Posted inUncategorized

Rebalancing our national portfolio

The rich are finally afraid. You can see it in their eyes. They're laying off their nannies. The smart ones are fleeing into Treasury notes, even though the yield is zero. According to the New York Times,

While this will lower the cost of borrowing for the United States
government, economists worry that a widespread hunkering-down could
have broader implications that could slow an economic recovery. If
investors remain reluctant to put money into stocks and corporate
bonds, that could choke off funds that businesses need to keep
financing their day-to-day operations.

Perhaps. But it might, just might, jolt Americans back to reality. That means an economy based on producing things of real value. And a re-valuation of business, which in this country means a re-evaluation of our very lives. It won't be easy, perhaps not even likely, because the dead hand of the past rests oh-so-heavy on everything we do. If it happened, however, it might just save us.

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Posted inUncategorized

Worse than the Great Depression?

It's widely acknowledged by economists, and supported by mounting evidence, that we're in for the worst economic contraction since the Great Depression. This is not "negative news" the media are inventing, dear positive-thinkers. It is simply reality. Yet it won't be as bad as the Depression, right?

For months, I have been giving a qualified "no" to that question. First, because the safety nets of the New Deal and Great Society, although badly frayed by Republican misgovernance, are still in place. Second, Americans are more affluent — we don't have a third of the nation "ill clad, ill-fed and ill-housed" and millions lacking even electricity. My "no" was qualified because expert opinion got us into this mess and will continue to hold sway — watch as the proteges of Robert Rubin steer the Obama economic plan. Experts were flummoxed by the Great Depression and in many cases carried out policies that made it worse. Expertise is only useful when it grows, as when a man demanded to know why Keynes had changed his view on an issue. Keynes responded: "When the facts change, I change my mind. What do you do, sir?"

Now, however, I am starting to wonder about my reassurances. Friday's report that 533,000 jobs were lost in November alone, signaling that the pace of unemployment is accelerating fast, was a kick in the teeth. Could this recession turn into a depression to rival, or surpass, the 1930s?

It is possible.

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