From Newsweek’s Jan. 25 edition:
No Rational Exuberance – Op-Ed by George F. Will
Today’s unemployment rate is 10 percent; the underemployment rate—the unemployed, plus those employed part time, plus those discouraged persons who have stopped looking for jobs—is 17.3 percent. Almost 40 percent of the unemployed have been so for seven months or more.
….With prolonged high unemployment predicted, consumer spending is paralyzed by caution. With Washington experiencing prolonged hyperkinesis, businesspeople are paralyzed by uncertainty about what the rules and costs of commerce are going to be. What would a cap-and-trade carbon-control regime do to energy costs? What will be the costs of whatever the Environmental Protection Agency decides to do on the basis of its “endangerment” finding that carbon dioxide is a pollutant? What will health-care and tax costs be?
….There is excess capacity in office space (in Manhattan, square footage equivalent to 920 football fields, according to The New York Times), malls, apartments (5 million are vacant), and in shipping, etc. But the economy, dependent on government-manufactured demand, is like an athlete on performance-enhancing drugs. Writing in Barron’s, Vitaliy Katsenelson compares the economy to an injured athlete who takes steroids in order to keep competing. They exaggerate the athlete’s recovery and mask the pain, but require steady doses and produce dependency.
The 1990s were the stock market’s best decade since the Depression; the 2000s were the worst. The 2010s? Today, talk about a “new normal” often includes gloomy references to Japan’s “lost decade” and a possible American future of protracted slow growth.
The administration, however, projects deficits three times larger than the post-1945 norm, interest rates less than one half the norm, yet growth 10 percent higher than in the booming 1980s. That is irrational exuberance. But nowadays there is no other kind.