Monday, October 19, 2009

Why so glum, chums?

I have been noticing that bloggers who post anything positive about the economic situation are often bombarded with negative and apocalyptic comments. See here and here for examples. The MSM is not exactly cheery either.

Some things are really truly good. For example, output in general and manufacturing in particular are growing again in a lot of economies. It is true that unemployment is quite high and may well rise even higher, but historically, unemployment is a lagging indicator.

The dollar is falling, but in an orderly manner, and its fall appears to be stimulating exports which is good. Interest rates are low and fears of further rounds of mortgage defaults when ARMS are reset to higher rates appear perhaps to be overblown.

Personal savings rates in the USA have risen appreciably.

We do have a very large and growing deficit and we have some policy proposals floating around that may well increase the problem. As Chairman Ben said today, a fiscal exit strategy is going to be important and in my view, the fiscal exit will be much more problematic than the monetary exit.

So I am not claiming we live in Shangie-La or anything, but we were supposedly standing on the brink staring into the void a few short months ago and in actuality things are turning out much better than many feared. So why all the hyper-negativity?


Anonymous said...

I think it's a hang-over effect. Everyone feels they've been lied to by all the "experts", and it had directly impact the middle-class' quality of life. So economic indicators may indicate that conditions are improving, but try telling that to some who can't sell their house, get a job, pay for retirement, afford tuition, etc.

I think the most important economic indicator I've seen this week is how much financial institutions have spent on lobbying the first 6 months of the year. HOLY IRONY BATMAN - they are spending taxpayer money to lobby elected officials who are spending taxpayer money to keep them afloat.

Forgive me for feeling slightly pessimistic.


Anonymous said...

I discussed this very problem some years ago with my wife - my conclusion that

People enjoy being miserable