Saturday, February 28, 2009

"In This Economy, Fear Is Rational"

Title of a Feb. 23 article in The New York Times.

This is a curious piece, because despite feints at a conservative, i.e., rational, understanding of economics, it never once mentions the market. It's as if that whole concept has suddenly just dropped out of the picture (down the Memory Hole), an unfact, a datum non grata (gratum?). What better way to abolish the market than to silence the very word?

Unfortunately the market cannot be bypassed in this way; the market, in fact, is the reason the lords of finance are having such a devil of a time "managing" the world economy. You can't fool the market; the market is reality, and it's having its revenge.

I read a sci-fi novel once, I think it was called "Virus," which posited a financial meltdown caused by a computer virus. The solution in the end was that the world agreed to set the value of everything back to what it was before the virus struck, and proceed from there.

There can be no solution to the current panic without allowing the market to operate, painful though that may be for some, and perhaps for all.

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