Everything's Fine!

Economists have kind of an incentive to keep things humming along, so when they say "we aren't headed into recession", I tend to discount their analysis. But this is simply excessive.

Government reports released Thursday showed surprising resilience in the broader economy, even as the financial system and the housing market continue to weaken. Retail sales rose 1.2 percent in November, and even housing-related areas like furniture and building materials were up.

Wholesale prices surged, indicating strong demand and raising cautionary flags about inflation, and a weekly report found that new unemployment claims fell by 7,000, suggesting a healthy job market.

OK, but inflation's up, too.

Look, the structural problems in this economy aren't going to all hit in a month. Retail sales is a function of consumers still having the easy accessibility to credit that they have. When that ends, the economy, which is driven by consumer spending, will sputter. And the credit crunch will eventually hit consumers, no matter how much money global banks inject into the system.

Denying that there's a larger problem with the economy because of the housing crisis is the worst thing we can do right now. The House and Senate certainly aren't. Neither is Alan Greenspan, who's listing the chances of recession in 2008 at 50-50. Of course, he has an incentive to wipe his hands clean of the matter, too.

All that wisdom about an “accident waiting to happen” — an accident for which he, of course, bears no responsibility.

Remember, this is the guy who brushed off Edward Gramlich when he warned about subprime problems; who “frequently argued there could be no housing bubble.”

The chutzpah is breathtaking.

In fact, the chutzpah of Greenspan can be applied to all of our economic "leaders."