By Patrick Maines at The Hill
Perhaps the most interesting opinions these days about things economic and political come from David Stockman, the former Republican congressman from Michigan and head of the Office of Management and Budget (OMB) under President Reagan.
In part, Stockman is the most interesting because he is also the most vitriolic, no mean accomplishment since he competes, in that category, with such as Paul Krugman. Consider, for instance, the following, all but the last example from just this February:
Regarding a member of the Federal Reserve's Board of Governors: "Have you ever heard of Lael Brainard? ... In the name of a crude Keynesian economic model that is an insult to even the slow-witted, Brainard and her ilk are conducting a rogue regime of financial repression, manipulation, and unspeakable injustice that will destroy both political democracy and capitalist prosperity as we have known it."
On central bankers: "There has been an economic coup d'etat in America and most of the world. We are now ruled by about 200 central bankers, monetary apparatchiks and their minions on Wall Street and other financial centers."
On Federal Reserve Chair Janet Yellen: "This stupendously naïve old school marm [sic] still believes the received Keynesian scriptures as penned by the 1960s-era apostles James (Tobin),John (Galbraith), Paul (Samuelson) and Walter (Heller)."
Of course, vitriol by itself wouldn't make Stockman interesting enough to talk about. What does is the ideological range of his opinions. He calls the GOP the "War Party," and never misses an opportunity to vilify neoconservatives for their so-called "nation-building" generally, and encouragement of the Iraqi adventure specifically.
Indeed, Stockman is so disillusioned by the GOP, which he claims has been despoiled by crony capitalists and warmongers, that on Feb. 27 he penned a piece containing this nugget: "There is no hope for the future of capitalist prosperity and a free society at home and world peace abroad unless the Republican Party is destroyed."
Pretty strong stuff from a guy who used to work for Reagan, right? Well, not so much. In fact, Stockman has been critical of the GOP since he resigned his position at OMB in 1985. Claiming that he was concerned by the growth in the national debt, Stockman subsequently wrote a book titled "The Triumph of Politics: Why the Reagan Revolution Failed."
So the gentleman has been seen as something of an iconoclast for some time. But it's an iconoclasm that cuts across all kinds of political sensibilities. He has, for instance, become a fierce critic of liberalism's economic religion, Keynesianism, and all of its present-day acolytes. Writing in his "Contra Corner" website on Feb. 20, Stockman had this to say:
For several years now the small coterie of Keynesian academics and apparatchiks who have seized nearly absolute financial power through the Fed’s printing presses have justified the lunacy of unending ZIRP [zero interest-rate policy] and massive QE [quantitative easing] on the grounds that there is too little inflation. ... The whole consumer inflation targeting gambit, of course, is an inherently preposterous notion because there is not a scrap of evidence that 2% consumer inflation is better for rising living standards and societal wealth gains than 0.2%.
Beyond the range and vitriol in Stockman’s commentaries, another of his notable features is his willingness to stick his neck out in terms of financial and economic forecasts. He is, for instance, arguing that a worldwide recession that will decimate the stock market is imminent, and that people should therefore move immediately into purchasing puts on Exchange Traded Funds (ETFs), which move opposite to the direction of the underlying securities, and would therefore provide outsized gains if the equities markets crash.
A more specific example of his willingness to make near-term calls was his warning in January that when Amazon reported its quarterly earnings on Jan. 28, the stock would fall precipitously. As it happened, Amazon did fall the next trading day — from $635 to $587 — and continued to fall until Feb. 9, when it closed at $482. (It has since recovered to $580, on March 2.)
Of course, Stockman has been predicting a collapse of the stock market for three years, and his Amazon call predicted a fall of as much as 70 percent within eleven months. Still, few others were calling for the kind of decline that has in fact occurred at Amazon, and who knows, maybe it and the market generally will go south in a big way. In any case, the point here is not that the gentleman is right, but that his is a distinctly different voice.
Stockman is never going to be everybody's cup of tea, and his warnings of a worldwide recession and near-term collapse in the stock market may not materialize. Beyond this, his political views are now, and have been for years, over the top.
But the guy is a good read, and at a time when so much commentary is marked by political and ideological predictability, much of it swimming in a pool of political correctness, David Stockman provides a kind of difference that refreshes.