The Weekly WTF: Spank the economists!

Plus, another backfire at CBS, former Prince Andrew finally looks humbled and the Iran war will be starting any minute.

Four curious developments this week:

Hassett Job. White House economist Kevin Hassett said on CNBC that four researchers at the New York Federal Reserve should be “disciplined.”

Spanked? Sent to bed without dessert? Put in a time out? Hassett didn’t say. He just wants his boss, President Donald Trump, to know that he’ll gladly throw his credibility out the window to prove his loyalty.

Hassett was referring to a New York Fed study published February 12 on who’s paying the cost of the new tariffs Trump has leveled on imports from most countries. Like virtually all credible research on the issue, the New York Fed found that American businesses and consumers are bearing most of the cost of the tariffs. This is practically self-evident.

The way a tariff works is, the US importing company pays the import tax to the federal government when it takes possession of the import. That company then passes on as much of the added cost to its own customers as it can, and so on through the supply chain, right down to the final purchaser. Tariff defenders claim there are magical adjustments, such as importers lowering their prices by the amount of the tariff, that spare Americans any pain. But those effects are minor at best.

[See the latest stock-market buzzword you might want to know]

There’s a heap of research by organizations such as the Tax Foundation, the Peterson Institute for International Economics, the Yale Budget Lab, the Penn Wharton Budget Model and many Wall Street banks that comes to the same conclusion as the New York Fed: Tariffs raise prices! Hassett said the New York Fed paper “is an embarrassment” and that “the people associated with this paper should be presumably disciplined.”

But many economists think Hassett is the one who should be disciplined.

“The only one who should be embarrassed is Kevin Hassett, the smell of whose burning reputation flavors the air of D.C.,” Douglas Holtz-Eakin, president of the American Action Forum and former director of the Congressional Budget Office, wrote on February 19. He called Hassett “a bipartisan embarrassment to all who have attempted to inject economic reality to the policy process.”

Many other economists pounced on Hassett, some reminding the public that he co-authored the 1999 book “Dow 36,000,” a prediction that took 22 years to come true.

Hassett was once known as a cheerful and friendly centrist wonk. Maybe he grew sour because Trump passed him over for the top job at the Fed, choosing Kevin Warsh as the next Fed chair instead. Or maybe you just turn crusty when you hang around Trump long enough.

At any rate, tariffs raise prices! Tell everybody you know.

Best Epstein photo ever. Reuters nabbed a priceless photo of former Prince Andrew being driven away from a British police station after they arrested him in connection with dead sex offender Jeffrey Epstein. In the photo, Andrew is slouching in the back seat of a car with a gobsmacked expression on his face that seems to say, “holy shit, I actually got caught.” I don’t have rights to the photo so I can’t publish it, but you can see it here at the BBC, among many other places.

By the way, British authorities seem to be investigating the former prince not for sex-related crimes, but for improperly sharing confidential government information with Epstein. They haven’t yet charged him with anything. This is all based on info the US government has had for several years, and only released recently because of public pressure.

[Why I started gambling on the news]

CBS helps a Democrat. A lot of people who wouldn’t otherwise care now know who James Talarico is, because CBS tried to block his appearance on the Late Show with Stephen Colbert. Talarico is a Democratic member of the Texas House of Representatives who’s running for the Senate seat currently held by Republican John Cornyn. Colbert had booked him for a normal show segment on February 16 but CBS lawyers blocked the appearance just before showtime. They said federal law prevents broadcast networks from hosting political candidates unless they give equal airtime to their opponents. But Colbert tweaked CBS lawyers for cowardice and media critics pointed to CBS’s growing history of deference to Trump and reluctance to criticize him.

Colbert interviewed Talarico on the Late Show set and posted the video to YouTube, which is not bound by the same federal rules as over-the-air TV. It’s an earnest 14-minute interview touching on religion and other potent topics, with Talarico, who’s also a Presbyterian seminarian, coming off as thoughtful and moderate. An early February poll showed Talarico trailing Rep. Jasmine Crockett by 8 percentage points in the Democratic primary, which takes place on March 3. But the Colbert interview racked up nearly 8 million views and brought Talarico a $2.5 million fundraising windfall. Getting canceled pays off.

Here’s the interview. It’s not filled with chuckles but is informative and refreshingly civil.

The Iran war will start at precisely … When the US military launches a war, it wants as much surprise as possible. So it’s odd that news stories are popping up saying all the forces are pretty much in place for the big attack on Iran Trump has been threatening. The Washington Post ran a handy map showing where US combat jets, warships, drones and other assets are deployed in the Middle East, for the ayatollahs to clip and tape to the wall. Trump himself suggested on February 19 that a 10-day countdown had begun.

Sorry, but this is not how the Pentagon goes to war. The evidence of that is the January raid to capture Venezuelan President Nicolás Maduro, which was a total surprise nobody talked about beforehand. Trump is most likely flexing military muscle to coax Iran into some kind of deal on giving up its nuclear program or making other concessions. Yet crude prices have jumped by nearly $10 per barrel during the last two weeks, registering real market concern about a messy shooting war.

[Why Trump is not going to attack Iran]

At the end of January, I predicted that Trump would not attack Iran, because there are no simple options and he prefers clean, one-and-done military operations. I still think that. I went to the Kalshi prediction market to see if I could place a $10 bet on the odds of a US-Iran war, and they’re not offering that bet. Polymarket is, but for now, Polymarket is off-limits to most Americans. Polymarket’s odds are 76% there will be no US strike on Iran by the end of February, but 41% odds there will be no strike by the end of March. So the bettors forming that market think the most likely outcome is a US attack on Iran sometime during the month of March. I think they’re wrong, but I’ll own it if I’m the one who’s wrong and Trump does order an attack.

Source: Polymarket