Unfortunately – or not – I sold all my investment assets a couple of years ago when I moved overseas. Nonetheless, I still try to follow the movement of the markets, as they are often seen (kind of incorrectly) as the bellweather of the national economy. Then again, as the perception gains currency, it becomes kind of a self-fulfilling prophecy.
Yet, I find it hard to believe that anyone can draw any kind of clear-cut conclusions (if that were ever really possible) from the movement of international markets this past week. First the Dow takes an O’Doyle-esque cliff dive, and now we have rallies like it’s free-money Tuesday. It’s all very curious, and I think this only supports my this-economy-is-whack! hypothesis. The slalom fluctuations in the markets are not really acting as deadweight to our country’s economic output or productivity gains, and yet confidence is lower than low and banks are ready to implode. And while the markets are clearly freaked out, nor do they seem to be particularly assuaged by Federal confidence-building measures, which seem to have only been temporary nudges at best. All in all, market movement is absolutely idiosyncratic.
Like so many others, this seems to be an issue of culture. If it defies explanation through conventional mechanics, then the human element has become such a swollen variable that rational reasoning is no longer entirely adequate. As I seek it, it looks like the markets and the consumer class cannot square the relative health of the traditional economy with the flatlining of investment entities on such a massive scale. When this occurs, confidence ceases to become an issue – it becomes the issue. At the same time, the markets flail because the information, however psychologically motivated, is one that defies economic metrics that are not spelling doom and gloom. In some ways, this is even more unsettling. If it’s a recession, let it be a recession. If it ain’t, then it ain’t. But here, no, we have uncertainty par excellence. Where we don’t even know where we are, where we’re going, or how to get out because indicators aren’t aligning with historical models.
Normally, in quotidien crest-trough business cycles, economists are usually able to project with moderate accuracy when and how the economy will recover or slide. But not now: everyone is panicking because our compasses are spinning, the gas light is on, and yet we’re still plodding along; utterly incomprehensible.
Is this worse than a recession? In many ways, no, of course not. Although unemployment is mounting, we’re not getting anywhere near Great Depression levels (to which this crisis is most often compared). If anything, the human fallout is more reminiscent of the dotcom bubble of the early 2000s, which was historically minor. Is this a reason for optimism? Um, sure. But it doesn’t guarantee that we’re going to get out of this cleanly. But, for now, if the climate of panic continues, we could stumble into a real recession from our own moodiness about the markets. Even if we don’t, history may look at this moment as being one of singular confusion and irrationality from confusion.
Indeed, from a human-organization viewpoint, the international reaction is not surprising. We humans are creatures of habit, and we like to have control over our own destinies. When bad things happen that are seemingly beyond comprehension, it is often chalked up to conspiracy or supernatural malice. And here, the cosmology that emerges is not one of forest spirits or Baal, but of singular corporate greed and runaway deregulation – as if something this complex has such simplistic, faraway origins. But the narrative is clung to with desperation, and won’t be released until it’s safe to feel in control once again.
