The other day somebody brought Larry Kudlow’s recent prediction of a “V-shaped boom” and his warning of problems for Republicans if they don’t recognize that’s what’s going to happen to my attention. I responded that Mr. Kudlow has predicted 15 of the last 3 booms and, consequently, I was inclined to take his predictions with a grain of salt. My correspondent then attacked me for ideological bias. Since I’m not a Republican, don’t really much care what Republican prospects are, and tend not to be ideological, I decided that our pleasant conversation had come to an unceremonious end.
I don’t know what’s going to happen. My intuition is that looking backward in five or ten years the authorities on these things will either describe what happened in spring of 2010 as a double-dip recession or that the shallow recovery of this spring proved illusory. That’s not a prediction. It’s just an intuition and I could well be wrong.
Guarded as I am about the country’s economic condition I relieved to say that I’m not as gloomy as Paul Farrell, writing at MarketWatch. After documenting the “happy talk” of the Wall Street “propaganda machine” in 2007-2008, 1999-2003, and 1929-1933, he makes the following dour prediction:
Yes, the Propaganda Machine is relentless, is growing stronger. And thanks to the Supreme Court’s incredibly stupid decision making corporations human, the Machine will feed more and more propaganda through the media, lobbyists and campaign donations, to control Washington. “The Machine” has your profile, knows you’re easily manipulated by happy talk and nonsense optimism.
There’s little you can do: Capitalism and democracy are dead. And unlike 2008, we will not be able to dodge a replay of 1929 and a Great Depression 2 after the coming crash.
A quick google of Mr. Farrell’s writing suggested to me that, just as Mr. Kudlow is something of a permabull, always seeing a boom just around the corner, so Mr. Farrell is a permabear. He’s been predicting a rerun of the Great Depression of the 1930’s for years.
Which way will the economy go over the next several years? Beats me.