May 15, 2008
The Recession Scare
Now that the preliminary first quarter GDP data is in showing positive but small growth and the markets have indicated we have bottomed in all but housing prices (under which Congress is trying to put an artificial floor, a mistake) those who were screaming about a recession since last summer should be contrite. They are not, of course. Some continue to claim recession (the data is misleading... it will be corrected...unemployment is the real problem... and so on). Others are quietly disappointed!! (Shucks, we are not all going to starve; we are doing better than I thought.") My favorite group, the blamers, just pretends the data did not happen and is still screaming recession (they profit by blaming a targeted "bad" group). The exaggerated claims of recession serve to many constituencies: 1) political candidates who want to oust incumbents by scaring voting, 2) media outlets who want to get viewers and readers by creating false crises that give enhanced incentives to view or read, 3) left wing theorist who are fundamentally uncomfortable with capitalism and claim that it needs to be "softened" to minimize income inequality (and , fill in the blank with any other political claim of exploitation), 4) and, a new group, government officials who can claim to have solved the crises (those who put together the Bear Stearns bailout, for example, and the fed that lowered interest rates precipitously). Many of those in one group are also in another. This cultural pathology is added by our lack-of-pluck. We are not worried about food we are worried about whether we can upgrade our television sets (84 million were discarded last year) or drive our pickup trucks cross country. In the face of minor setbacks we wine and moan; what would happen if we truly faced a major setback?? Would we collapse in a puddle of urine??
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