What I Know About The Economy: Nothing

Remember recently when everybody just *knew* that oil was going to go to $200 per barrel? And that $4.00/gallon gasoline was here to stay? The little “gadget” on the side of my Windows Vista screen tells me that Light Sweet Crude is trading for $53.78 as I write this. Gasoline prices, which had fallen precipitously when oil went into the $30/bbl range, have crept back up to just under $2.00. And they’ve stayed there as oil migrated back up through the $40’s and now into the $50’s.

This tells me that our former assumption that the cost of gasoline was inextricably tied to the price of oil is simply wrong. Gasoline is just another manipulated commodity. Someone…somewhere…has decided that Americans can exist quite acceptably on $2.00/gallon gasoline.

And so we are.

Remember last summer when the “expert” talking heads on the cable financial networks were all predicting that the housing market had “reached the bottom” and things would start to get better? But they didn't. In fact, they got worse. Much worse, which I don't even have to tell you.

People don’t know shit.

And now, just about everybody has criticism for President Obama’s economic-recovery plan. Everybody knows better…everybody knows and will tell you with great authority what Obama should be doing and what he shouldn’t. They speak as if Obama is a complete and utter moron who has no friggin’ idea of what to do, and in any case has no advisors with any practical business knowledge whatsoever to offer advice. Democrats and Republicans alike criticize Obama’s economic plans with uniform vitriol. The man cannot do anything right. Or so it seems.

I am one person who has no opinion on this subject. I literally have no idea about what is going to happen. Or what “should” happen. Yes, my 401k is in the tank, mostly because I put my money into fairly aggressive funds, instead of the one-third stocks/one-third bonds/one-third cash ratio my boss advocates (or something like that). And it’s been successful for him, I might add; he says his 401k is doing well and has not lost any money.

But no matter who you talk to, people are just convinced that the president is not doing the right thing. Along with their criticisms, they offer all kinds of suggestions about this or that:

GM should just go bankrupt.
GM is too big to fail and would irreparably damage the economy.
AIG should just go bankrupt.
AIG is too big to fail.

Yadda. Yadda. Yadda.

Look, I might not be highly edumacated, but I’m not an idiot. I’ve studied the various theories and schools of economics (e.g. Adam Smith, Keynesian, Chicago, Marxism) and I’ll admit that I don’t understand crap about them. Microeconomics, macroeconomics…feh- who can say they truly understand all that mess as it applies to our world today?

And I’ll tell you something else: All these economic theories are probably right and wrong to some degree. In a complicated global economy, I don’t think that one theory rules supreme over another. Nothing happens in perfect laboratory conditions, and there are always variables that people don’t consider. Like those economic pundits on CNBC last summer. Boy, were they wrong! (Yet they blather on today unabated.)

Remember when former chairman of the Federal Reserve, Alan Greenspan admitted that he screwed-up? After the fact, of course…after he was no longer in his Wizard of Oz-like position. If you recall, Greenspan said that many of his decisions were based on the premise…his belief that corporations (i.e. banks) would do the right thing for their investors (and by extension, employees and customers). This is an astounding bit of naiveté, causing one (meaning me) to wonder if Greenspan was perhaps senile during his 16-year tenure as head of the Fed? Or was he just stupid? At very least, he was asleep during the 1970’s and 80’s.

Ahh - it is much too simplistic and extremely unfair to lay the entire blame for the country’s current economic woes on the slumped shoulders of Alan Greenspan. But if he was wrong in his assumptions about free markets and the economy in general, then what are we puny citizens to make of this? Do we think we know better than theses so-called experts?

I have a job. I have more money coming in each month than goes out. I am living my life normally. I’m holding off on buying that new car…waiting to see which car companies survive and which ones fail. (Good time to buy a Pontiac or a Saturn or a Chrysler? I think not!) Yes, I am “hoarding” cash but I haven’t reduced my 401k contributions in the hope that I’ll live long enough for the markets to recover.

People often try to engage me in these harumphy, ”Look what that Obama is trying to do NOW!” conversations. I always throw up my hands and stop them. Read my lips: I…do…not…care. I don’t have any control over that, and I’m not going to worry about or lose any sleep over it. I am not angry or frustrated. And I cannot predict the future any more than Alan Greenspan can. If Obama cannot do what he promised during the campaign – if he cannot even begin to bring the economy around, then he’ll be a one-term president. And we’ll go from there.