On Texas, Christmas Eve, and What Else Matters

Our holiday travels have now taken us deep into the heart of Texas, where most of the paternal side of the family now resides, and as much as we hate to be away from God’s own Kansas it’s good to be here. The weather is warm even by heart-of-Texas standards, which will no doubt encourage all the global warming alarmists, while reassuring all those social justice warriors who worry that a “white Christmas” is somehow racist, but we’re nonetheless enjoying the warmth of family on a Christmas Eve.

The drive down unlovely and casino-clogged and incongruously up-to-date I-35 was surprisingly grueling — who knew that a jaunt through relatively tiny Temple, Texas, would be even slower than the legendarily clogged Dallas-Fort Worth area or even out-of-control Austin — but for the most part we enjoyed a respite from the even more grueling news of the day. Most of the drive was spent listening to ancient family lore and the music of Ernest “Texas Troubadour” Tubb and Jim Ed Brown and Hank Snow and other mellifluously nasal old-time honky-tonkers on the folk’s newfangled Sirius radio system, and except for a brief update from the Fox News station and a quick reading of the news after our beloved aunt somehow recalled the password for the internet wi-fi that a more tech-savvy daughter set up for her we mostly ignored all the latest political and economic developments. Given what we found on those brief looks at the news, it was probably best to stick with the old-country music.

Barring something unexpectedly catastrophic, we’ll stick with Christmas carols and old-time country music and family lore today, and we urge you to do the same. There’s still good news out there, even if you have to turn off the news to hear it.

— Bud Norman

The Cloud in the Silver Lining

Federal Reserve Chairman Ben Bernanke offered an upbeat assessment of the economy on Wednesday, and of course the stock markets immediately took a dive. So convoluted is the American economic system that bad news such as the latest jobs report will prompt a stock market rally, while any talk of good news such as the Fed is now peddling will as surely cause a sell-off. Should the country somehow ever again achieve robust growth and anything close to full employment it will surely be the ruination of the economy.

Although counter-intuitive, the stock market’s recent tendencies are easily explained. After the crash of ’08 the Fed started churning out dollars at unprecedented rate, and with interest rates and bond yields being held artificially low those dollars had nowhere to but the stock markets, which have since expanded at a noticeably faster pace than the overall economy. Anything that would ordinarily be considered good economic news will tempt the Fed to take its foot off the metaphorical pedal, which makes it bad news for those invested in stocks.

Investors might find reason to keep buying if the economic news is good enough, but what Bernanke was touting on Wednesday was just good enough to be bad news. The Fed raised its forecast for economic growth to 3 to 3.5 percent in the next year, reduced its outlook for unemployment to 6.5 percent, and although Bernanke left himself ample wiggle room he made it quite clear that such statistics would justify at least a slow-down in the pace of money-printing. Those statistics aren’t good enough to justify a Dow Jones at 15,000, though, and private forecasters think they’re suspiciously rosy anyway, and with Europe in recession and China rapidly slowing and Obamacare offering massive incentives for employers to hire no one for more than 29 hours a week there is plenty of reason to suspect things are going to get worse rather than better. If a precipitous drop in the stock markets occurs, the worry that caused it could easily become self-fulfilling.

All that dollar-printing must eventually come to an end, lest people start using the things to paper their walls, and it is most unlikely that the stock markets can maintain their historic highs while the economy catches up to it, and it is altogether impossible that the government will cease its ever-increasing meddling, so considerable economic turbulence seems likely in the coming months. This should be good for stocks, though, and perhaps we should just have that this somehow makes sense.

— Bud Norman