Monday, June 04, 2012

Failure To Freak Out Has Been The Problem For Years


It's clear that the economy remains stuck in low gear, and it's all too easy to see how bad decisions out of Europe, bad numbers out of the emerging markets, and news out of Congress lead to further deterioration as the years goes on. But, a few months ago, a lot of smart people thought it was easy to see how better decisions out of Europe, a soft landing in China, relative calm in Congress, and surprisingly good news out of the American labor market were going to lead to a better 2012 than anyone had predicted. It looks like they were wrong then, but that should also remind us that they could be wrong now.

We never had enough good news to justify the repeated rounds of optimism. The premature declaring of victory on the economy has helped to ensure that the nobody in charge felt much need to do anything about it. It's wrong to lurch from "yay recession over" to "DOOM DOOM DOOM," not because DOOM DOOM DOOM is too pessimistic, but because DOOM DOOM DOOM is where we have been for years.

The freakout should not have ever stopped.