The economy, denialism, and perception

How bad is the economy?

Really fucking bad. My patients are losing their jobs, the restaurants are empty, businesses are shuttered, houses empty.

Really, really fucking bad.

What does the government have to say about it? Not so bad. Chill.

There are some good reasons for this. As the recent Indymac debacle shows, a statement from a politician can destroy a bank (although, to be fair, the bank was a dead man walking before Schumer’s letter came out).

So, when our leaders continue to downplay the economic disaster in this country, are they being denialists, or responsible public servants?

Probably both…

Look, IANAE (E=economist) so I won’t even pretend to understand the economic subtleties here, but there seem to be two brand of public servants here. There are self-serving politicians who helped create this mess and wish to downplay it—these are denialists. Then there are the responsible public servants who don’t wish to exacerbate the recession by playing it up. It make for tricky public policy. I don’t envy them.

But when I walk in to the most popular diners in the area and find a seat with my eyes closed, I worry. Thankfully, IANAP (p=politician).

Comments

  1. #1 rjbrash
    July 16, 2008

    Thanks for the Schumer addendum. I absolutely detest the man and I am willing to blame him for a host of problems affecting this country, but he did not cause the IndyMac shutdown, just as short sellers are not the cause of the financial stocks collapsing.

    The blame lies with the last 25 years of politicians, absent regulators and financial companies. The statements made by these clowns trying to cover their butts would be funny if our economy was not at stake.

  2. #2 Denice Walter
    July 16, 2008

    While IANAE either,I inherited the task of managing money for myself and advising several other relatives,so I spend probably 10 hours a week monitoring prices.My advice is like that of the airport PA:”Keep your eye on your possessions at all times”,i.e.know what’s going on in your investments, in detail. The NY metro area isn’t doing so terribly but there is definitely a slowdown.The off hour traffic is down and sales are common, especially on new cars.

  3. #3 Suricou Raven
    July 16, 2008

    I know two friends who are sufficiently concerned for the future that they are (independantly) setting themselves up for semi-self-sufficiency. Housing in a rural area, solar power, rainwater collection and processing, space to grow some food.

    A few years ago I would have dismissed such behavor as the action of paranoid cranks. Today, I think they might be onto something – civilisation isn’t going to collapse, but it might be about to go through some hard times as the society-sustaining cheap energy comes to an abrupt end.

  4. #4 Brad Koehn
    July 16, 2008

    This sounds a bit like the pot calling the kettle black. It seems you’re the denialist in this case, PalMD; you’re denying what every economist (not just the ones in the administration) has been saying: it’s a slowdown, not a collapse. Maybe you haven’t been around in a bear market and a recession before, but the sky is not falling. Could it? Sure. Is it? Not even close.

    Get a grip.

  5. #5 PalMD
    July 16, 2008

    Remember Brad, I’m not an economist. I’m just observing. Perhaps you don’t live in the rust belt, but it’s really, really, really bad. I’ve been through a number of recessions, and this is qualitatively different. Deny it all you want, but it’s here.

  6. #6 Chuck
    July 16, 2008

    There are always sectors of the economy and regions of the country that are more adversely affected during economic hard times. There are also sectors of the economy that thrive during these same hard times and regions that have a more diverse business sector and are not reliant on a single sector of the economy.

    What happens when someone drinks the wine and eats the candy during the good times? Is there a price to pay for your health? Same goes for the economy.

  7. #7 Skwee
    July 16, 2008

    The title of this post reminded me of this:
    http://www.mattbors.com/archives/413.html

  8. #8 jason hill
    July 17, 2008

    New York Times reported that hedge fund managers have a new champion in their effort to keep legally dodging the taxes the rest of us pay: none other than New York Senator Charles Schumer. Now you know who is Schumer’s friend and why he caused the bank run on Indymac. He truly support hedge fund and private equity because they truly support him.

