Kunstler's hair is spontaneously combusting in the face of the economic news. Excerpt:
The comprehensive bankruptcy of the United States, at every level, in all corners, atop each hill and mole-hill, and down not a few rat-holes, is preceding like some kind of hideous multi-media, inter-dimensional cosmic grand opera as produced and directed by the Devil. Every week, some bizarre new subplot is introduced by the stage managers, each turn and twist geared to produce maximum pain and carnage in the US economy, as if to foreclose any possibility of redemption on the way down. Well, the absence of hope is, after all, the essential nature of Hell (setting aside, for the moment, J.P. Sartre's quaint notion that Hell is other people).
Robert Samuelson says calm down, we're nowhere near a Depression. Excerpt:
The paradoxical thing about today's economy is its strength. No kidding. Consider all the hand grenades lobbed at it. Higher oil prices. The housing implosion. Large layoffs in affected industries: autos, airlines, construction, mortgage banking. The "credit squeeze" triggered by losses on "subprime" mortgages. Despite all that, the economy hasn't collapsed. It's merely weakened. Output in the first quarter of 2008 was actually 2.5 percent higher than a year earlier.To be sure, there are parallels with the Great Depression. People fear what they don't understand or expect. In the early 1930s, no one really knew why the economy had deteriorated so rapidly. Similarly, much of today's bad news was generally unpredicted: the higher oil prices; the losses on subprime mortgages; the collateral damage to financial markets; the sharp run-up of food prices.
People fear what's next. They worry whether complex financial markets and a globalized economy are unstable. These are legitimate anxieties. Economist Nouriel Roubini of New York University believes additional losses at banks and investment banks are being disguised by lax accounting practices. If so, things might get worse.
Still, parallels are limited.
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It's an election year. Remember "It's the economy, stupid"? "Are you better off than you were four years ago". It happens every time.
Those who want in (and their supporters, including most of the media)find it to their benefit to cry "the sky is falling and it's THEIR fault".
Those who want to stay in will try to diminish the problem and deflect blame.
If they would just all shut up, and stop trying to tinker with the economy, the market will right itself.
But that is not to their advantage, so they won't.
For at least 15 years, the U.S. economy has run on easy credit and, if not cheap, at least affordable oil. Now, over-and-out on both. I don't see how anyone can make a credible case that we're not in for a painful and lengthy adjustment.
Are there growth opportunities? Sure: alternative energy development, mass-transit equipment and infrastructure, environmental cleanup equipment, redevelopment of urban and near-suburban real estate, online retail, generic and discount pharmaceuticals, even financial services that aren't too far gone to clean up their act. Do they offer short- or even medium-term profits? Highly doubtful.
Meanwhile, home values are a year or two away from bottoming out, the blue- and white-collar workforce continues to contract (during which wages will stagnate or decline), inflation in fuel, utility and food costs is nowhere near stabilization (let alone reversal), and consumers - at least those with two brain cells to rub together - are battening down the hatches for the long haul.
Jack says;
The ball is corporate earnings. Check any business website and you will see that earnings of good companies continue to increase. If we were in a meltdown, earnings would be falling or negative.
The problem is that the number of "good" companies is still falling. Yes, there will still be companies making money. Fortunes were made DURING the great depression. Doesn't mean the economy was healthy.
jack
Dismiss all the hysteria and uninformed speculation, and keep your eye on the ball. The ball is corporate earnings. Check any business website and you will see that earnings of good companies continue to increase. If we were in a meltdown, earnings would be falling or negative.
You mean like the collapse of Home Depot and the construction companies?
But, anyway, by the time non-stupid random corporations collapse, the problem will have already worked its way through the general population. Basically, we'd have hit the point where either people cannot spent money (because they have no money.), or they cannot work (Because they are homeless, or because they can't afford the commute.). Corporations crashing is the last point of an economic meltdown, at least one like this.
Your statement is akin to saying 'If we were in a nuclear meltdown, the walls would be on fire'. Erm, yeah, eventually.
And, more to the point corporate earning are falling.
Let's bailout the banks for a crisis that they caused! Makes sense to me!
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