Tuesday, August 24, 2010

So Close, And Yet, So Far: Stephen Roach Doesn't Get Monetary Economics

Below is an interview from CNBC's Squawk Box today with Morgan Stanley Asia's Stephen Roach, discussing the "Fed's Next Move":

What can be said of Mr. Roach and his "minority view" on the Fed and monetary economics? Simply put-- he doesn't get either one.

As our own Robert Wenzel has been pointing out repeatedly recently, various members of the Fed member banks seem to be experiencing rising alarm about Ben "Money Crank" Bernanke and his Wonderful Flying Market Machine. And Roach is correct to point out that their alarm is appropriate given that Bernanke has essentially hit the monetary policy "replay" button and seems bent on re-releasing (straight to DVD, no doubt) a digitally-remastered, SFX Director's Cut edition of the 2000 Tech Bubble crash-reinflation. Further, Roach is correct to point out that it was the extended periods of exceptionally easy money that fueled the ensuing, recently-deceased Housing and Credit Bubbles.

But that's as far down the tracks as Conductor Roach is able to take the Sound Logic Express before quickly and suddenly derailing the rush hour commuter and somehow rolling it right off a nearby cliff, where, after falling nearly a mile straight down, he manages to land it directly inside the cooling tower of a nuclear reactor, setting off a chain reaction that leads to an explosion which instantly incinerates every passenger on board and is so spectacular and magnificent to watch that the body of Harry Truman sheds a tear of appreciative envy.

I mean really, lobbing the rhetorical "Is this the right way to run a central bank?" and then proceeding to blow long and hard about it for the next eleven minutes and twenty seconds is pretty damn abusive of logic when the whole enterprise really begs the question, "Is there any 'right' way to run a central bank?" or even "Can any good, in an economic sense, come from the existence of a central bank, versus a world without one?" Now there's a question worth discussing on air for twelve and a half minutes.

However, that's my world, a world which will likely remain a fantasy for as long as I and most of humanity live, so in the meantime I'll try to be of service to the good, non-executive Yale professor in another way, by serving as the emergency first responder to his aforementioned logical train wreck disaster.

So, in response to his own question, Roach posits that the Fed should be more proactive rather than reactive-- rather than responding, haphazardly, to the crises of yesterday (that it created, Roach seems to grasp), the Fed should be thinking "strategically" about the crises of tomorrow and taking steps to ward them off. A great idea, Mr. Roach, but wouldn't it be much simpler to just take the Fed out of the equation entirely? There is no sense in saying, the Fed makes messes, instead of making messes, the Fed should be thinking about how to clean up the messes it will inevitably make.

Roach, like many other pseudo-critics of the Fed a la mode, then suggests that "financial stability" be added to the Fed's congressional mandates of "price stability" and "unemployment". There's a teensy little problem with that: as the Fed's own Fed Chairman Game demonstrates, price stability and unemployment suppression are often mutually exclusive goals and unfortunately, as this crisis as well as every one before it have shown, so, too, is financial stability.

The root of the problem, again, is the Fed itself. Facing a business cycle downturn, the Fed can lower rates, fuelling a new boom. In the short term, the Fed gains for itself financial stability and low unemployment -- I am not even going to try to keep putting the skeptic quotes around these terms, please, read generously and know that I don't approve of these terms, their common definitions and the idea that the Fed is able to successfully provide even one -- but it trades it for future price instability and future financial instability. Then, in response, the Fed tightens, trading price instability and financial instability, for future high unemployment and, get this, further financial instability. The cycle goes on and on and on until it reaches the inevitable point where it can't go on any longer and we witness Mises' crack-up boom, the end of which brings with it all three of the dreaded Instabilities simultaneously.

(Some observers would point out that we seem to be in that period now, and even Mr. Roach himself hints that this is where things are going via grandiose double-dips, but most reasonable people agree that those tin-foil hat-wearers are total bummers and zero fun to have at dinner parties and therefore their opinions and observations, can, will and should be safely ignored.)

So, back to Roach, it doesn't do any good to have Congress give the Fed a formal mandate to ensure financial stability. Keep in mind, the Fed has demonstrated, since December 23rd, 1913, that it royally sucks at carrying out its first two mandates. When you see a half-wit 8-year-old trying to learn how to juggle with two balls and he just keeps dropping them over and over, sometimes into your bowl of Cheerios as you read the paper, sometimes onto the head of the family dog (sending it yipping all around the house, again while you're trying to read the paper), is that the point at which you'd go find a bowling ball and toss that into the mix and see how the little tyke does with his juggling trick?

