Kai Ryssdal: The one thing that’s certain about what’s going on in this economy is that there’s a whole lot of stuff happening that’s not very certain. That’s the second half of the broadcast today — how businesses both big and small are dealing with that.
Right now, a perspective on how we got here from commentator and business writer Megan McArdle.
Megan McArdle: During the 2008 primaries, I was puzzled by all the people throwing themselves so furiously into campaigning. Why would anyone want the presidency? It seemed clear to me that a number of trends were about to converge into a very unhappy time for America.
I’m not claiming I predicted the financial crisis. I didn’t. But I did see a popping housing bubble, and a nation that had stopped saving because after all, their houses were so valuable. I saw that we’d likely have a recession because, well, you usually do after eight years of growth. And I saw that there was no agreement — among experts, voters, or politicians — on how to fix any of these problems.
Three years later, it is even worse than I expected. The financial crisis has made it hard for overindebted households to repair their balance sheets. That’s depressed demand for longer than usual, and sent unemployment skyrocketing. Many people have been out of work for years now, many may never work again. This is a tragedy for them, and an economic loss to their nation. Meanwhile, the federal deficit balloons as tax collections collapse and welfare spending rises. Much of the added government spending is a good idea, but it will still be a drag on growth when the economy finally starts to recover.
The financial crisis has also destroyed whatever political consensus we had — both about fixing our short term economic woes, and about our creeping fiscal disaster. The political dynamic has turned towards actively making things worse. Out of concern for the deficits, we’ve somehow managed to put our nation’s credit rating at risk, and yet we’ve utterly failed to outline a credible plan for either the country or the debt. All this just adds to uncertainty about the future. And uncertainty about the future makes it hard to invest in a new business, a new product, or a new idea.
Three years ago, I saw the wounds that economic trends were going to inflict; what I didn’t see was the ones we’d inflict on ourselves.
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