Strange winds are blowing these days, which prompts one to advise people to hold on to their hats.
The winds arise not so much from the anomalies that are inherent in every survey, whether it be in meteorology, economics or popular music, but from the tendency to extrapolate those anomalies to infinity.The drought covering much of the nation's agricultural areas has generated a spate of speculation about the greenhouse effect, a situation in which the pollutants of society are trapping heat and raising the Earth's temperature.
In economics, the odd convolutions over the past year have produced extreme forecasts of boom and bust, inflation and deflation, higher and lower interest rates, a new level of prosperity and a return to the dirty, dusty 1930s. Surveys served up daily show Americans on a new level of affluence and poverty worse than ever, consumers more confident than ever and more fearful, too, and jobs going begging but unemployment never worse for some people.
In such times it is difficult, almost impossible, to maintain a historical perspective, to avoid emotional involvement, to keep a cold eye on the larger picture, to step back a distance from the events.
Each day's statistics are projected beyond eternity and warnings issued, but the statistics themselves might be revised in the meantime. It happens all the time to jobless numbers, retail sales, corporate profits and more.
The strongest gusts seem to blow whenever things are not fully understood, as when the stock market crashed, or when an extreme is reached in prices, interest rates, crop statistics or commodity futures. Such events spur speculation, and the speculation is good for at least a month or so, or whenever the newer figures are reported or the old ones corrected. In turn, this sets off additional gusts from another quadrant.
Robert Prechter, well known stock market optimist, now preaches despair. Countless others who posed as bulls now shiver amid dismal echoes of the 1930s.
Over a longer time frame, these are some of the gusts that seem to have blown themselves out:
-The stock market crash will cause a depression.
-The dollar will continue to fall almost freely.
-As the economy's growth continues a rise of inflation is inevitable.
-The same factors will push interest rates into the double digits.
-U.S. manufacturing cannot compete with foreigners.
-Social Security will go broke.
Determining which events are winds of economic storms destined to grow violent, and which are meandering, meaningless gusts that will spend themselves is a challenge today for ordinary folks and those who claim expertise.
Winds, events and perspective change. The farmland drought isn't forever, and neither, perhaps, are the big budget and trade deficits and other economic problems that have been projected into eternity.