Testing, testing, 1...2...3. Is anyone out there? Stephen Roach, can you hear me? Is this thing on?

Not to mention the whole Hayekian pretense of knowledge thing, whereby that kid is never going to juggle one ball nor three. Guys, they don't pay me enough here to give you the full, Yale-quality lecture on this topic so you're going to have to do a little homework yourself and click the link I made for you (think of my link building as a little pre-lecture note handout freebie) but here's the gist of it for those people who are more interested in drinking beer and getting laid and less interested in passing my blog-class final: it doesn't matter how many ubermensch Ben Bernanke types the Fed employs, they will never be able to collect, measure and extrapolate "proper" policy from all the data about all the preferences and possible courses of action available to all the individuals in the US economy, therefore their efforts are doomed to failure from the outset and their policy pronouncements, far from being scientific and objective, will instead be permanently reduced to arbitrary, hope-and-pray guesstimation-based spaghetti-tossing.

In other words, they'll just try stuff and see what sticks.

Oh, and never mind the fact that every time the Fed intervenes, all the individuals in the economy will change their preferences and courses of action in response to this new set of incentives, meaning whatever data and patterns the Fed managed to collect beforehand will be instantly depreciated to zero value because they will be evidence of an economic structure that has vanished.

None of this seems to be of any significance to Roach, however. He's too busy talking about the need for Fed transparency (the first instance of which would be a precedent-setter, looking at the historical record), explanation of the Fed's exit strategy (doesn't have one, for all the reasons mentioned above) and the need to "normalize" interest rates. Yet again, this begs the question, "What is a 'normal' interest rate?"

Everything the Fed does is, ultimately, arbitrary. This means that so long as the Fed exists and is in control of interest rates, "normal" interest rates will reflect arbitrary Fed decision-making for whatever period of time the Fed arbitrarily decides upon. For one period of time, normal could be 10%, for another (extended!) period of time, they could be 1%, as we've seen recently. Look at ZIRP in Japan, which has been going on for decades-- has it been long enough for those interest rates to be considered "normalized"?

People like Roach find themselves floundering around in a confused manner in these debates, constantly contradicting themselves, because they never start with defining their terms. Obviously, that's because defining one's terms doesn't fit in a twelve and a half minute CNBC news "clip", nor the confined space of an Ivy League professor and Wall Street under-boss' head. Properly defined, "normal" interest rates would be whatever an actual, non-central bank regulated free money market would say they are, and there's a lot higher probability that under such a regime they'd be entirely more "stable" and predictable, as well.

More question begging from Roach's various collected Fed inanities: what on Earth/Planet ZIRP does Roach think the Fed is waiting for at this point? Does Roach think the Fed, mandate or not -- remember, Bernanke is an adherent of the "beg forgiveness, rather than ask for permission" school of policy-implementation -- is not trying, from it's point of view anyhow, to enact financial stability? Does Roach think that Bernanke has some bag of super-tools or a binder full of Madden-style exit plays (down, up, X, right, A, left, R1 for the Hail Mary) that he's keeping secreted away, refusing to tell anyone about them lest the market get too confident that he actually has this one under control and too many people get their jobs back?

It truly defies all imagination how Roach's pontificating could be anything but vacuous, ineffectual whining. One thing's for sure, the man really learned his stuff when he did his tour of duty at the Fed. Maybe he's practicing for a second run at the title?

Roach says Dodd-Frank was a "necessary" reframing of regulatory issues. EPJ's Bob English spits at the idea. As he's wont to do, though, Roach again swings and just barely misses. He says that as long as the monetary policy situation ain't fixed, the regulatory bill patch jobs aren't going to be enough to avoid another blow-out down the road. Problem is, ol' mechanic Roach doesn't seem to notice the engine block is cracked as he's tinkering with the timing valves.

So, in the end, what is this monumentally and eminently respectable doofus left with?

Well, his heart is certainly in the right place, and on this count I can't badger the man but rather I must applaud him: Roach doesn't trust the Fed to do the right thing. He knows that, given the chance, the Fed will start screwing the pooch again just as soon as the head of the house turns back to his morning newspaper.

