Just Another Fix

Rather than identify the economist – because he’ll be eating his words shortly – here’s what his listeners heard him state today at the Northwest Intermodal Conference. The Great Recession is over, he said, and a sustainable period of recovery and growth is underway. [“Sustainable” … that’s the new buzzword. Just sprinkle that throughout your conversation and your listeners will surely be convinced that you know what you’re talking about.]

Recovery and growth? Maybe that economist hasn’t heard yet about the troubles we’ve caused around the globe. He should be paying attention to what the Business Times has been reporting:

“(LONDON) World stocks and the euro skidded yesterday as excitement over the euro zone’s mammoth US $ 1 trillion rescue package gave way to doubts whether its weakest economies can meet their end of the bargain and deliver drastic debt cuts …

“Moody’s credit ratings agency warned it might downgrade Portugal’s debt rating and further cut Greece’s to junk status, noting the contagion effect of Greece’s crisis on the other euro members. ‘Contagion has spread from Greece – historically a weaker credit in the context of the euro zone – to sovereigns with stronger credit metrics like Portugal, Ireland and Spain,’ Moody’s said.

“‘Even though one of the worst scenarios – a Greek default – has been avoided for now, in many ways solving the bigger problems have simply been postponed and new issues could emerge in places such as Portugal and Spain,’ said a strategist at Morgan Stanley Securities.

“‘Progress has been made, but the whole sovereign debt looks very much like a can of worms,’ according to the markets analyst at BGC Partners.

“‘As the dust settles from yesterday’s shock and awe bailout package, the realization that this is a sticking plaster to a much deeper rooted problem has slowly permeated through and the euro has given up most of yesterday’s gains,’ said an analyst at CMC Markets.”

Yesterday’s LA Times headline put it this way: “Europe bailout fights debt crisis with more debt”

“With fresh commitments to lend potentially huge sums to struggling borrowers, ‘it does seem like you’re just giving the addict another fix,’ said the economist at Chicago’s Northern Trust Co.

“According to one Euro Zone official, the troubling message is that ‘the euro is going to be propped up by massive bailouts – not just for Greece but for every profligate and highly indebted euro zone member.’ The global economy ‘remains weak and uncertain,’ he said, ‘and the biggest cloud hanging over it is the massive increase in public indebtedness on both sides of the Atlantic.'”

A “sustainable” recovery – here as well as globally – will be possible only when millions of jobs are created on this “side of the Atlantic” by another WW2-style Emergency Shipbuilding Program.