For those of you who may not know John Cassidy, he is a Contributing Editor at Condé Nast Portfolio and also a staff writer at The New Yorker. From his own self description: "when it comes to issuing gloomy warnings about the U.S. economy, I’ve established myself as something of an authority."
But Mr. Cassidy abruptly flip-flopped this past week. His new thesis: "It’s possible that this downturn could end quicker than anyone thinks." (See "The Case for Optimism")
Say what? This is the same Cassidy that on Nov 11 wrote "The Worst of Times." In that gloomy piece his pessimistic verse proclaims that "most economists predict a recovery late next year. Don’t bet on it."
In less than 60 days, he has changed his mind.
Careful not to label himself a "heady optimist" (I guess that would be me), he goes on to make strong arguments for his quick about-face. He asserts, "As the economy goes down, we could be overemphasizing the negative just as we exaggerated the positive on the way up." He summarizes the significant and swift policy actions put in place in Q4 2008. There are now many signs that those swift actions are bearing fruit.
Additionally we have an energetic and hopeful new president-elect. An orator that can calm fearful spirits and re-instill confidence. After describing what went wrong last year and successfully making his case for stimulus, Obama may also begin to restore the appropriate psychologically trust needed to nudge consumers and businesses in positive economic directions again.
Because of all this appropriate policy action, Cassidy concludes, "By the end of this year, if all goes well, there could be tentative signs of an upturn. How seriously do I take this rosy scenario? Recently, I moved some of my savings from cash into stocks. If the past two years have taught us anything, it’s that popular economic wisdom is often mistaken."
Sound familiar?
Friday, January 9, 2009
Eternally Economic Pessimist Sees The Light
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orator didn't convinced sellers today.
ReplyDeletei believe things will get better. i think the bottom is something we~ve already reached if not come very near. some corrections are still to come, altho not in the financial markets, but in the housing markets. prices are still too high. for loans to be feasible again, housing costs have to come down. the majority of legislators are reluctant to see this type of correction because they are landowners. but it has to happen and the sooner it does the sooner banks can begin lending.
ReplyDeleteThe gov should attach an automatic "ez-ira" to each job created by the economic stimulus plan. This would usher in the next wave of investor and get the market boosting again. People need to understand that they should NOT rely on social security, especially since the printouts they send out every year don't explicitly say they are "today's dollar values" and therefore are misleading.
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