But beyond that, he just can't seem to open his mouth without making a complete fool of hisself. According to Roach, the Fed is supposed to get a new homework assignment from the Congress (proven illustrious and enlightened economic champions, one and all, couldn't think of a better group of people to assign this particular task assignment task to) and then write a book report on "The Tale Of The Financial Instability" every six months. Everyone at the Fed will have another chance to be busy pumping out mindless research and this process will ensure that nothing will go wrong any more, like in Europe. See, Roach wants a system like the Bank of England's where they... oh, crap, wait, they ended up nationalizing their banks, too.

And as our helpful CNBC bobble-head news anchor is quick to point out, Roach's proposed solution is "very different" from what other critics want. Other critics are talking about removing responsibilities from the Fed and putting them inside new federal agencies. Roach is a member of the Second Chance club, he wants to add new responsibilities.

One group wants the government to regulate the financial markets and the economy. Another group wants the government to regulate the financial markets and the economy. Nobody in their right mind wants the financial markets and the economy to regulate themselves.

See, this is America, and in America, we have choices. God bless this wonderful democracy of ours, and god bless great patriots like MoStan's Stephen Roach.

Monday, August 23, 2010

More From John Lounsbury On The Treasury Meetings

SeekingAlpha.com contributor John Lounsbury has put up another post about his meeting with Treasury a few weeks ago. This time, he lists the attendees of a second, Wednesday meeting for "paid" journalists (versus free-lance or non-professionally compensated bloggers) that occurred that same week, as well as links to some of the reviews of the session by his fellow attendees. The proportion of boot-lickers in attendance appears to be growing with each and every disclosure.

It really is amazing reading some of the reactions of the attendees. They seem truly perplexed at the inability of the Treasury representatives to articulate how they socialistically calculate. You get the feeling that these people honestly believe that this is an entirely new set of interventions, with no historical precedent anywhere in the world, that is totally disconnected from all existing economic theory and thus deserves to be considered and judged on its own individual merits.

In the minds of these people, intervention is a game of constant originality-- it's so challenging to them to keep trying to wrap their heads around a previous intervention when the Treasury continues to come up with "new" ones seemingly every week. These people seem to have grossly overestimated their own intellectual capabilities and value as gatekeepers of information. This, of course, is one of the much vaunted benefits of the Internet and its democracy of information.

Not surprisingly, just as democratic political systems tend to cater to and be ruled by the Lowest Common Denominator, so, too, do democratic intellectual systems.

Watching this all happen is like watching adolescents sparring with cripples and then being told by the promoter that you're witnessing an historic heavyweight title match take place.

Thursday, August 19, 2010

Bill Fleckenstein Predicts An Era Of Desperate Accounting Shenanigans

Eric King has a great, no-nonsense interview with investing sensei Bill Fleckenstein up at King World News.

They cover a decent amount of ground in 14 minutes. Fleckenstein says that he doesn't believe you can make a lot of money in other stocks if you can't make money in large, diversified multinational companies like Microsoft and Verizon. In other words, if you can't make money with a great company, how can you do it with a marginal one? Fleckenstein then channels Benjamin Graham for a bit and says to watch out for accounting shenanigans from these marginal firms that are desperate to pull down the numbers and please analysts in the short term for the benefit of their stocks.

Building on that point, Fleckenstein then begins to channel Zen Buddhism, asking, "So what if a company misses its EPS estimates by a penny? What does that matter?" The market punishes companies for missing statistics that are, ultimately, arbitrary projections and ignores the quality management and quality. earnings-producing assets underneath. Again, giving a nod to Graham, the flipside to this observation is that a company that misses its earnings estimate marginally, resulting in a big disappointment for the market, could potentially be priced afterward in such a way as to make it an appealing value again, enabling the savvy investor an entry-point into a quality name.

I enjoy Fleckenstein's interviews, especially with Eric King, because the guy just shoots straight. He discusses simple investing concepts and ideas in a way that almost anyone can grasp and almost no one can argue with. He always can be counted on for a great observation or two per interview. Here's one of my favorite quotes from a previous interview he did with Eric King:
So much in the investment business is about marketing. I see people with horrendous strategies and horrible numbers and they're still running zillions of dollars! I mean, how can anyone have any money at all with someone who was loaded with financial stocks in 2008? If they owned financial stocks they basically have a neon sign on their forehead that says, 'I DON'T GET IT! I don't understand the financial crisis.' Or housing stocks or anything like that. If you didn't understand the biggest bubble in the history of the world, why should you be allowed to run money?

