highs. Half a
million workers have lost their jobs during the past
two years. Dozens of debt-laden companies, from
Winstar Communications to Global Crossing, have
collapsed into bankruptcy. And on July 21, the
sector sank to a once-unimaginable low when
WorldCom Inc., the company that embodied the
industry's power and promise, filed the largest
bankruptcy claim in U.S. history.

"Yet a small group of CEOs and financiers managed
to save the family silver before the house burned to
the ground. Philip F. Anschutz, founder of ailing local
and long-distance upstart Qwest Communications
International Inc. (Q ), reaped $1.9 billion from
company stock sales since 1998. Former Qwest
CEO Joseph P. Nacchio sold $248 million worth of
stock before he was pushed out of the scandal-plagued company in June. Global Crossing founder Gary Winnick sold $734 million of his shares before
his company filed for bankruptcy in January. And former WorldCom CEO
Bernard J. Ebbers borrowed some $400 million from his company before he
was ousted in April--and that loan remains to be repaid."

The story connects the dots to the fall guy du jour -- Salomon Smith Barney's own analyst of the year, all around neutral observer, and general pig, Jack B. Grubman. The man with the Midas touch in 1999, although all that was glittering turned out not to be gold -- more like the stuff you pitchfork out of stables. Dross, as Freud knew, was the other side of gold -- too bad the investors Mr. Grubman sold down the river weren't conversant in Freud, in spite of his loss of stock in the last decade, eh?

As for the inventor of the Telecosm, hmm. Poor Old George Gilder is still plugging away at the spectator, and on the Telecosm lounge he purveys some recent email from believers who urge each other to keep the faith, to recognize that new paradigms sometimes take, well, hits. Big hits, in fact. Massive, tsunami size ones. I imagine less, shall we say, sanguine gamblers have abandoned the Telecosm lounge, and the Gilder Technology report, for the more secure predictions that emerge from horoscope charts, haroscopy, and other forms of divination.

The ethics of integrity or the Baker at Dachau

    Throughout the 19th and 20th century, one stumbles upon the lefthand heirs of Burke – Red Tories, as Orwell called them. Orwell’s inst...