Wednesday, October 19, 2011
The Confidence Fairy has fled the US
Scared off by the sound of the housing bubble bursting.
The United States has a confidence problem: a nation long defined by irrational exuberance has turned gloomy about tomorrow. Consumers are holding back, businesses are suffering and the economy is barely growing.It has taken 30 years since the advent of Reaganomics to turn the US into a "Can't Do" nation. How long will it take to turn it around, if ever.
There are good reasons for gloom — incomes have declined, many people cannot find jobs, few trust the government to make things better — but as Federal Reserve chairman, Ben S. Bernanke, noted earlier this year, those problems are not sufficient to explain the depth of the funk.
That has led a growing number of economists to argue that the collapse of housing prices, a defining feature of this downturn, is also a critical and underappreciated impediment to recovery. Americans have lost a vast amount of wealth, and they have lost faith in housing as an investment. They lack money, and they lack the confidence that they will have more money tomorrow.
Subscribe to Posts [Atom]
Post a Comment