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Don't Worry
Sep. 16th, 2008 09:45 amThe financial turmoil is unlikely to seriously affect the broad US economy, which grew at a revised 3.3% pace in the second quarter despite everything.
Brian S. Wesbury and Bob Stein 09.15.08, 6:00 PM ET
There is not enough room on page one of the nation's newspapers for all of this week's news. Any of the major business stories--the Lehman bankruptcy, a sale of Merrill Lynch, AIG capital needs, plummeting oil prices or new Fed lending facilities--could be above-the-fold headline news.
The U.S. is moving through its deepest set of financial market difficulties since the banking and savings and loan crises of the 1980s and 1990s.
The key thing to remember here is that the emphasis belongs on the word financial. The economy is not the problem; lousy lending standards and the excessive use of leverage are the problem. Gales of punitive destruction are knocking down one investment bank after another, while gales of creative destruction continue to move the economy forward. In fact, real gross domestic product (GDP) has grown 2.2% in the past year and accelerated to a 3.3% growth rate in the second quarter.
( Read more... )
Brian S. Wesbury is chief economist, and Bob Stein senior economist, at First Trust Advisors in Lisle, Ill. They write a weekly column for Forbes.com.
Don't Worry
Brian S. Wesbury and Bob Stein 09.15.08, 6:00 PM ET
There is not enough room on page one of the nation's newspapers for all of this week's news. Any of the major business stories--the Lehman bankruptcy, a sale of Merrill Lynch, AIG capital needs, plummeting oil prices or new Fed lending facilities--could be above-the-fold headline news.
The U.S. is moving through its deepest set of financial market difficulties since the banking and savings and loan crises of the 1980s and 1990s.
The key thing to remember here is that the emphasis belongs on the word financial. The economy is not the problem; lousy lending standards and the excessive use of leverage are the problem. Gales of punitive destruction are knocking down one investment bank after another, while gales of creative destruction continue to move the economy forward. In fact, real gross domestic product (GDP) has grown 2.2% in the past year and accelerated to a 3.3% growth rate in the second quarter.
( Read more... )
Brian S. Wesbury is chief economist, and Bob Stein senior economist, at First Trust Advisors in Lisle, Ill. They write a weekly column for Forbes.com.