The Humpty-Dumpty Housing Market And All The Treasury's Yes-Men

Did the Treasury invite anyone who wasn't a yes-man to their recent, off-the-calendar meeting o' the blogger minds? It looks like the closest they came to doing so was invited guest John Lounsbury, a PhD/CFP with approximately 47,000 followers on SeekingAlpha.com and a bit of a wet noodle when it comes to pushing the Treasury department around.

In response to Wenzel's inquiry ("Who the hell did Treasury invite into this room?"), Mr. Lounsbury has been kind enough to provide us with the answer:
I was privileged to attend a meeting at the Treasury Department in Washington on Monday afternoon, August 16. The two hour plus meeting was hosted by Senior Treasury Officials. There were three discussion leaders:
  • Michael Barr, Assistant Secretary for Financial Institutions, led the first 45 minutes;
  • Matthew Kabaker, Deputy Assistant Secretary for Capital Markets, next 45 minutes;
  • Secretary Timothy Geithner led the final 45 minutes of discussion, which actually went overtime from the scheduled 30 minutes.
Other senior officials present:
  • Mary John Miller, Assistant Secretary for Financial Markets;
  • Jake Siewart, Counselor to the Secretary;
  • Lewis Alexander, Counselor to the Secretary.
There were seven guests. In addition to yours truly, they were (alphabetical order):
  • Tyler Cowen, Holbert C. Harris Professor of Economics at George Mason Univ. (Vita) and a contributor to The New York Times and Slate, as well as co-author of Marginal Revolution blog.
  • Philip Davis, a top ranked Seeking Alpha contributor and publisher of Phil’s Stock World.
  • Michael Konczal, Roosevelt Institute Fellow, Rortybomb blog author and Seeking Alpha contributor.
  • Yves Smith, who publishes the widely followed Naked Capitalism blog.
  • Alex Tabarrok, Bartley J. Madden Professor of Economics at George Mason Univ. (Vita) and co-author of Marginal Revolution blog.
  • Steve Waldman, Interfluidity blog author and Seeking Alpha contributor.
I don't read or have familiarity with all of them but definitely put Cowen, Tabarrok and Smith in the "bootlicker/enabler" camp, as I've detailed myself here and here.

Today, Lounsbury penned a follow-up post to the article linked to above in which he shared "Further Thoughts on My Treasury Meeting", in which he covered a topic that he apparently overlooked on the first pass, Treasury's policy concerning the housing market (doh!):
Treasury officials several times emphasized that they recognize there are still many more potential foreclosures to come. I conclude that they are not delusional about the magnitude of the remaining tenure of the housing bubble and its aftermath. I took the occasion to try to explore Treasury’s thinking. One thing Treasury folks mentioned was a responsibility to support efforts to ensure that citizens can get adequate housing. I found that very curious but let it pass because I had a larger objective, which I was able to get to shortly thereafter. But, before getting there, let me just say that I think a more appropriate statement would have been that policy should not interfere with citizens’ ability to get satisfactory housing rather than support those activities. Semantics? Perhaps. But, to me the distinction is important. [emphasis in the original]
It's funny that Lounsbury assumes the best and posits the idea that Treasury simply made a semantic error in stating that they feel they are responsible for actively ensuring citizens have access to "adequate" housing, rather than making sure they're passively out of the way of individual's allocating those resources on their own.

While I am well aware that politicians, government bureaucrats and other hucksters trying to serve the Greater Good with OPM are wont to beat the living hell out of their official language every now and then, this is not an example of calculated carelessness with language but rather precise, explicit communication of intent through clear, frank language. You've got to be a card-carrying member of "Mankiw's Club For People Who Are Not Interested In Jumping To Extremes Or Questioning Anyone's Motives Or Saying Anything That Might Possibly Be Construed As Anything Other Than The Most Polite, Thoughtful Constructive Criticism" to miss that and instead assume that Treasury just made a little English error.

