One of the most frustrating sideshows of the economic meltdown is the simplistic, pedestrian coverage and analysis offered by our media leaders. Take for example this article in today's NYTimes. The focus of the piece as stated in the title is that economic growth and an economic environment that cultivates growth can be a big help in our effort to cut our deficits:
If the economy grew one half of a percentage point faster than forecast each year over the next two decades — no easy feat, to be fair — the country would have to do roughly 40 to 50 percent less deficit-cutting than it now appears, based on my reading of budget data from the economists Alan Auerbach and William Gale.
The article goes on to talk about how economic growth was instrumental in the surprising turn in the '90's from deficit to surplus. The article lacks any in-depth analysis of how or why this economic growth in the 90's came about. The boom of the '90's was brought about in large part because of the Internet build out and cheap abundant credit.The Internet boom started out legitimately but degenerated in many ways into a glorified ponzi scheme.
I believe what we saw in those years was a continuation of Alan Greenspan's easy money policies that began after the '87 stock market crash and continued throughout the '90's.It was one crisis after the next: Latin America, Russia, the LTMC fiasco, the Asian tigers. One excuse after the next to simulate. Remember "irrational exhuberance'?
Post 9-11 we went through the same scenario, this time it was housing that was the bubble of choice. All through this cycle we as a society have delayed making responsible financial decisions. Instead we have spent $ we don't have, run up the credit card to a point where we are at our limit and instead of bracing for tough, difficult choices our media elite offer a bromide: we can grow our way out of trouble. Good luck. It's not going to happen.
Karl Denninger does a great job of laying out the math of our current situation in many of his posts. It's time for us as a nation to understand reality, rather than continually wishing upon a star. As Yogi Berra once said, "It's getting late early here".