Ten Years Later

At RealClearMarkets Jeffrey Snider takes note of the tenth anniversary of the financial crisis that brought about the Great Recession:

Using subprime as an excuse meant making a monetary event seem like something else, an exogenous factor beyond the scope of monetary policy. Irresponsible lending practices sounds just plausible enough to keep anyone from seeking the right answers, and maintaining Economists in the business of political authority. Inertia.

So, ten years later we still wait for recovery having supposedly avoided “the collapse of the global financial system.” In every one of those years the Federal Reserve Chairman appears in front of Congress, twice at each House, and declares how the economy is getting back to normal – only to be overshadowed by more events that equally have nothing to do with subprime mortgages.

Many people now speak of the US economy in particular as if it is booming. They do so, however, from only one piece of evidence: the unemployment rate. The number itself is uncorroborated by any other data, especially wage growth, therefore in the absence of corroboration it is supplemented by a plethora of anecdotes. Most of them either refer to some imagined labor shortage (again easily refuted by wage and income data, income data which declares rather than suggests alarmingly decelerating labor markets to nearly nothing the past three years, including every month so far of 2018) or the idea of globally synchronized growth.

This latter concept is actually based on the belated acknowledgement that something hasn’t been right about the world’s economy since, well, July 2008. In 2017, for the first time all the major systems were positive at the same time. How tiny little subprime managed to keep them from accomplishing this “feat” for a decade is another huge mystery.

Our economy doesn’t need more regulation, less regulation, additional stimulus, higher taxes or lower taxes. It needs a 12 Step Program. We haven’t even acknowledged that we have a problem yet.