Fundamentally speaking

It’s tons of fun to read the business pages and observe how much of what passes for expert opinion is the modern equivalent of examining sheep entrails for divine clues. Or more precisely, petitions to Jupiter for relief.

The latest round is a debate over whether or not the U.S. is heading into recession, and after years of tut-tutting any such suggestion, the hounds are braying from Wall Street to Capitol Hill that yes, in fact, we are. The driving motive behind this unusual doomsday talk is the financiers’ craving for another quick injection of cheap money by way of an interest rate cut. As with any addiction, the habit requires ever larger doses to produce the calming effect.

As long as the Received Wisdom was that things were just great, you heard a lot about the ‘fundamentals,’ meaning the underlying facts of the country’s economic performance. You don’t hear any of that now, and this ignorant rube suspects that it’s because key aspects of the ‘fundamentals’ are appalling. The war is costing money we don’t have; Bush responds to the war’s fiscal requirements with tax cuts, deficit spending and pump-priming low interest rates. My traditionalist economics professors years ago would have called that a perfect formula for inflationary debasement of the currency, and voila, the dollar cannot buy even half an English pound.

The problem with bad ‘fundamentals,’ the guys on the business pages tell you, is that they leave you with no attractive options. Where once it might have made sense to lower interest rates to give economic activity yet another jump start, further cheapening of the dollar could have unexpected consequences given the vast trade deficits the country is running with China and other countries. And so the whirlygig of globalization brings its revenge.

The whole scenario makes me contemplate with awe and some perverse glee the eternal truths of market economics, ergo, that the markets will always drive themselves into a huge jam unless someone at the top is putting on the brakes, regulating and adjusting, so that its innate tendencies toward instant gratification and quick profits don’t overwhelm the fragile economic organism. Kind of like parents monitoring the amount of Halloween candy their children consume after running through the streets in scary costumes.