For about 20 years, Ray Keating wrote a weekly column - a short time with the New York City Tribune, more than 11 years with Newsday, another seven years with Long Island Business News, plus another year-and-a-half with As an economist, Keating also pens an assortment of analyses each week. With the Keating Files, he decided to expand his efforts with regular commentary touching on a broad range of issues, written by himself and an assortment of talented contributors and columnists. So, here goes...

Thursday, January 28, 2016

Throwback Thursday: Nailed It on Our Long Economic Mess

by Ray Keating

I was watching CNBC early one morning this week, and a prominent Wall Street analyst was assessing the ills of our economy, declaring that no one saw how bad this was going to be. Really?

Quite frankly, the only way anyone could have misdiagnosed the poor economy of the past eight-plus years was if the actual causes of these troubles were ignored. But many so-called experts have done just that. They’ve ignored that our lengthy economic woes are rooted in public policies that have increased both costs and uncertainties for entrepreneurs, businesses and investors.

I’m no genius (as most of my family and friends will attest), but on this Throwback Thursday consider the following points I made in columns in late 2008 and early 2009, amidst the height and frenzy of the credit and economic meltdown.

Consider a September 26, 2008, Long Island Business News column in which I observed:

But before it gets etched in history that this was a case of government coming to the rescue of a market gone awry, the government’s role in helping to create this mess must be noted. Consider, for example, the following points:
• When the government set up Fannie and Freddie as public-private entities, problems were inevitable. Stockholders would reap rewards, while taxpayer got stuck with the losses. And while politicians could deny responsibility for Fannie and Freddie problems, they also could use the two mortgage giants to push their affordable housing agendas, and as a source of patronage opportunities. Not exactly a situation in which politicians have incentives to keep a close eye on things.
• The Federal Reserve ran a monetary policy that was far too easy. This kept interest rates too low, created a bias in favor of debt and fueled over-leveraging.
• After the Enron mess, new accounting rules imposed, with approval from the Securities and Exchange Commission, mark-to-market asset valuation. In the current housing debacle, financial institutions have been forced to revalue assets, even when the value of those assets may not be currently known, when price declines are temporary for assets that could be held to maturity, and/or when a mortgage, for example, is not in default. The write-downs require larger reserves, and hence financial firms get sucked down.
So, maybe it’s not just about greedy people on Wall Street, as so many politicians keep chattering on about these days. Perhaps it’s also about politicians and their appointees who fail to fully grasp the consequences of their policies.
Unfortunately, word out of the halls of Congress is that more government regulation is on its way. That’s typical. Troubles bubble up in the market, and no matter what the actual causes, politicians decide that something, anything, must be done – whether it makes economic sense or not…
Even if some folks on Wall Street have temporarily given up on sound economics, that doesn’t mean the rest of us have to go along. Jeez, does anyone honestly think more government will fix things?

In a November 8, 2008, column, I offered the following outlook (bold added):

What’s ahead? Well, the current recession only promises to deepen in the current quarter. And given the many problems on the credit, confidence and public policy fronts, it’s unfortunately too easy to envision a longer-than-usual recession followed by a very sluggish recovery.
In fact, the economy is unlikely to get back on a robust growth path until entrepreneurs and investors see clearly that higher taxes, trade protectionism, increased regulation and bigger government in general are off the policy table, replaced by clear commitments to tax and regulatory relief, free trade and restraint in the size and reach of government. When the nation might return to that kind of agenda, however, is anyone’s guess.

And on February 3, 2009, I wrote:

More federal government spending is being offered as the right tonic for the economy. On top of already staggering levels of federal government outlays, the plan is for politicians to throw around another $600-billion-plus to jumpstart the U.S. economy.
The Congressional Budget Office released an analysis of this “American Recovery and Reinvestment Act” on Jan. 26. It turns out that only $92 billion of the spending would occur during the current fiscal year. Another $225 billion would wait for fiscal year 2010, and $159 billion for 2011. So much for the idea that quick government spending on “shovel ready” projects is the path to reviving our economy.
But even if most of this government spending were doled out over the next few months, it would not be a positive for the economy. Instead, it would be a negative in both the short run and over the longer haul.
Shifting resources out of the private sector in order expand the size of government is not the road to economic revitalization. Instead, it is the path to economic stagnation and relative decline.

Nailed it! All of it!

Okay, am I guilty of patting myself on the back? Perhaps. But if you understand free enterprise, markets, and the impact of public policy, this should have been quite obvious. And yes, we continue to pay the price today, and will for the foreseeable future without a dramatic change in policy direction.


Mr. Keating is an economist and novelist who writes on a wide range of topics. His Pastor Stephen Grant novels have received considerable acclaim, including The River: A Pastor Stephen Grant Novel being a finalist for KFUO radio’s Book of the Year 2014, and Murderer’s Row: A Pastor Stephen Grant Novel nominated for Book of the Year 2015.

The Pastor Stephen Grant Novels are available at Amazon…

Wednesday, January 27, 2016

Republicans Should Be Saying, “Run, Mike, Run!”

by Ray Keating

The 2016 election should be a big moment for Republicans. After all, a divisive, failed Democratic presidency is coming to an end, and either an ethically-challenged, lefty candidate with lots of baggage or a crackpot socialist will be the Democratic candidate for the White House.

But things have not gone the Republicans way, so far.

A strong field of GOP candidates was transformed into a circus when a narcissistic, flip-flopping, populist, former-Democrat reality TV star jumped into the race for the party’s presidential nomination. And according to poll after poll, a significant chunk of GOP voters have abandoned whatever conservative principles they might have had and signed on with Trump. Why? Because … well … they’re pissed off and Trump is a recognizable personality who also seems mad and … well … what the hell! As a result, the media has focused on the Donald Trump dramedy, rather than on the many problems with Hillary Clinton and Bernie Sanders.

