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Why the despair?
Posted by: McQ on Tuesday, July 31, 2007

Kevin Hassett asks a fair question:
We found out Friday that the U.S. economy grew 3.4 percent in the second quarter. For macroeconomists, the number is a familiar one. The average annual rate of real growth in the U.S. gross domestic product from 1948 to the present was about 3.4 percent.

The U.S. is indisputably a great and thriving nation. The economy right now is about the same that it has always been, delivering growth and general well-being that is unrivaled in world history. And yet, judging by the mood of the country, Americans seem close to despair. Why?
There are a number of reasons given for the mood, but Hassett uses a quote from Alexis de Tocqueville to point to what I think is perhaps the most persuasive reason:
``On Great and Small Parties,'' he wrote, as if about today, that ``America has had great parties, but they exist no longer.'' He continued: ``I cannot conceive a more wretched sight in the world than that presented by different coteries (they do not deserve the name of parties) which now divide the Union.'' It is, he said, ``a shame to see what coarse insults, what petty slanders and what impudent calumnies fill the papers that serve as their mouthpieces.''
Said another way, we're being convinced, through politics, that "its all bad" even when everything indicates the opposite is true.
All this would perhaps be a minor nuisance if some other party of greatness emerged, but Republicans have hardly been better. Did you find the impeachment of Bill Clinton distasteful? It had precedents. The parties of the early 1800s astonished Tocqueville ``with what unashamed disregard of all the social decencies they daily arraign before the tribunal of public opinion, the honor of families and the secrets of the domestic hearth.''

Our politicians mischaracterize their opponents' motivations and focus on their personal failings, because they themselves have given up the quest for greatness. They have been honed into cynical creatures by the sharp blades of their own parties. Their failings reflect on us all, turning Americans into an unhappy bunch, even in the face of prosperity.
As good a description of what is extant today in America as any I've seen. And while some may draw comfort from the fact that it has precedent and we've survived it, there has to be some concern as well that a nation that has done as well as this one, despite our politicians, still hasn't come to demand much more from them than that to which we are continually subjected. Party politics as it is played today, as in the past, is both destructive and divisive. We should demand better.
 
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http://biz.yahoo.com/ap/070731/consumer_confidence.html?.v=6
 
Written By: markm
URL: http://
Reasons for malaise?

1. A war that drags on.
2. Stagnant median wages.
3. Growing health care costs.
4. Some pretty substantial evidence that the vast majority of the increase in wealth associated with this boom is going to a tiny fraction of the American population (which is just 2 & 3 put together).
5. The collapse in the housing market, which is the biggest retirement asset for most families.
 
Written By: Francis
URL: http://
As an example...

Back in March, my father an I were talking about the economy, and why the market has a built-in crash protection system now (retirement money going straight into investments). He mentioned that his retirement fund had increased 17%...

Not "Since it was started". He meant since the start of the year. for every $100 in the fund, he now had $117.

That’s not bad...

And Francis...
1. A war that drags on.
You really can’t do anything without mentioning the war, can you... Answer one question, genius: What ended the great depression? Hint: It wasn’t the TVA...
2. Stagnant median wages.
I would suspect that is because so many manufacturing jobs are headed to China, because you don’t want to pay $20 for a garden nozzle.
3. Growing health care costs.
Considering the free market doesn’t get to play in that ballgame, and it’s mostly being sucked into a slowly dying hell... You know what? Never mind on this one. You’re unable to see what’s what with health care, so I’m not even going to bother...
4. Some pretty substantial evidence that the vast majority of the increase in wealth associated with this boom is going to a tiny fraction of the American population (which is just 2 & 3 put together).
Because how DARE people that run businesses that make the things you can’t live without make money. I don’t see Moore handing over all his cash. Why should Gates? Successful people get lots of money. It’s one of the perks of succeeding.
5. The collapse in the housing market, which is the biggest retirement asset for most families.
Anyone that bought a house with the intent of selling it upon retirement was damned stupid. Apparently no one payed attention when the bottom fell out of the real estate market a couple of decades ago...

Buying a home with the intent of retiring when you seel it is playing the speculation game. It’s a bad idea for stocks, it a bad idea for houses...
 
Written By: Scott Jacobs
URL: http://
5. The collapse in the housing market, which is the biggest retirement asset for most families.
Any collapse in the housing market, IMHO, is based on people making poor choices. I am seeing houses added to the market on a daily basis here in north GA, and for the most part, the people I speak with say they got in over their heads, bought more than they could handle and did it on zero interest ARMs. All those wonderful zero interest months are now behind them, and they are facing the reality of a 400K mortgage with interest and PMI. Man I wish I had some extra cash to grab up some of those houses...

Net net though, it’s Bush’s fault.
 
Written By: meagain
URL: http://
4. Some pretty substantial evidence that the vast majority of the increase in wealth associated with this boom is going to a tiny fraction of the American population (which is just 2 & 3 put together).
I guess if you exclude all private pension plan investments that have grown in value during the same period, this could possibly be true.
 
Written By: Neo
URL: http://
Francis,

You at least look for some possible explanations.

My business partner’s sister lives in SF and told me a year ago the USA had been in recession for two years and we have to get rid of Bush.

I asked her who told her that the US was in recession...she said the paper and her friends.

This woman has an MBA in finance by the way.

Francis, I think you missed outsourcing as a reason as well.

Nothing like fear of losing your job, healthcare, etc. to get people in a panic, even if its not justified per se on the macro level.
 
Written By: Harun
URL: http://
Reasons for malaise?
Or perhaps it is a media - in nearly open revolt against this particular Administration and the right in general - that constantly ignores the positives and plays upon the negatives of your list. I keep on asking my BDS friends (yes, I still can have great interactions with folks that agree with Chavez that Bush is the devil) what evidence they have of the terrible economy. Without exception, it wasnt their situation, nor their contemporaties situation, but the picture of dispair constantly painted it the papers (NYT LAT SacBee BGlob DenPo) and on network news.
 
Written By: bains
URL: http://

 
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