If you’ve been following the news over the past 24 hours, you’ll get this new take on the old saw: Beware Greeks bearing bricks.
Here’s another old saw: There but for the grace of God goes us.
If you’ve seen the news, you know the news is not very good. The latest dank data came from the Phildadelphia Fed, which Thursday said manufacturing in the Mid-Atlantic region slowed in June and that the outlook for the future among these companies fell to its lowest level in 31 months. A similar report from the New York Fed on Wednesday said pretty much the same thing. A report Wednesday from the big Fed said factory output rose in May after declining in April, but that’s a month old.
Thursday’s report on initial jobless claims showed a drop of about 16,000 but said claims remained “above levels consistent with a healthy economy.”
Yesterday, Yale Professor and housing guru Dr. Robert Shiller told the Wall Street Journal that he believes there is a “substantial” probability that the U.S. could fall back into recession. In aninterview Monday with Bloomberg News, he said this:
“Well, I think that the economy is a complicated thing. A lot of things go one way and others go the other way. And the net effect is the sum of all of these things. So there are reasons to think that the economy will continue to grow.
Obviously, the stock of housing hasn’t been augmented. And the population is still growing. So you would think that we’ll catch up with her supply and come back. But the fundamental problem, yes, is people don’t think in terms of econometric models.
And the buffeting they’ve had, and the fact that they’re really suffering, and many people are unemployed, they’re losing their homes, it has just poisoned the atmosphere and has led to a sense of discouragement.
And that, on top of all the other factors, is the dominant influence at the moment.”
What happens if that sense of discouragement turns to anger? We may have gotten a sneak peak a few months back in Wisconsin, when public-employee union “activists” turned the statehouse into a sewer and physically attacked those with whom they disagreed. We also gained insight via comments made by Massachusetts Democrat Mike Capuano, who told a group of unionists that “every once and awhile you need to get out on the streets and get a little bloody when necessary.”
If people riot over the result of a hockey game, what could happen if the Supreme Court rules the insurance mandate in Obamacare unconstitutional, thereby killing it? Or if necessary cuts are made to countless federal social welfare programs? Or if Obama is defeated in the 2012 election? (Remember, those hockey rioters were Canadians, who in general are better behaved that many of their neighbors to the south.)
So Congress dithers, or perhaps the better word is diddles, over the federal debt ceiling even though every one of them (except perhaps the dimmer bulbs in the California delegation) knows that spending at current levels can not be sustained under any circumstance.
We hope Ben Bernanke is right that the current slowdown is a bump on the road to recovery fueled largely by the hike in gas prices, that growth will pick up again. But we, like Shiller, wonder. Best to avoid anyone bearing a brick–other than a bricklayer, of course.