Eschaton

Excellent column by Thomas Frank in the LA Times

The Rah-Rah Boys

There are no mea culpas from the gurus who prophesied an unending bull market. They're still
cruising from one posh gig to the next.

By THOMAS FRANK
Thomas Frank is the editor of the Baffler magazine and author of "One Market Under God."

August 18 2002

CHICAGO -- Many of the '90s icons have passed from the scene: The swashbuckling dot-com entrepreneurs have moved back in with mom, the rule-breaking CEOs are being hauled before Congress for tongue-lashings, the day-trading seniors who were supposed to "beat the pros" are thanking God that Social Security still exists. But one group remains untouched: the public intellectuals of the bull market. The writers of Dow-worshipping books and commentators who handed down daring pronunciamentos from the silicon heights are still cruising from one posh gig to the next.

If you tuned in to CNBC at any point during the long, slow meltdown of the last couple of months, you probably saw the news reader turn to a representative of Forbes magazine, formerly one of the world's most enthusiastic pushers of bull market optimism, now cast as an expert on a market in retreat. If you kept watching for a few hours, you probably enjoyed the surreal sight of James Cramer, one of the late boom's most prolific publicists, trying to feign outrage at the same forces he once cheered. And you undoubtedly gaped in disbelief when you recognized Cramer's co-host as Larry Kudlow, the hyperexuberant economist who once proclaimed from the op-ed page of the Wall Street Journal that the free-market policies of the Reagan/Clinton years were so profoundly correct that they would one day cause the Dow Jones industrial average to hit 50,000.

The Journal itself, far from showing contrition for its New Economy excesses of a few years back, recently ran a defense of the nation's beleaguered stock analysts by none other than James Glassman, coauthor of the 1999 book "Dow 36,000." In his article, Glassman argued that analysts from the big Wall Street firms are being unfairly singled out for blame by killjoys like the New York attorney general. "Every bear market requires a scapegoat," Glassman wrote, "and this time the chosen victims are stock analysts." Glassman is certainly right about the stock analysts. However guilty they are for puffing the bubble, analysts alone shouldn't be forced to bear the blame for the subsequent catastrophe. That burden should be shared--by, for example, Glassman himself, the editors of the Wall Street Journal op-ed page, Forbes magazine, Cramer and Kudlow.

[...]
The prominence of these people and others like them were, to a great degree, unrelated to their skills as economic prognosticators. Their trade was politics, and at it they were wildly successful. Americans were indeed persuaded to roll back the regulatory state in the 1990s, to give the corporations whatever they wanted, to slash welfare, to smash the labor unions and even to (sort of) elect the most pro-corporate administration since Herbert Hoover's, headed by a man who promised to privatize Social Security.