I wasn’t going to post anything today, but I couldn’t resist commenting on the editorial in today’s WSJ, Get Ready for a Lost Decade. This editorial is of note for its gloom and hopelessness. It seems we’re facing a Great Depression-like decade and nothing can be done to prevent it. Our long period of prosperity has led to a fat, ineffective government that is powerless to alter our dreary fate.
Our point here is that the bad policy vicious circle probably has a long way to run. While it’s still possible to entertain wild hopes about an Obama administration, such hopes are partly self-liquidating on closer inspection — they exist in the first place only because Mr. Obama has given us so little to go on, except campaign boilerplate.
Bottom line: Politics is in charge — in a way that makes a lost decade of subpar prosperity more likely than not.
Perhaps this is partly a case of sour grapes as the unbridled free market philosophy so strongly espoused by the WSJ has taken one on the chin lately in much of the press. Combine that with the strong gains by democrats in the recent elections and I don’t think it would be a stretch to postulate that the editorial writers are feeling a bit Scrooge-like. Even so, this is a particularly glum offering.
A couple of observations, “the lost decade” is generally used to refer to Japan in the 1990s, not the U.S. in the 1930s, and as I have stated so often here the Japan Scenario looks more plausible than another Great Depression. Also, we have already experienced a lost decade: the S&P 500 today is trading lower than it was in June 1997. That’s over 10 years of lost growth.
But even Mr. Scrooge eventually learned the meaning of Christmas and it had little to do with his habit of counting money. So, Happy Holidays indeed.