But it’s (hopefully) a long road to either party’s convention, and (hopefully) much can and will happen.

The most interesting developments in recent days have been reports that Michael Bloomberg, business billionaire and former New York City mayor, is thinking about mounting an independent run for the White House. Republicans should be chanting, “Run, Mike, run!”

An independent Bloomberg run would be a big plus for Republicans. But how can that be? After all, as Gerald F. Seib wrote in The Wall Street Journal this week, “The hole in the moderate middle is wide enough that former New York City Mayor Michael Bloomberg has begun pondering whether the conditions are right for a presidential run as an independent, centrist candidate…”

“Centrist candidate”? Only a liberal in the media could call Michael Bloomberg a centrist. As evidenced from his time as mayor, Bloomberg is pro-abortion, anti-Second Amendment, pro-tax hikes, a big government spender, and regulator extraordinaire as illustrated by his desire to dictate the size of sodas.

Most people, I think, can see that Michael Bloomberg is no centrist. In addition, Bloomberg has a bit of Trump in him in terms of being a party switcher, as Bloomberg was a Democrat, ran for mayor as a Republican, and then for re-election as an independent.

A Bloomberg run for president would clearly split the Democrat vote, and help pave the way for a Republican win. So, here’s a possible plus for Republicans this year.

But then again, this all should be quite obvious, so it’s unlikely that Bloomberg will actually jump in the race. He has dabbled with such things before.

However, if we want to play the game-changing independent run, why not go all in? Bloomberg runs; Hillary gets the Democrat nod; Republicans come to their senses and turn away from Trump to a sane, true conservative candidate, such as Marco Rubio; and Trump throws a tantrum and also runs as an independent. A wild four-way race. Would that officially make the U.S. a political basket case?


Mr. Keating is an economist and novelist who writes on a wide range of topics. His Pastor Stephen Grant novels have received considerable acclaim, including The River: A Pastor Stephen Grant Novel being a finalist for KFUO radio’s Book of the Year 2014, and Murderer’s Row: A Pastor Stephen Grant Novel nominated for Book of the Year 2015.

The Pastor Stephen Grant Novels are available at Amazon…

Monday, January 25, 2016

Trump and the 7 “C’s” of Voting as a Conservative Republican

by Ray Keating

The caucus/primary season is upon us. The Iowa caucuses arrive on February 1, and the New Hampshire primary follows on February 9.

The challenges for conservative Republican voters are considerable given that this is the year, apparently, of the angry voter. And Donald Trump – reality television star, casino operator, real estate mogul, political flip-flopper, and shameless peddler of populism – has tapped into some of this anger. He also leads in polls of Republican voters.

Before casting a ballot, however, it’s time for any conservative to take a deep breath, or a few deep breaths, and reflect on what it means to vote as a conservative. Perhaps the following 7 “C’s” of casting a conservative vote might help.

1. Conservative. Obviously, the first and most important factor is voting for an actual conservative. That is, a candidate who understands and subscribes to Judeo-Christian values, free enterprise, free markets, and a strong national defense. Among the most important resulting policy positions are low taxes, smaller government, a light regulatory touch, strength in foreign policy and national security, free trade, and a social policy agenda led by being pro-life and pro-traditional marriage.

2. Character. Conservatives have said time and again over the years that character matters, in particular when talking about someone being president. Can this person be trusted by voters, by other elected officials, and by our allies to occupy the most powerful office on the planet? What does a candidate’s history tell us about character?

3. Consistency. Part of the conservative and character questions is consistency. Has the candidate been consistent in the views held, or flip-flopped for political convenience? Consistency is vital over convenience.

4. Competence. Quite simply, does this candidate have the competence, such as the judgment and abilities, to be a quality candidate and president? The voter needs to assess the candidate’s experience and past performance. Is there something more there than just being, for example, a community organizer?

5. Confidence. There actually are two questions when it comes to confidence. First, does the candidate possess confidence in his or her own abilities to take on this job? Second, how confident is the voter in each candidate’s commitment to conservatism, character, and competence?

6. Constructive. Particularly in the rough and tumble of a presidential campaign, the issue of how constructive a candidate might be in office often gets lost. But being constructive, that is, having the wherewithal to be useful and to build, is vital for success in the White House and for the principles, ideas and policies that conservatives deem vital for citizens and our nation. Can this candidate be constructive in bringing along voters and members of Congress of both parties?

7. Cheerfulness. Really? Well, the greatest conservative president of the 20th century was Ronald Reagan. And Reagan was no sourpuss, grim conservative. He was a cheerful political warrior. Too often, conservatives come across as anything but cheerful. That’s unfortunate and wrongheaded. It’s the cheerful conservative who will grow the conservative movement, and bring about much-needed remedies and change that the United States needs today.

In the end, as any conservative should recognize, the perfect conservative candidate does not exist, especially since conservatives themselves have excelled at squabbling over issues in recent years. But among this year’s candidates, at least one point stands out: Donald Trump fails miserably on five of the 7 “C’s,” namely, conservative, character, consistency, competence, and constructive. Trump is no conservative, and does not deserve the vote of any conservative.

So, take a deep breath, and channel justified anger into thoughtful, conservative votes.


Mr. Keating is an economist and novelist who writes on a wide range of topics. His Pastor Stephen Grant novels have received considerable acclaim, including The River: A Pastor Stephen Grant Novel being a finalist for KFUO radio’s Book of the Year 2014, and Murderer’s Row: A Pastor Stephen Grant Novel nominated for Book of the Year 2015.

The Pastor Stephen Grant Novels are available at Amazon…