It’s nice to know that in the depth of the worst financial crisis since the Great Depression, the world’s central bankers can still afford to hold a little soiree amid the luxurious digs of Jackson Hole, Wyoming. One would think they’d be hard pressed to afford a diner in Hoboken, NJ.
Ah, but there is light at the end of the tunnel, an isle of black in a sea of red. At least this is the message from Fed Chairman Ben Bernanke. According to Saturday’s New York Times, Ben reassured his cohorts that, “The prospects for a return to growth in the near term appear good.”
Okay, so we kind of have to overlook Ben’s announcement of the Great Moderation in his February, 2004 speech in which he declared an end to market volatility. In the context of the day on which he made that speech he was correct. The economy was floating heavenward like a hot air balloon. How was Ben to know the balloon was a fragile bubble?
Granted, “recovery” may seem to be a bizarre concept to an unemployed auto worker or to a family that’s just lost their home and are sleeping in their car. For many, the light at the end of the tunnel is a cop’s flashlight rousting a homeless man sleeping in a doorway.
The problem the poor have is that they simply don’t understand what Ben means when he says “recovery.” It is, after all, a new economy.
Recovery use to mean that the unemployed would get their jobs back. A return to growth meant that factories would start producing and workers would use their newly minted paychecks to buy what they produced.
The problem is that in all this contempory talk of recovery, there is a little adjective attached to the word that puts a nasty backspin on it: “jobless.” There may be a recovery, but the lower classes in this country ain’t going to see it. The factories that start producing are all off shore.
So, whose going to recover? When he speaks of recovery, Ben means an increased flow of pus seeping from America’s running sore, Wall Street.
The banks are thriving; therefore the economy is thriving, regardless of the misery enveloping Main Street. That great economic delusion, the Dow, is up, bonuses are being paid and the banks have cooked their books and are turning a profit.
It makes no difference that it’s all smoke and mirrors as long as Wall Street believes it’s real.
Of course, any recovery has to navigate its way around a landmine so wide and deep that it can’t be avoided—oil. The price of oil is down because demand is down. Once recovery begins, demand will increase and the price of oil will go up. Once price of oil goes up, the landmine explodes and the recovery is no more.
This is why Ben’s reassurances are so important. If we can’t have a recovery, we might as well believe in one. Where the discipline of economics falters, the discipline of theology rushes in to fill the void.