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On “Panic,” Recovery and Dynamic Capitalism

Friday, October 10, 2008  |  posted by Hugh Hewitt

Jonah has this interesting quote:

“I’ve never seen a panic like this,” said David Wyss, chief economist at Standard & Poor’s. “I’ve seen stock market drops, but not an overall panic.”

(HT: RobinsonandLong.com).

If everyone knows it is a “panic” and not a correction based upon looming recession, then the panic-driven selling must be close to an end as rational investors assess the basic facts that companies like IBM posted great numbers, companies like Apple keep unveiling amazing new products at very attractive prices and American innovation keeps throwing up new goods and services. The Washington Post can put out nonsense stories like “The End of American Capitalism,” but even an enormous loss of wealth gained over five years is only that and not a repudiation of laws of supply and demand or the marvelous effects of liberty on markets, and of course the eventual and widely expected rebound will erase some of that loss. There’s an enormous amount of cash on the sidelines waiting to enter at the perceived “bottom,” and not eager to miss the expected dramatic move up, and that will be just the beginning of a recovery in share price for most of the companies that are still doing in October what they were doing in August. As Victor Davis Hanson noted this morning: “Sometime in the next few days, wiser investors should see that trillions of global dollars are now piling up and could begin to prime the economy -and that still valuable stocks, for a brief period, are up for sale at once-in-a-lifetime bargains.”

These basic truths are hard to keep at the front of mind when expectations are shattered, but this is the fourth time I have watched this in 20 years –1987, the dot.com meltdown, after 9/11 and now this. Each time American capitalism came roaring back. There are lots of bank failures out there, but lots of banks are very, very strong as well. The Fed and the Treasury are flooding the zone with credit and will continue to do so. Inflation may be a problem down the road, but deflation doesn’t look like a realistic possibility.

There is also a new economy humming along powered by millions of highly connected Millennials doing business in new and very different ways. I know a number of them, and most of you do as well. They are outside of old structures and busy designing an economic future. For them, the collapse of stock prices is the greatest investment opportunity of their young lives since they can buy their first shares at these ridiculously low prices. Those of us who invest every month are in fact going to get some greatly discounted shares for a bit, and when the market recovers, please remember that.

Finally, if you haven’t yet read Walter Russell Mead’s “God and Gold: Britain, America and the Making of the Modern World,” now would be a great time to do so. If you have read it, reread it. Here is one key paragraph from Mead’s opus:

This Promethean drive to acquire all the power that can be acquired, to do everything it is possible for humanity to do, to learn what can be learned, to build what can be built, and to change what can be changed is the force that impelled the three maritime powers to their global position. Societies that grasp this dynamic and embrace it become wealthier and more powerful; those that reject it or fail to handle its challenges become weaker. Within societies something similar happens: the more dynamically oriented individuals, regions, institutions, and industries tend to gain power at the expense of those who prefer a slower and safer path. The unique hold role of the Anglo-Americans in modern times stems in part from the way in which these societies have come to believe that dynamism is their tradition: that they honor the past and acknowledge their roots by pressing on into the future.

Not many Americans are thinking about “pressing on into the future” today, but they will be next week or next month. (In fact, enough of them might so carefully consider the future to give Obama a huge shock at the polls.) A NASCAR nation loves its fast economy, but as with fast cars, there are some spectacular wrecks along the way. We are watching one right now. At its conclusion –which may have already arrived, we just can’t know– a shaken crowd will exhale, fret a bit and mourn the real damage, and then look forward to the next race. “Gentlemen, start your engines” will mark all of 2009, no matter who is president.

I wonder how many web star-ups launched this week? LawStudentCafe.com did, and probably a few thousand others. More will follow next week, and in ten thousand industries many hundreds of thousands of engineers will continue to innovate and design. Yes, the Christmas sales season will be slow, and car sales awful, but one thing is certain –Americans will be buying cars for a long long time. There are lots and lots of newly unemployed investment bankers, and most of them are enormously talented folks who will now take that talent away from banking and into the American economy at some other point. Think of the seeding that is going on in front of us.

The underlying American commitment to building and growth isn’t going anywhere, and even if Obama wins and the Democratic majorities expand, the government can only hinder not ruin the deeply rooted American desire to grow and improve. If the fanatics among our enemies think to strike at America or its allies, they will be quickly be reminded that stock prices have very little connection to the ability to project American military power. In short, the Greatest Generation did much more than win World War II. It rebuilt a country capable of absorbing very hard hits and recovering quickly with a dynamism that astonishes every time.

We saw that in 2002 and 2003, and we will see it again in 2009 and 2010.

And perhaps even in the closing months of 2008. Perhaps even in the closing weeks of this election.

God and Gold: Britain, America, and the Making of the Modern World (Vintage)

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Another Incredible ACORN Story

Friday, October 10, 2008  |  posted by Hugh Hewitt

Geraghty has the details.

ACORN stands for “Association of Community Organizations for Reform Now” and it has stood with Barack Obama for years and years. Its record this election cycle is particulary rife with allegations of fraud, but very few reports have connected Obama to ACORN, just as very few reports have connected Obama with Ayers, Khalidii, Rezko and Wright.

The panic makes it difficult for otherwise huge stories to receive attention, but this is the point where the nets have to at least provide a little cover against the inevitable post-election investigations and indictments. Expect some rear-covering segments on all of Obama’s problems in the next few days.

Krauthammer On All The Would-Be President’s Men

Friday, October 10, 2008  |  posted by Hugh Hewitt

Charles Krauthammer’s opening paragraphs:

Convicted felon Tony Rezko. Unrepentant terrorist Bill Ayers. And the race-baiting Rev. Jeremiah Wright. It is hard to think of any presidential candidate before Barack Obama sporting associations with three more execrable characters. Yet let the McCain campaign raise the issue, and the mainstream media begin fulminating about dirty campaigning tinged with racism and McCarthyite guilt by association.

But associations are important. They provide a significant insight into character. They are particularly relevant in relation to a potential president as new, unknown, opaque and self-contained as Obama. With the economy overshadowing everything, it may be too late politically to be raising this issue. But that does not make it, as conventional wisdom holds, in any way illegitimate.

Read the whole thing. Th ecolumn hits McCain for failing to raise these issuess earlier, but then returns to the significance of these associations.

The Obama-ACORN-Financial Crisis Connection

Thursday, October 9, 2008  |  posted by Hugh Hewitt

Details here.

Meanwhile Politico.com reports on Obama’s latest version of his Ayers’ ties.

In 1998, Ayers and Dohrn declared they’d bomb again. In September 2001, Ayers is photographed standing on an American flag. In November of 2007, both Ayers and Dohrn appear at the SDS reunion and denounce America again.

Rehabilitated? Is the MSM so in the bag that they won’t notice this tissue-paper thin dodge?

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