    http://www.nytimes.com/2007/07/30/washington/30schumer.html?_r=1&oref=slogin

    “Large Investor decided to pay a few bucks to a Senator in New York to force the issue.”(Prospect Mortgage Backed By Sterling Fund–Private Equity Acquired The Mortgage Branches from Indymac before FDIC takeover)
    http://www.housingwire.com/2008/07/03/regulators-to-schumer-weve-got-a-whole-bag-of-shhh-with-your-name-on-it/

    “And do remember that there are many investment bankers located in New York, making them pretty influential constituents of Sen. Schumer.”
    http://www.pasadenastarnews.com/opinions/ci_9783402

    “In a Sunday news conference, he said everything in his letter was already known to the public.”
    If it was already known to the public, what is the reason for his public letter? It is contradict to what he said previouly :”I just bring private message to the public. Do not kill the messanger.” What a great liar from time to time!
    http://www.cnn.com/2008/POLITICS/07/13/indymac.schumer/?iref=mpstoryview

    Same thing he did for FRE and FNM, he forced FRE and FNM to buy $145 billion bad loans last September. So his hedge fund friend could short the stock, then his private equity friend could take huge discount to acquire the properties. So obvious criminal acts, but he is still out law and do whatever to harm the American and benefit himself and his friends.

  9. #9 DuWayne
    July 19, 2008

    Brad –

    Denialism hell, you can almost always find “credible” economists to support whatever position you like. Now is no different. There are a lot of economists giving pretty fucking gloomy predictions. And quite honestly, you have to be either blind or completely insulated from reality to think that our economy isn’t in a whole world of trouble right now.

    And as Pal points out, you probably aren’t in the rust belt, from which I fled three years ago. Michigan in particular, is pretty much hopeless right now. I left because it started looking pretty bad. Three years later I can only say that it’s exponentially worse than I thought it would get when I left. Michigan isn’t waiting for economic collapse, it’s there in all it’s glory.

    Meanwhile, here in my new home of Oregon, in better economic shape than most places, things are merely really fucking shitty and slowly getting worse.

    Downturn my pasty white ass. I don’t consider it a downturn when it’s going to take years to dig out of the mess we’re in now, a mess that is still deteriorating.

  10. #10 island
    July 20, 2008

    You’d have to be blind, stupid, or very, very young to believe that this is a “downturn”, and given that it’s perfectly okay to lie to the American people in order to prevent a “panic-run”, you can figure your own odds.

    It really bothers me that the brokers and banker-criminals can’t jump out of the windows of Wallstreet anymore

    Better brush up on your “SOUP KITCHEN ETIQUETTE” though:

    http://finance.google.com/group/google.finance.983582/browse_thread/thread/5ad7f7b40350c048/962cc282d2bd78d5?lnk=st&q=soup+kitchen+etiquette#962cc282d2bd78d5

  11. #11 R. Tull
    July 21, 2008

    My patients in my town are losing their jobs, therefore the economy of the United States is “really fucking bad?” The internet is full of conclusions based on anecdotal evidence, but it seems out of place in a blog that is supposed to be about critical thinking. It may very well be that the economy is really bad, but it isn’t because of anything mentioned in this entry. C’mon, you can do better than that!

  12. #12 PalMD
    July 21, 2008

    Didn’t know people wanted data on this one:

    My area has led the country in home foreclosures for a few years:

    http://money.cnn.com/2006/11/10/real_estate/Top_ten_cities_for_foreclosures/index.htm
    http://money.cnn.com/2008/02/12/real_estate/realtytrac/index.htm?postversion=2008021306

    We also lead the nation in unemployment:

    http://www.businessweek.com/bwdaily/dnflash/content/jun2008/db20080623_156900.htm

    I was sharing the “on the ground” observations, but it’s really not a controversy requiring data.

  13. #13 khan
    July 21, 2008

    Things are also bad in Dayton, Ohio. Someone on another board remarked; “It looks like they’re getting ready to close the place.”

  14. #14 R. Tull
    July 23, 2008

    I wasn’t questioning your conclusion as such–it just sounded like you were extrapolating the health of the US economy as a whole from local observations.

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