EVERYTHING IS OUR FAULT
So says Time blogger Michael Scherer:
The most important sentence I heard last week came from Mark Zandi, the noted economist who has been advising both political parties on the economic crisis. "The difference between a recession, a very severe recession and a depression is a lack of confidence," he said. It is a troubling thought, even though it's not at all controversial.
Most of the press coverage about the U.S. Government's response to the crisis thus far has focused, appropriately, on what is being done.... But these policy issues are small compared to the impact they have on the nation's psyche. Confidence is the ultimate thing that will either save us, or doom us.
In other words, even if the toxic banking problem was solved tomorrow, and the stimulus was big enough to rebuild every bridge in America, none of it would matter much if you stayed scared, if you remained worried that you could be laid off tomorrow, or if you started padding your mattress with $100 bills. The reverse is also true: If the credit, contraction and employment problems continue for the foreseeable future, but the American public maintains its confidence in a coming recovery, then the damage done will be considerably less severe....
Of course! We are the reason the economy isn't recovering, just as we are the reason it tanked. (I'm really sick of the latter argument, which we hear even from the likes of Frank Rich; there he was again yesterday, talking about "an American faith we soiled and buried with all our own nonsense in the first decade of our new century." Hey, Frank, most of us never had a thing to do with that "nonsense," and most of those who did were led to it by Pied Pipers with infinitely more money who never fully explained their schemes.) And now we're just being irrational -- we're not having a perfectly reasonable response to layoffs, wage cutbacks, tanking 401(k)s, and near-daily stock market declines so massive that any individual vote of confidence we might make with our pittances in the market are like gnat flatulence in a hurricane.
Oh, but, Mr. Scherer tells us at his blog, if Barack Obama doesn't personally correct everything that's our fault using his superhero powers of global mass hypnosis, everything will be his fault:
If Obama has a single task before him, as the most celebrated communicator of his generation tasked with leading the economic recovery, it is to temper this rising contagion. Good speechs will not be enough. He will, over time, have to find a way to calm the markets, address the concerns of his responsible critics, and then use these successes to assure consumers everywhere that better days do, in fact, lie ahead.... Obama may be just the man for the job. (I can't really think of anyone else up to the task.) That is the hope, at least.
Obama has to expend some effort talking us off the ledge, but I'm with Paul Krugman -- what Obama has to do is crank up the firehoses and make sure there's enough policy water pressure to put out this damn fire, which, as Krugman argues, doesn't (alas) seem likely so far.
And if this is all in our heads, I'd be interested to know what Scherer thinks ought to be done about Obama's irresponsible critics -- or, as I like to refer to them, the entire national Republican Party. Is it also Obama's job to persuade them to stop proclaiming him a usurper/Stalinist hell-bent on destroying America in order to usher in a thousand-year Reich of Big Government? If this is just a national mood disorder, do you think those people might have something to do with it?