Arianna complains that Warren Buffett is too positive about the economy, while unemployment us over 10% and many homeowners are facing foreclosure.
All this pom-pom shaking would have been okay if it had been accompanied by some ideas — any ideas — for what steps need to be taken for “the American economy to come back.” The assumption being that it would, somehow, just happen. That the rising tide of unemployment, foreclosures, and bankruptcies drowning so many Americans would, somehow, reverse itself. But the bout of truth-telling we so desperately need was absent.
This is where Arianna’s economic knowledge is absent. The Fed has interest rate near 0% and the government is deficit spending as if the world will end in 2012 and we will never have to repay it. The result is that the government is creating another asset bubble in the ongoing business cycle of booms and busts.
The recession is over. Companies will not immediately hire, as many have recently reduced their workforce. We are seeing worker productivity increase and hours worked inccrease. It is just a matter of time until companies increase their roles.
Assuming the government doesn’t make it too expensive to do so.