It's funny how no matter what your instincts seem to tell you about the current economic crisis, punditry-land can't wait to direct your attention to the latest signs of "green shoots" making their way through the cracks thus signaling the imminent return of the go-go recent past. Sure, the economy is shedding jobs at the rate of 600,000 per month and the American auto industry has been allowed to sink beneath the waves (those parts not wholly owned by foreign competitors) while trillions in taxpayer funds have been shoveled to the insolvent financial institutions that drove us over the cliff, but ignore all that if you will. You see, this time the very economists who missed the dangerous growth of the largest asset bubble in history and clapped like circus seals as the deregulated financial sector "innovated" the Derivative Beast into existence which now exceeds the combined GDP of the entire world in notational value are now on the case and ask that you trust their sober judgement on this.
Dmitry Orlov neatly splashes cold water on this nonsense in his latest speech. An excerpt:
Economics is not directly lethal, and economists never get sent to jail for criminal negligence or gross incompetence even when their theories do fail. Finance is about the promises we make to each other, and to ourselves. And if the promises turn out to be unrealistic, then economics and finance turn out to be about the lies we tell each other. We want to continue believing these lies, because there is a certain loss of face if we don't, and the economists are there to help us. We continue to listen to economists because we love their lies. Yes, of course, the economy will recover later this year, maybe the next. Yes, as soon as the economy recovers, all these toxic assets will be valuable again. Yes, this is just a financial problem; we just need to shore up the financial system by injecting taxpayer funds. These are all lies, but they make us feel all right. They are lying, and we are buying every word of it.
I highly recommend you read the speech in full. Sobering indeed.
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