|> Why do these comentators (not JIm) keep mentioning "our strong
> underlying fundamentals"?
Partly it's because of the return of the "business confidence" vision of the
economy amongst observers. This vision preceded Keynes, but is very
Keynesian, in which expectations -- how happy businessclowns and consumers
are about the future -- drive the economy. It links up with the Wall
Street-centric focus of the media, which see it worth their time and ours to
report the almost meaningless ups and downs of the Dow (the Las Vegas of
Manhattan). Obviously, the Stock Market reflects expectations in a big way,
but I think that the extension of this vision to the economy as a whole is
In this vision, fear & trembling about what may or may not happen in the
coming war against Iraq is front & center, so economists can say that as
soon as war matters are settled, everything will be hunky-dory.
Complementing this very subjective view of the economy is a nationalistic
and neo-liberal vision of the economy in which _of course_ the US
"fundamentals" are doing fine since business is getting the government
programs, subsidies, and tax cuts it wants more or less and those pesky
unions and environmentalists are at bay. (Today, as part of the "Washington
Consensus," neo-liberalism and US nationalism are combined, each helping the
other.) It's a great country, what? Since flexibility and privatization and
all that stuff is taking over the world, everything will work out, as part
of a supply-side vision. Of course, it's all great for the individual
businesses that the government helps.
The Two Towers of the conventional wisdom (over-emphasis on expectations and
nationalism/neo-liberalism) distract the observers from the fundamentals
that are amiss, i.e., for the US low profit rates, high corporate debt,
unused capacity, high consumer debt, a housing bubble, a large deficit on
the current account, etc.