I don’t buy the economic recovery.
A big bank merger and an unexpectedly high growth announcement last week led to some optimistic speculation by Wall Street’s optimistic speculators. Even a front-page NY Times analysis couldn’t help but credit Bush fiscal policy (the tax break) for the turnaround.
I don’t think we’re in a turnaround. I think we’re downing an extra cup of strong coffee and believing we can make it through the night because it’s 4am and almost dawn. But the long dark night has barely begun. It isn’t 5am – it’s only 5pm. We have yet to pay for the economic excesses and looting of the past several years.
So, I don’t think that tax credits for the wealthy will ultimately accomplish more than redistribution of national wealth in the wrong direction. And a big bank merger, though taken as a sign of increasing business activity, is really just a circling of the wagons. Mergers and acquisitions are ways of fooling the balance sheet into appearing more profitable. Bigger isn’t usually better, and any money made is from increased efficiency (firing redundant workers), not new prospects.
I’m not familiar enough with economic cycles to know when the other shoe, already dropping, actually hits the floor. It’s the reason I can’t play the stock market guessing game with any accuracy.
But a few kind readers of this blog, though interested in my more recent musings on music, thinking, and fun, have asked to say something about the economy, and to follow up on my predictions last year of a prolonged downturn. If I were an investing man, actually had capital, and didn’t care about human rights abuses, I’d probably invest in Eastern European stock funds, foreign currency, European bond funds, and China. At least that’s what I have been telling people at parties this year. If it were me, I’d invest in social responsibility funds – problem is, most of them (Ariel, Calvert) aren’t really social responsibility. They just have filters for cigarette, alcohol, and obvious employee abuse. It’s much harder to find, say, a solar power fund or child welfare fund.
So, in short, the predictions I made last year still stand, even though I’m not thinking so much about the economy these days. Instead, I’m trying to remember that the worse things get, the better they might get in other ways. If we can resist the temptation to blame our misfortunes on one or the other ethnic group, hard times might even help us reinvigorate our civic and community values.