Do people like bad news? Do they welcome the prospect of catastrophe? Listening to the din of economic doomsayers, I have to wonder. Henry James once spoke of “the imagination of diaster.” He wasn’t thinking of economic disaster, exactly, but the phrase seems custom made for the crop of amateur Chicken Littles running around skirling that the sky is falling, the sky is falling (and the stock market, too).
I would be the first to acknowledge that what I know about the “dismal science” could be inscribed on the head of a pin, and not a very capacious pin, either. But I wonder how much deeper is the knowledge of economics on the part of the punditry. You cannot open a newspaper or turn on a television news show these days with out being greeted by some Bobby Sue gleefully explaining that the U.S. economy is in recession, that the worst is yet to come, and that economic Armageddon is right around the corner. Stay tuned for an update at 10:00 p.m., live from the trading floor. The last time I checked, a “recession” meant 2 consecutive quarters of negative growth. The U.S. hasn’t had a single quarter of negative growth in recent memory, so the only recession we’re in, so far anyway, is a recession populated by the imagination of disaster.
Who knows? It seems pretty clear that the geniuses who paraded up and down the land shoving mortgages into the hands of anyone who would sit still have helped precipitate a mess. It would be interesting to know why banks made so many “ninja” loans (loans made to people with no verifiable income and no assets). Greed? Maybe. But I’ll bet you a nickel that political pressure to “open up” the lending process played a part, too. Doubtless even as I write, someone in Washington is framing legislation to further strangle. . . . oops, I mean “regulate” the financial industry.
One of things you hear about a lot these days is “consumer confidence.” Well, when you have the media bringing you scenarios of disaster 24 hours a day, 7 days a week, what effect do you reckon that has on people’s confidence?
For a long time people have been warning that the stock market is over-valued. Well, OK. So now the current drop, perhaps it is settling in to where it should be. My own suspicion is that “this too shall pass,” and perhaps sooner than many of our pundits believe. Betting on the American economy is usually a pretty good wager. But don’t expect to see rosy bulletins emerging from the press when we have a turn around. Especially if (as I expect) the White House continues to be occupied by a Republican, good news will be ignored or explained away, while every scrap of bad news will be amplified and repeated ad nauseam.