For investors, more than half of the financial crisis survival test involves sorting out the valid analysis from the rhetoric. For example, most investors by now know how to avoid overt financial propaganda.

Conservative commentator Sean Hannity's show on the Fox News Cable Network is a classic example. Tune in any weeknight and you're likely to hear the latest negative spin on any financial or economic data point or development, simply because Barack Obama, a Democrat, is now U.S. president: Are credit markets starting to loosen? Well, they would have loosened quicker had the federal government simply left the markets alone.

No doubt a Hannity show in the near future will provide never-released-before new evidence on how the Obama administration's fiscal stimulus spending policies have changed the orbit of the planets Saturn and Jupiter in our solar system. Fortunately, most investors know nonsense and/or a repetitive diatribe when they hear it, and they tune it out.

Subtle rhetoric is even more damaging

However, investors do less well sorting out the more-subtle rhetoric that masquerades as analysis, and one classic example of this is Lawrence Kudlow, who hosts CNBC's "The Kudlow Report."

Kudlow is a conservative, supply-side economist, and his show abounds in double standards, unclear distinctions, and a lack of full debate.

For example, during the recent economic expansion, the show's theme -- promoted throughout the broadcast -- was, roughly: We believe that free market capitalism is the best path to prosperity.

Then credit markets froze and the financial system nearly collapsed in September and October 2008 due to the excesses and errors of free market capitalism. Several major investment banks folded, and nearly every major bank in the United States is now experiencing some form of stress. AIG (AIG) is about to cost the U.S. taxpayer more than $300 billion. And the Fed and Treasury have been forced to initiate the largest federal government intervention in history to stabilize financial markets and prevent credit markets from vanishing, all due to free market capitalism.

Free market mantra ... disappears

And what happened to Kudlow's "we believe in free market capitalism, etc."? The show removed it; you don't see it blaring every ten minutes. Why is that? Probably because it would offend viewers, considering that it has caused an astounding amount of devastation, and it just isn't true. Regulated free markets (i.e., markets with rules and limits) represent the best path to prosperity, not capitalism in its purist form.

A second example: For the better part of a year, Kudlow defended high commodity prices. He frequently said he viewed commodity prices as a sign of economic strength, as a sign of demand. And, to a certain degree, Kudlow was correct. However, in 2008 commodity prices were not merely high, they had formed a commodity bubble, driven by a leverage bubble, which was created by Kudlow's free market. Rest assured, very few economists today would make the case that the record commodity prices experienced recently were healthy, normal, and a plus for economic development.

Third, for weeks after President Obama was inaugurated, Kudlow complained that "the stock market had plunged more than 20 percent under the Obama administration." Fair enough: Obama is now in charge, so he's responsible for whatever happens. But then the stock market rebounded. Where's the administration's credit for the stock market? Not a word from Kudlow to praise the administration. That's a double standard, pure and simple.

Finally, and perhaps most indicting, is the "nondebate" debate. Kudlow will invite three or four financial, economics, or policy professionals to debate an issue, and the ideologies they represent are frequently: very conservative, conservative, and center-conservative. Rarely does one see a liberal analyst on the show. What would be even better: invite public officials from France, Germany, and Sweden to talk about their various health care systems, pension systems, and investment frameworks -- that would give views a fuller picture of the range of public and private policy options and investment arenas available.

Economic Analysis: Kudlow's topics are timely, but the show loses credibility points due to the aforementioned inconsistencies and half-spectrum debates. Kudlow can improve his show by presenting more analysts with genuine opposing views. If the theories propounded by the host are strong, they'll stand the rigor of these critiques.


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