Posted by
Andrews on Friday, September 19, 2008 3:39:41 PM
A few months ago
I tore into Debra Saunders (rightly) for misunderstanding banking, but today I have to say
she got it right. Despite all the doom and gloom, the rending of clothes and howling, the ashes and sack cloth, the economy just isn't that bad. McCain may have stupidly retracted his (correct) statement that the economy remains strong, but he was right the first time. The economy is strong.
Let us look at the facts. The economy continues to grow. Oil is below $100 a barrel. Jobs continue to be created, if a bit more slowly than before. And when unemployment is at a "five year high", all that hand wringing statement means is we had worse unemployment in 2003, and I don't recall 2003 as being the depths of a recession.
Yes, there is some bad news from the stock market. And yes, housing prices fell. But that fall was after a 5 year sting of unbroken growth, and housing prices are still at least twice what they were in 2000 in most markets. Most investors only dream of such appreciation. There is a problem in the subprime lending market, but that was always a shaky area for investing. The only difference today is that the government forced previously conservative firms into supporting risky investments instead of leaving it to the traditional subprime lenders. So now more firms are feeling the pain of that risky market.
So, we have some problems, but nothing to compare to even 2001's slump, much less the slumps of the early 1980's, and certainly nothing like the economy of the Carter years. As pseudo-recessions go, this one isn't even the biggest faux recession we have seen.
So, why are so many people convinced we are in a recession?
Because a Republican is in office. Seriously. When Clinton suffered from economic numbers equally bad, not a peep was heard. From time to time the media would focus on one aspect, say unemployment, and blame Newt Gingrich for it, but they were reluctant to do even that, for fear of making it look like Clinton was presiding over an economic slowdown.
Now that we have Bush in office, there has been nothing but a constant drumbeat of bad economic news since 2000. Think back to the days before 9/11 and recall the debates of the day, Republicans pointing out that Democrat charges of a "Bush Recession" were unfair, as he had been in office under a year. We have heard nothing but "impending recession" for eight years, so, inevitably, those who are not economically savvy think there is something to the story.
Look at polls if you doubt me. Every one shows a majority satisfied with their own economic situation but equally certain the economy is unsound. How can that be? A economy where everyone is content, but certain no one else is doing well? It can exist, and easily. If the press talks down a good economy, those are precisely the results we would expect.
And that is the truth of the current economy. Some problems, many caused by the government itself (subprime crisis, failure to allow drilling, inflating of the money supply), and the rest by normal economic fluctuations (rising gas prices), but underneath a basically sound economy. It is a truth no one will admit, for fear of being called a Pollyanna. But that does not mean it is any less true.Just because politicians and newscasters are too frightened of public opinion to tell the truth does not mean the truth does not exist.