Monday, July 20, 2009
Economist: "The Fevered Activity at Goldman Is a Sign of Lingering Economic Illness, Not Economic Health"
PhD economist Robert Kuttner points out that Goldman's health shows the economy's sickness:
The financial sector has not yet returned to health, despite outsized profits (and bonuses) reported by the likes of Goldman Sachs. This is the kind of purely financial engineering that caused the collapse. The fevered activity at Goldman is a sign of lingering economic illness, not economic health. The rest of the economy, which depends on the financial sector for real investment capital, is still deeply depressed.Kuttner also points out the dismal unemployment situation means that things are getting worse, not better, and that America has to rebuild its manufacturing sector before a lasting recovery can occur.
Kuttner ends with the following point:
We are in a national economic emergency. This is not just about talking up the economy by emphasizing good news. The administration needs to stop smoking its own green shoots and offer strategies equal to the magnitude of the crisis.I couldn't agree more. The government's attempt to instill false confidence will backfire. Only real structural change can fix the economy.