EDITORIAL: Economic reality, not fantasy

Oh I get it, it's not a recession until reporters are laid off.

The real reality is that, while the Clinton economy was built on declining debt and a balanced budget, the Bush economy was built on massively ballooning debt in all sectors. Anyone with their eyes open saw this coming.

Please correct me if I'm wrong... to be considered an economic recession, don't we have to experience two quarters of negative real economic growth? (Yes, you can have negative growth.) Presuming I'm correct on that definition, have we done so? If not, it really just sounds like people are trying their to fit a square peg in a round hole. So, let's agree on what a recession really is before we start declaring that we are in one. Otherwise, we're just like politicians - making stuff up.

To present a picture either rosy or bleak, reporters simply find "human interest," or anecdotal stories, to conform to their story outline. Economics may be "the dismal science," but it is still science, and J-school grads would do well to obtain expert input--not just bullet points--before assembling their stories.

It has been quite obvious for at least a decade that many lenders were financing homes, vehicles and even derivative securities without evaluating risk or the ability of the borrower to repay. Motivated by greed and/or political considerations, creditors and borrowers alike made risky decisions, hoping that they wouldn't be the last to hold the uncollectible loan or the devalued asset. The only sane answer is to let the losers lose and protect the innocents who didn't get involved in this massive poker game. But Congress apparently intends that everyone should pay--and we will, one way or another.

Perception becomes “truth”. For the past year media reports of a “recession” have been common and insistent. This reminded me of the juvenile game that had several people telling someone they looked sick and the result often was that person became “sick”. Whether these reports are driven by ratings or primary campaign “economics” is debatable. The end result is the “consumer” believes it, therefore we have a negative trend in economic growth. The Housing bubble burst, after several years of record growth coupled with basic greed by the mortgage banking industry, leaving some borrowers with unsupportable house values or loan conditions. The result of this was to move LARGE amounts of investment capital (hedge funds, pension funds, etc.) from the financial industry into commodities (Oil, Grain, etc.). The correction for this is that the “consumer” needs to filter media reports and understand that media usually only report facts that fit story profiles and rarely include ALL of the facts about the story. Whether the journalistic reports are about Iraq, Global Warming or any of the current political hot-buttons, there are as many “unreported” facts as there are “story” facts.

Staggslaw - Check your facts. The debt continued to soar under Clinton. Just because the Republican Congress forced a balanced budget down his throat (no jokes please), that doesn't give bragging rights to Clinton (again, no jokes please). Basically you forget or ignore two facts. First Social Security and other aspects of the Federal outlays are "off budget" to mask the real deficit but the IOUs Congress places in the SS "trust fund" and other trust funds as they spend every penny taken in still count against the debt. So we "borrowed" off budget from SS, medicare, the highway trust fund and government pension plans to show "balance" while the debt still increased. Second as I pointed out, Clinton did not even try and balance the budget. I still remember one of his comments when fighting the Repbulican Congress over the budget going something like "We can balance the budget in 5 years, or ten years or 15 years, it doesn't matter". Clinton and the Democrats were never interested in balancing the "budget" until the Republicans did so (Congress is in charge of spending) and then Democrats only became interested in taking credit for balancing the budget. In other words, actions speak louder than words. But if you believe Democrats and Clinton felt differently please be kind enough to explain where the balanced budgets were when Democrats were in complete control (or even in control of Congress).