weekly response

There's been some exciting news about the economy over the last 24 hours as stock prices plummet and job growth seems to be picking up.  The media is having a blast with sensational graphics and dramatic headlines, but let's hang on to our thinking caps and get a few things straight.

1. Now is a splendid time to buy stocks.

If you can swing it, if you happen to have money you can manage to part with for a while, invest it in Wall Street.  Stocks are suddenly a bit cheaper, so gobble them up while you can. Help yourself, help the economy.

2. Unless you're a day trader, today's stock plunge doesn't need to affect you.

Regular people who have invested part of their wealth in stocks have no obligation to sell them on a day like today. In fact, to do so would be exceedingly silly.  Those who can stomach the temporary disappearance of wealth and hold onto their horses of impulse will be rewarded later when things return to normal.

3. Things will return to normal (eventually).

Better yet, things will continue to improve after they've returned to normal. Markets go up and markets go down, and all we have to do is wait.

4. The media needs to get a grip before it is too late.

Naturally, the media are inclined to frighten the masses into thinking the economy might never recover. It is a captivating story. But this sort of yellow journalism has a real impact on consumer and investor confidence and, therefore, a chilling effect on economic growth. In the long run, the press is only making things worse for all sectors, including its own, by inspiring fear and reservation in the public.

5. The economy just added 112,000 jobs.

Finally, unemployment is down, if only by a smidge. With stock prices down (read: more affordable) and jobs up, the economy might be able to pick up some real momentum.

We can only wait to see whether these predictions and assessments will hold true. In the meantime, I don't think there is any reason to dismiss optimism entirely and squander opportunities for growth.

In the aftermath of Tuesday's debt deal, liberal commentators and members of the Congressional Progressive Caucus are furious at radical Republicans for hijacking the debt debate and forcing President Obama's "surrender." But, as Daniel Markovits writes in his piece, "How the GOP lost on the debt deal," published yesterday in the Los Angeles Times, it's a wonder things didn't end up a whole lot worse for the left, considering the Tea Party's extremist negotiating tactics.

Perhaps most importantly, Republicans can no longer bolster their hand with the ultimate bargaining chip: the threat of default. When a bipartisan commission meets this fall to negotiate further budget cuts, anti-tax hawks will no longer hold the power to shove the economy into the ditch; they will settle instead for indignant sound-bytes and symbolic bluster. Though the President is disappointed that Washington wasn't able to grow up and stitch together a bigger deal, the fact remains that the nation has escaped with Medicare, Medicaid, Social Security, and education grants - the pillars of our social safety net - fully intact.