Lounsbury then makes a startling discovery... that Treasury is actively engaged in a policy motivated by Free Lunch-economics:
The important point that we eventually reached involved the underlying strategy of HAMP and other foreclosure prevention programs implemented by the Federal government. The Treasury statements indicate they clearly had an objective of spreading the time line for foreclosure over a longer time frame than would have otherwise occurred. I offered a paraphrased summary statement to find if I had understood policy correctly. There is no transcript but it I offered something like this:
Policy was directed at deferring what might have been 5 million (an arbitrary number for discussion purposes) foreclosure completions in 12-18 months to 5 million foreclosures over 36 or 42 or 48 or 54 months. This was done to lessen the economic shock of massive action. Do I have the essence of the policy?
The response was something like: and also avoid some foreclosures that would otherwise have occurred.

My reply:
Then add to my previous statement that policy possibly reduces the number of foreclosures ultimately experienced by 5 or 10%, if successful. In other words, 5 million foreclosures might be reduced to 4.5 million or 10 million foreclosures might be reduced to 9 million, if the foreclosure prevention programs achieved a high level of success.
I think there was affirmative response, but I admit there was not an aha! moment. At least I am confident that my summary was not contradicted, so I will continue to feel I understand policy.
There are costs involved in any policy decision. As misguided as it is, however, the idea that the foreclosure crisis could be spread over a longer period of time to reduce the "sudden impact" shock of it is decidedly less insane than the idea that foreclosures that would happen could be transformed into foreclosures that won't without any real repercussions. In other words, it's one thing to say, "Well, we're going to have 5 million foreclosures no matter what, but maybe we can effect whether they happen tomorrow or over the next few months" (this policy can "succeed" but at what cost?) versus "Well, it looks like we're going to have 5 million foreclosures, but with the right program in place we can actually reduce that number to 4.5 million!" (this policy can "succeed" today but will ultimately fail tomorrow, and again, there is an enormous unseen cost involved).

While you have to give a round of applause to a guy who, confronted by something that makes absolutely no sense when he first hears it -- Treasury's policy on actively supporting the housing market -- nonetheless continues whistling past the graveyard, smiling all the while, it would be unfair to call Lounsbury a total dope. He got the important parts right from his Afternoon At The Treasury-- the policy is all about kicking the can down the road and providing a taxpayer-financed "carry trade" for bank earnings:
The housing discussion crystallized again for me the overall policy direction that started with the previous administration and has continued with the current one. I have joined many others in using the term “kick the can down the road”. That is in fact the formal policy. It is nowhere written in bright lights, but that is the fundamental basis of policy.

With housing, the policy has been to diffuse a foreclosure problem over a longer time frame to reduce economic shock. With finance, the policy has been to create a “workout” time line for large banks to “earn” their way out of balance sheet problems.

The problem with this approach is, of course, that the Federal deficit basically funds the “earnings” of the banks. The FED provides new money that the banks can borrow at near 0% and the banks then buy Treasuries that pay higher interest rates. The “earnings” that the banks get from this “carry trade” process is achieved by the further indebtedness of the citizenry through the increased national debt.

This is not a growth policy. Treasury guys stated that the long term potential for the economy might be near 2.5% real growth, but that we are experiencing (going to experience?) a post stimulus slow down. Treasury does not appear to be delusional about the sluggish growth prospects for the economy. The question of a recessionary double dip was not broached, but I don’t think any opportunity was lost – Treasury would not have ventured into that realm had we attempted it, in my opinion.
Which is why the Treasury did their level best to only invite Yes-Men; no need to ever suffer the awkward silence that would ensue should someone have actually thrown a fastball right into the preening, show-off, jacked up on steroids hitter's head.

Lessons From Soros Acolyte Stanley Druckenmiller

User "HistorySquared" at SeekingAlpha.com has produced a short piece on the recently departed Stanley Druckenmiller, based off of an interview in Jack Schwager's The New Market Wizards. Here's a taste:
it was as an analyst where he honed his stock picking skills, which involved a very thorough written analysis that was then challenged by a stock committee. Drukenmiller learned that it's more important to identify the business factors that correlate and lead to stock movement, as opposed to a simple fundamental analysis. Frankly "even today many analysts still don't know what makes their particular stocks go up and down. " In one sector it could be earnings, another comp sales, or such as in chemicals, it could be capacity.

