From the fact that it always has, Mary.
In every recession, the economy has righted itself after the excesses were dealt with. Granted, this is shaping up to be a deeper and longer recession than the averages, but it's still following the regular pathway.
The economic cycle is one of boom-bust....always has been, always will....and bubbles are characteristic. We had a credit bubble...it popped...and now the unwind from that bubble is underway. Every time a bubble bursts there are winners and losers...this is and should be no different. The weakest retailers, banks, manufacturers, etc. are and should be weeded out. The poorly managed businesses and households need to suffer the consequences.....to prop them up is folly and only kicks the can down the road.
The surviving businesses, i.e. retailers, banks, manufacturers, etc., will grow and add jobs from the jobless who lost their positions during the recession. This is the way it has always worked and it has worked well for the greater good of the country. All the layoffs happening right now are just part of the normal unwind and necessary for a company to remain viable. It has to happen before the economy hits bottom. The current stock market rally could be telling us that it has sensed that the amount of unwind is the correct amount and renewed growth is on the horizon....maybe 6-9 mos. out.
IMO, the mindset in Washinton is dangerous because it's an attempt to abort the normal business cycle, prevent the pain that comes from bad judgment and poor management, and spend obscene amounts of money to restore everything to what it was two years ago. The stimulus package, even with the expected tinkering by the Senate, makes me very sad this weekend. |
