Monday, February 09, 2009
..."Everyone" is talking about recession, depression (both economic and psychological). The attached picture here depicts search engine traffic based on the word "recession". Pundits go on T.V. (career-defining moment!!!) and tell us how we are only in the "3rd Inning" of an economic and social meltdown that will compel us all to burrow underground, evolve into Morlocks, and await The Time Traveller in order to explain that if only the banks had not gone under, we would not be breeding Eloi.
Words like "meltdown", "destruction", "imploding", "collapse", etc. are being used to describe 2% declines in stocks. This is not a geological physical event where we will all become extinct. Yes, things will get "worse", relative prices will continue to adjust, uncertainty will prevail into the 4th quarter and perhaps beyond. However, there are indications that, after the first quarter, equity markets will recover somewhat...and even Keynes said "when the facts change, I change my mind".
But springtime in the northern hemisphere should provide a respite from the unending parade of economists who think their forecasting powers are now more accurate after the chastening experience of Gotterdamurung or whatever fantastical label they affix to a necessary component of a market based economy.