Take a step back away from the spin, and it's Alice in Wonderland. We keep following further down, and we keep spinning it. "No, it's not bad, no, we're okay, the fundamentals are sound." I wonder how much of what's going on with our economy is a matter of not recognizing that we can do either guns or butter, but not both.
Instead of recognizing that, and dealing with it, we spin it. Hide it. Redefine it. Don't let the public deal with what it takes to pour money down the hole of war; do the subprime thing, borrow the money we spend, keep the whole thing patched up, pretend it's fine.
Could it be that it was pretty much in the cards, when we embarked on that war, that what was then a reasonably healthy economy was going to suffer?
And then the unhealthy failure to deal with the problems created more problems, cascading forward until we're now rescuing our financial system, still, like Alice in Wonderland, spinning it. "We're fine, everything is fine, don't worry."
So this time we solve it, apparently, by printing up another $700 billion and passing it out.
Is there any point in this strange descent into the rabbit hole that we stop and say "Wait a minute. We can't pay for all this?" Wars, mortgages, trade deficit, federal budget deficit ...
And -- here's where it gets really bewildering for me -- with all of this happening, there are still candidates saying they are going to reduce taxes? Is it just me, or is that really crazy?
What if Ockham's Razor, the idea that the simplest explanation is correct, is in play here? What if what's really going on is that all the time it was really a matter of guns or butter, but not both? Like they teach in macroeconomics 101?
This morning our local newspaper (in Eugene, OR) quoted our congressman, Peter DeFazio, with the following. Strange, with all the celebration of the measures to save the economy, he seems worried:
"These people are all feathering each other's nests. Hank Paulson himself got a $50 million bonus for one year. The same year Wall Street rewarded itself with $60 billion of bonuses. That's not a mistake - billion dollars worth of bonuses in 2006. These people are out of control. They don't understand the real world. And for them to talk about main street or pretend they're populist and they care about main street and student loans and homeowners' equity is a bunch of B.S. We need major structural reform.