It's the Economy
by Seth Cagin
Feb 05, 2009 | 1398 views | 0 0 comments | 11 11 recommendations | email to a friend | print

You might start out talking about how great the snow has been, but every conversation turns sooner or later to the economy.

How everyone you know has been hit one way or another.

How there are no buyers for homes in the region, and so people are stuck where they are. How even a drastic reduction in price might not move a property.

How food seems to cost more even though gas is less.

How kids out of college can’t find a job. How people who have long been employed are losing their jobs. How people who were retired need to go back to work, if they can.

How empty Target was last time you were there, on a Saturday!

Whether Obama can turn it around. Whether Obama is enacting change we can believe in or is caving in too quickly to old philosophies that we thought had been soundly discredited and resoundingly defeated in the election.

Whether we are at the bottom, and if we are, how long we’ll be there, and whether we can survive it.

And how, if we’re not at the bottom, we don’t really have a plan.

How we’re going through our savings. How we can’t borrow any more. How we’re cancelling trips and other plans in anticipation of a long downturn.

These are profoundly unnerving times, and the very uncertainties make it all the worse because nobody can make a move. The metaphor of a “slow” economy is much more than a metaphor. Everything is literally slow, like water freezing up in a river, like blood slowed by congestion in arteries, like a shopkeeper in a poor country who waits all day hoping a single customer may show up to buy a cupful of grain. Nobody feels good about consuming or investing, or about borrowing or lending, so we all hold off and do it as little as possible, which is the smart thing for each individual to do but only makes the situation worse for all of us collectively.

This is the very definition of depression economics: Everything is counterintuitive.

The word “depression” is more than a metaphor, too. It’s literally depressing.

If we all hunker down and go into a mode resembling hibernation, then how and when will things start moving again? Nobody has come up with a better answer than Keynes did nearly a century ago. But will massive government spending work this time? Will it be sufficiently massive? Will it provoke hyperinflation?

Anyone’s guess is as good as anyone else’s guess, and so we talk about it and try to express a sense of confidence. The world has seen dark times before and has emerged from them. Therefore, obviously, we tell ourselves, we will emerge from this one. Well, yes, maybe, but this time is different, we sense. Copy editors are allowing reporters to use the word “unprecedented,” a word that is generally frowned upon in the news media. But perhaps this really is an unprecedented crisis.

It feels worse in the midst of a dark and cold winter, we tell ourselves, but the spring will arrive. Well, yes, but will the economy revive with the season?

We will muddle through, somehow, we reassure ourselves. But as Obama has tried to persuade us, the time of quick and easy riches, of anything goes, of no rules or accountability, that era, surely, has passed – unless you’re an Obama appointee who forgot to pay income taxes.

We always knew that get-rich-quick schemes are always bubbles and that bubbles always burst. Or will we know it only until the next bubble comes along and we happily suspend our disbelief to take advantage of it – as virtually the entire world has done over the last decade. Sure we would. Why not? For an individual to stand back from the irrational exuberance of a bubble is as counterintuitive as it is to embrace a policy for government to borrow and spend us out of a downturn.

The arguments for a strong federal government to temper irrational exuberance and to lift up a failing economy – regulation with one hand and stimulus with the other – have never been more urgent.

This is the age we find ourselves in.

Meanwhile, it’s too damn quiet on main street. We reduce our standard of living. We shrink our businesses. We keep our spirits up as best we can. We watch warily and wait for the ice to melt.
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