For example, "the ideal time to buy chemical stocks is after a lot of capacity has left the industry and there's a catalyst that you believe will trigger an increase in demand. Conversely the ideal time to sell is when there are lots of announcements for new plants, not when earnings turn down. The reason for this is behavioral pattern is that expansion plans mean that earnings will go down in tow to three years and the stock market tends to anticipate such developments. "

Traditional technical analysis and chart reading helped in timing his macro bets along with overall market valuations for context and size of potential moves. This led Drukenmiller to begin shorting in June 1987, citing a dividend yield 2.6% and a record high price to book value.
Nothing revolutionary, but still interesting from the perspective of "How'd he do it?"

Tuesday, August 3, 2010

Ted Nugent Places A Stranglehold On Obama Supporters

When he's not busy sardonically defending the 2nd Amendment...

...Ted Nugent is laying it on thick on Obama and all the short-sided, "criminally negligent" Americans who helped vote him into office in editorial columns at The Washington Times:
Barack Hussein Obama did not sneak into power. An army of clueless, disconnected, ignorant Americans invited him to bring his Marxist, glaringly anti-American jihad into our lives. This president's overtly destructive, clear-and-present-danger agenda is surpassed in transparency only by his ultra-leftist public voting record and overall lifetime conduct of consorting with the enemy as a child and student of Marxism, socialist and racist community organizer, congregant of the blatant America-hating black-theology- and social-justice-spewing Rev. Jeremiah Wright and close personal friend of convicted communist terrorists like Bill Ayers, and by his unflinching appointment of an array of communist czars, including Van Jones, Cass Sunstein, Anita Dunne, et al. So let me get this straight: You claim your intentions were noble because you simply wanted to get your child a puppy but somehow didn't notice that it was foaming at the mouth, and now you're shocked that your child has rabies? I think not. That is not a mistake. It is negligence -- dangerous, life threatening and, I am convinced, downright criminal negligence.

And the price for such negligence is catastrophic, don't you know.

But it gets worse. For, you see, the blame doesn't fall just on the obvious stupidity of our friends and families who voted for this corrupt, death-wish government in whose stranglehold we find ourselves. Ultimately, it is our fault. It is the failure of those of us who know better but have failed miserably to educate our own. Living our lives with a captive audience of family, friends, co-workers, socialites, fellow worshippers at church and other parents at school -- everyone in our everyday walks of life -- far too many of us have allowed uneducated, history-devoid, denial-riddled, fantasy-driven, anti-gun and anti-hunting, anti-capitalism general ignoramuses to remain so and run amok, when by all thoughtful considerations, it was our duty to educate and upgrade everyone in our lives to truth, logic and the American way.
Obama is pretty bad, but according to Nugent, we have met the enemy, and he is us.

Monday, August 2, 2010

Secret Bailout Exposed: FedEx Express Attacks UPS

It looks like recent regulation passed by Congress has allowed for a backdoor bailout of "Big Brown", the unionized parcel carrier UPS. "Activists" aligned with FedEx Express have counter-attacked with a new website, www.brownbailout.com:
What is this all about?
  • trying to keep up with the competition in today’s need-it-now, around-the-world, around-the-clock, just-in-time economy . . .
  • wanting to return to the days when it operated as an unchallenged monopoly and raised prices whenever it wanted . . .
  • now using its political muscle to write its own “Big Brown” Government bailout . . .
  • to force the world’s most efficient airline to operate under trucking rules that have never applied to airlines . . .
  • at the expense of those who depend on America’s next-day commerce system for essential medicines, critical parts and important shipments.
Using their clout as the “biggest giver to U.S. lawmakers,” UPS hopes to slip this bailout in under the radar.

UPS lobbyists have buried a short 230-word legislative bailout deep inside the FAA Reauthorization Act of 2009 currently before Congress. It’s worth billions to “Big Brown” at the expense of today’s American economy that thrives on next-day commerce, competitive shipping options and ready access to markets around the world.
This is an exciting new front in the war on special interest lobbying as first launched by Frederic Bastiat in 1849 with The Law:
Oh, sublime writers! Please remember sometimes that this clay, this sand, and this manure which you so arbitrarily dispose of, are men! They are your equals! They are intelligent and free human beings like yourselves! As you have, they too have received from God the faculty to observe, to plan ahead, to think, and to judge for themselves!
Back then, special interest lobbying was known simply as "socialism", which it still is today even though people don't call it that.