But that didn't stop the Axis of Gloom, AKA the New York Times and its Beantown subsidiary the Boston Globe from publishing op-ed items this morning finding the cloud on the silver lining. A lugubrious Times editorial laments:
By the end of last week, any lingering hope that the housing downturn would be contained had vanished. As this week begins, signs of contagion seem to be everywhere . . . The fallout of housing-related turmoil is also likely to extend beyond financial markets.
The editorial ends with a call for closer monitoring of hedge funds.
Over at the Globe, liberal economist Robert Kuttner [pictured here] emits a sky-is-falling column "The crash that could come."
HISTORICALLY, October has been the month for big financial busts. But this year, October could come early.
Kuttner envisions this worst-of-all-worlds scenario:
Investors and ordinary citizens have good reason to worry about a perfect economic storm: a deepening loss of confidence in the dollar leading to higher interest rates; the higher rates bringing a crashing end to a hedge-fund, private equity, and merger binge that has depended heavily on cheap borrowed money; the boom in bait-and-switch mortgages ending in a morning-after of rising defaults and sinking housing values; inflationary pressures in food, oil, and other commodities leading to still higher interest rates -- all unsettling stock and credit markets and putting a new squeeze on consumers borrowed to the hilt.
Echoing the Times, Kuttner also closes with a shot at those evil hedge funds and a dollop of class envy:
When historians sort out what could well be the recession of 2007-08, they will wonder why regulators did not act before the speculative binge in hedge funds, private equity, derivatives, and subprime mortgages pushed the larger economy into a general downward spiral. As always, the details will be complex, but the basic reason is pretty simple -- too many well-connected insiders were making too much easy money.
Nothing infuriates a liberal like the thought of someone, somewhere, making a lot of money.
I wonder if the Times or Kuttner penned similar jeremiads prior to the internet-bubble stock market crash that actually did occur: during the Clinton administration?
Contact Mark at mark@gunhill.net
