The Economic Beast

As I sit here on the cusp between semi-retirement and full-fledged geezerhood (assuming I still receive some pittance of a pension, social security, and/or Medicare, and am not living under a bridge over a creek, chewing on watercress and duck droppings), I can’t at all understand why governments and financial institutions can’t just come out and say what is perfectly obvious: No one knows anything about how the economy (U.S. or world) works and thus have no way of affecting it, one way or the other. Consider these quotes from a current Time magazine article:

“The fact is, even the world's savviest investors don't seem to know how to play the latest bout of market gloom.”

“The Federal Reserve's promise to keep interest rates low until mid-2013 – a move meant to coax consumers and businesses to lend and spend – failed to juice markets. That sent confused investors into a tug-of-war between those who think global growth will tank and those who see stocks as a bargain.”

“The bottom line? We are entering an age of austerity, and no one – not the Fed, not China, not a unified Europe – seems able to save us from that fact.”

The economy (or maybe it should be Economy) is an entity in and of itself, beyond human control, a beast from a 1950s sci-fi movie that stomps around the globe at will, crushing throngs of fleeing, screaming people, flicking off the fiscal missiles of the Fed or Treasury like pesky gnats. Don’t believe any politician who says they can do anything about it. They can’t, and that’s the fact. The best to do is find a politician who will admit to this reality and just say, “Weather the storm and see how many of us are left alive at the end.” Or just run screaming through the streets. Good luck.

THE END?

Comfort In the Economy

This has been a comforting week for me. For the past month or so we’ve watched a political death match over the debt ceiling and deficit reduction, being told if some compromise wasn’t reached by this last Tuesday we would have some sort of (unknown) economic catastrophe. So Sunday evening, a compromise that no one thinks is worth crap is agreed to, supposedly saving us from the (unknown) catastrophe. Monday it passes the House. And the stock market falls a couple of hundred points. On Tuesday the Senate passes the compromise, and the President signs it. And the stock market falls a hundred points or so. On Wednesday the market falls again before moving back up to about even. But then today the market tanks, dropping 513 points, almost 5%, the most since the financial crisis of 2008. It’s dropped about 10% over the past two weeks. “Markets nosedive amid ‘total fear’” reads the headline on the CNN site: "The conventional wisdom on Wall Street was that the economy was growing -- that the worst was behind us," said Peter Schiff, president of Euro Pacific Capital. "Now what people are realizing is the stimulus didn't work, and we may be headed back to recession." (If we would have known we were headed for another recession would we have worried so much about the (unknown) debt-ceiling catastrophe?)

So why do I find this comforting? Because I now realize that I’m not the only idiot who doesn’t know shit about the economy – no one does. You can’t worry about something you can’t understand and can’t do anything about. Just hang on and enjoy the ride. Down the river Styx.