Tuesday, January 22, 2008

Fighting Against a Solution

This just in: Responding in a panic to a collapsing stock market, the Fed jumps the gun and announces an emergency interest rate cut early this morning of 0.75% -- the largest one-day cut in decades. MSN headline reads: "Stocks plunge despite an emergency rate cut by the central bank." I'm not surprised. As a rule, reactionary measures don't build confidence. They merely make you look unprepared, reinforcing and confirming suspicions that you're not in control -- that other, more powerful forces are forcing your hand. MSN could've written, "Stocks plunge because of emergency rate cut by the central bank" and hit closer to the truth.

This whole economic "crisis" fascinates me, really. The way I see it, it's a classic example of the power of words. Semantics, if you will.

Consider this: When was the last time you heard someone -- anyone -- in the media or government say something positive and hopeful about the immediate future of our economy? I could have amnesia, but I can't think of the last time I heard a positive spin on the situation. However, in the last fifteen minutes alone I've been told that "hard times" lie ahead, that "recession" is "inevitable", that the Fed can't stop the "bloodbath", that markets are in a "nosedive", that people are "worried" and "disappointed" and reacting out of "fear" as profits "plummet", "plunge", "slump", "slip", "drop", "fall", and otherwise come crashing down around us, all but destroying the middle class. It's enough to make me want to cash in my 401(k) over my lunch break and sock it away in a drawer. Every article and newscast on the topic proclaims through a megaphone: "These are desperate times, no one will escape, and no, not even God can save you."

Then, if you listen carefully, interjected midway through the latest gloom and doom analysis of our financial future, you'll hear Mr. Random Economist sharing a brief soundbite of conventional wisdom to help explain the situation: "If consumers lose faith, if they panic and pull back, then you can have recession."

Now, I'm not an economist, but I'm not an idiot, either. As the federal government, if the last thing you want is for people to lose faith, start to panic, and pull back from participating in our economy, what the heck are you doing crushing faith, causing panic, and encouraging people to pull back? Has anyone tried using reassuring words? Demonstrating a little faith? Offering a little hope?

I'm not advocating that the government or media sweep a real crisis under the proverbial rug. If this really is a crisis, and it sure looks like it is now, then fine, let's work to address it. But if the formula looks something like faith + confidence = a strong economy, stop fighting against a solution.

1 comments:

Aimee said...

Don't take Heather to slopes! Take her to a cross country course - it's not as scary. If Brandon would have taken me to a huge hill I would have laughed at him - laughed pretty hard, actually. Right before I slowly crawled down a hill. Start small.