Ooooooh Shit! No…. Shit. Economic Rollercoaster by Stephen P. Pizzo

Friday, 11 January 2008

I am beginning to get the same feeling in my gut that I get when the roller coaster nears the top of the first drop.

Until then it had been all anticipation, anticipation that builds as the cars — click,click, click — inched up the steep incline towards the first crest. Then there’s that singular moment, when the cars reach the top and I get the first look down the drop inches ahead. At that moment the cars seem to pause for second — before they hurtle downward in an uncontrolled rumble.

That’s how I feel right now about the economy. I’ve known for a long time that a helluva drop was coming. But the ride to the top has been so slow, so unthreatening and comfortable that the inevitable drop seemed more theoretical than than anything I had to worry about immediately.

But suddenly here I am — here we are — paused at the top for, who knows how long, peering down an abyss without a clear bottom in sight. And like that same roller coaster moment, we know it’s too late to change our minds, too late to turn back. We are on for the ride — the ride of our lives.

Okay, so enough with the metaphores. The roller coaster thing is really quite insufficient. At least on a roller coaster you know it’ll all be over in a a couple of minutes and that no one is likely to get hurt. Not so when the economy goes bust. When an economy goes bust, “hurt” is the rule, rather than the exception.

Over the past couple of weeks the signs that “the end is near” have been abundant and clear. And this time, thanks to globalization, the pain will global as well.

UN Says U.S. Economy’s Housing Slowdown Risks Global Recession
Jan. 9 (Bloomberg) — Erosion of the U.S. housing market and a weaker dollar might drive the American economy into recession this year and stall world economic growth in 2009, United Nations economists said.

“There is a clear and present danger of the world economy coming to a near standstill,” the UN’s Department of Economic and Social Affairs said in an analysis released today in New York. “The domino effect of a U.S. recession would be to knock down export growth from China, Europe and Japan, in turn reducing their demand for exports from developing countries.” (Full)

I’m not going to waste ink trying to convince neo-con dead-enders still in denial, because those folks will never admit the mess their careless and greed-driven ways are about to cause:

“Some argue that the push back against market forces is a momentary pause in a steady march toward unfettered capitalism. The libertarian Cato Institute recently issued a report in which it found that economic freedom — shorthand for smaller government and fewer regulations — has never been greater.” (NYT: The Free Market: A False Idol After All? )

I have no beef with capitalism, per se. But unfettered capitalism is another matter. By “unfettered” folks like those at the Cato Institute and The Heritage Foundation, mean government should butt the hell out. This is especially true when a bubble is forming, like it was during the 1980’s after they succeeded in getting the feds to deregulate the savings and loan industry.

Later they advised the feds to keep their noses out of the dot-com boom of the 1990s. They claimed the feds were wrong to be nervous about all billions of dollars pouring into startups that lacked explainable revenue models. They said it was not a bubble but rather that the old business cycle had been eclipsed by this “new paradigm.” What no one had the guts to say at the time is that there was nothing new about bullshit and wiseful thinking.

When the Bush administration came to office they crowed that the good Clinton economy had only been an illusion created by the dot-com bubble. And that the nation was in recession because it went bust.
http://dandelionsalad.wordpress.com/2008/01/13/ooooooh-shit-no-shit-economic-rollercoaster-by-stephen-p-pizzo/