Newspaper article THE JOURNAL RECORD

Hoist a Cup of Reality

Newspaper article THE JOURNAL RECORD

Hoist a Cup of Reality

Article excerpt

NEW YORK -- There's no sense trying to throw cold water on this hot economy. It won't do much good -- merely give off a puff of steam while activity continues to percolate, as even Alan Greenspan, the Federal Reserve chief, has learned.

The president proclaims a balanced budget. Business spends and so do consumers. Economists declare that conditions today are the best in a generation. Money pours into stocks, and market analysts talk about months of new highs to come.

Financing costs fall, builders rush to construct megamalls, highway departments build new roads to accommodate them, big-name retailers hurry to fill the spaces and small businesses make plans to benefit from the onrush of shoppers. Bad news, as in the currency collapse of some emerging nations, becomes good news because it will lower costs for U.S. importers and help keep inflation at bay. And good news is made to sound better still because, you know, "this is a new era." Still, there are good reasons for the economy and its promoters to take a few cold sips of reality right about now, just so reason too doesn't get consumed in the enthusiasm. * Using commonly accepted accounting methods, the budget hasn't been balanced. Only by using government-style accounting can the numbers be made to balance. Government-style accounting moves money from trust funds, especially Social Security, to achieve the appearance. But that doesn't change the grim reality. Without Social Security's $109 billion, the 1999 budget would be that much in the red. And that red ink doesn't include a lot of other obligations, such as borrowings from the highway fund and airport fund. Not to mention all the unfunded pensions. * Business has gone a long way toward putting itself on a sounder financial footing, but big questions arise over consumer finances. Wages have risen, but bankruptcies have too, reaching 1.3 million in 1997. Something's wrong here. Further documenting the instability is the fact that non-mortgage consumer debt is nearly 21 percent of disposable income, which is worse even than Uncle Sam's repayment obligation. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.