Not so fast. Barataria has been a source for positive economic news for at least a year now, but it’s always been tempered with caution. Things are turning around, yes, but the headlines hide the work that still needs to be done to make this into something much bigger. It’s up to all of us, really, to find a way to make it happen.
But we do have a party, at least as long as Ben Bernanke is buying. He’s a fun guy, really.
Stocks are up for a very weird reason. There has been a ton of good news lately, especially in corporate profits, so Ben Bernanke naturally told the world that the stimulus would not last forever. Since we’re still in Bizarro World, where good news is bad news, there was a bit of a slump in June. Bernanke recently softened that line and said that the handouts, er, stimulus might need to continue a while longer. Free beer at Ben’s place!
If that sounds like a bad reason to party, keep in mind it is summer. Relax, let it go.
The US government surplus is only for one month, but the deficit is down 44% for the year. This is due to a number of factors that we have been following closely. Income tax receipts are up, as are corporate taxes, thanks in part to a stronger economy and the increases approved last January. Spending is down due to sequestration and the big turnaround in housing which has made Fannie Mae a net contributor to the budget rather than a drain as they pay back what they borrowed.
What’s bad about this? Several things. We still don’t have a real budget – and don’t even have a process for creating one that cuts through the political gridlock. And there is no sense of long-term balance which a process like Simpson-Bowles would create. Worse yet, the sequestration is only now starting to take hold – and some defense workers are only getting 32 hours of work per week as a result. There is little to celebrate in how we got to a brief surplus.
This says nothing about the complete restructuring that will be necessary if we are ever going to have equity between how much we tax labor versus investment, how we handle the wave of retirement coming on, or any of the other problems we can see on the horizon. We’re not even close to a genuine restructuring, and that says nothing about how a global financial system will be stabilized.
Which naturally gets us back to the stock market rise. There is little doubt now that the economy is improving and confidence is coming back. This will continue to be the lead story through the long summer and people will have a much better attitude than they have in years. Given this news, we are almost certainly in the best time to take on a genuine restructuring. Markets are, traditionally, driven by either fear in bad times or greed in good times. What drives them in an era that nearly everyone can describe as “Meh”? Fundamentals. We’re not ready to be greedy yet, but are cautiously optimistic.
So who is ready for a new political movement of pragmatic centrism and compromise designed to build consensus? I realize that the short answer is “Just about no one in Washingtoon,” but that’s not good enough – or entirely true. It’s time for the voters to start insisting on a lot more.
Barataria’s focus in politics is going to have to shift to be at the vanguard of a movement like this, just our coverage of economics shifted to reflect the strong foundation for a new economy laid in 2012. It’s time for a new politics as well – one that serves a new generation. And before I go on about this I’d like to know what you think.
But we can also enjoy the party for at least a little bit. Think of it as a good chance to mingle and meet new people.