Sunday, August 03, 2008
Opinion

Our economy and silent lucidity

Few among us would want to switch places with a homeless person, but he perfectly embodies the American ideal ...

By Stephanie Ramage

Driving home last week, I stopped to let a grinning homeless guy cross Monroe Drive. He was carrying a case of energy drinks that were sweating in the heat almost as much as he was. He seemed an island of optimism in the muggy tide of Atlanta’s commute as he unwrapped the case and proceeded to hawk the drinks.

Few among us would want to switch places with a homeless person, but he perfectly embodies the American ideal of the free-marketer who will not be defeated, despite having few resources and no concrete reassurance that his plan will pay off.

Markets, we must remember, operate primarily on faith. Want to start a run on a bank? Start spreading a rumor that the bank’s in trouble. Want to bump up investments in a company? Start spreading a rumor that the company is on the brink of developing a cheap alternative to gas that can be used immediately in cars that now use petroleum products. Want the value of the dollar to plummet? Just wait for an election season. Candidates almost always rely on dissatisfaction with the status quo to promote their own platforms, and when the European and Asian banks see and hear one financial horror story after another, they know their clients will get the willies and shy away from American investment opportunities. Not wanting to offend their customers or make a wrong move, they send their money to other locales, and the cycle perpetuates itself.

Don’t believe in the power of rumor? Ask Martha Stewart or any one of a number of other ex-convicts about the insider information that eventually landed them behind bars.

I’m not talking about sprinkling pixie dust and being able to fly. I’m talking about what every conscientious investment broker has always known: Money talks, but, more important, it listens.


Our economic malaise is not a figment of your imagination. Our economy has derailed. But the rails were greased by the media. Bad news wins Pulitzers. Good news doesn’t.

In its July 24 edition, The Economist, a publication that has long eschewed self-aggrandizement, reported:

“American headlines are crammed with words like ‘failure’, ‘hurting’ and ‘Fannie Mae.’ Foreign pundits sound even more bearish, and one sometimes detects a hint of gloating at the hyperpower’s distress. ‘The Great Depression,’ thundered the front page of the Independent, a British newspaper, in April. The story underneath was about an increase in the demand for food stamps, after an effort to publicize their availability."

The Economist continued: "Amity Shlaes, the author of a history of the Great Depression, thinks the comparison absurd. During the '30s, she notes, ‘people lost their homes even though they had borrowed only 10 percent of the purchase price.’ People losing their homes today often borrowed more than 90 percent. And today’s unemployment rate, though rising, is 5.5 percent. In the Great Depression, it peaked at 25 percent.

"Most Americans think their country is in a recession. But, buoyed by exports, output has yet to shrink for a single quarter.”

I believe that the unregulated blogosphere is more to blame than the mainstream media. Anonymity promotes irresponsibility, and it is among the blogosphere’s anonymous cowards that panic is used to accrue power.

Nonetheless, there are real problems with our economy. As long as most insured Americans rely on their employers for health-care coverage, any job crisis will carry more freight than it should. In 1970, before the rise of HMOs, a visit to the doctor was still affordable enough to be paid for out of pocket. Today, job loss means a loss of health insurance for our families, and with medical costs grossly inflated, that is truly scary. And, too, there’s our reliance on oil.

But we aren’t sunk yet. And having lived in this country for 42 years, there is one thing I know about my fellow Americans, no matter their background or political leanings: We always find a way, baby. Always. SP