And so here we are at the one year anniversary of Larry Kudlow's post at NRO, proclaiming "the greatest global stock market boom in history...And it's not over yet."
I've harped on Kudlow's prediction since last summer, but not because he called the market wrong -- everyone who makes pronouncements on the stock market does so sometimes, although his miss was one for the ages -- or because he bet wrong on subprime contagion.
No, Kudlow's piece deserves special note for two reasons. One is the depth of his misunderstanding or misstatement of what was actually happening in the financial world, revealed by his claim that global markets were being powered in part by "the robust free exchange of information." As we've seen over the last year, critical information was not freely exchanged. Financial markets have been dangerously opaque, with the bankers themselves not always knowing or understanding their own portfolios. This was a critical error by Kudlow, a guy who is all over the media as an expert on Wall Street.
But the really unforgivable thing is the politicized tone of the piece, which is the wellspring from which the errors flow. Kudlow isn't really doing financial analysis, he's a cheerleader with a political agenda ("Markets are giving Bush’s steadfastness in the battle of Iraq and the world terror war a big thumbs up.") When you start letting your political views dictate your financial advice, the people who listen to you are going to get burned.
We've had a terrible year. Obvious problems remain, along with whatever else lurks beneath the waterline. Wall Street showed some optimism about the future yesterday, but we've still got a long way to go.
A lot of this boils down to arithmetic. Pay more attention to the numbers and less to ideologues on teevee or the web who try to tell you different.