Remora
On the Optimism Front

We packed our Schopenhauer for our LA jaunt last week -- which should tell you that Limited Inc is not a member of the Optimists club, if you were wondering. However, Schopenhauer's extensive pessimism -- the sort of grief only a philosopher could manage, shedding tears over the pain and irrationality of individuation, and even more tears, acidically tinged, over the incongruous and unheard of reputation of Hegel, the contemporary Schopenhauer most despised -- is not a good guide to short range economic forecasts for first quarter GDP growth.

An optimism about such things has reigned in the columns of American newspapers for the past month. One wonders if this is a real boomlet, or if this is mere puffery. Although short term memory loss is the norm in this wonderful land of ours, still, there are those who remember the Y2K year -- the year that the Dow became unhinged, the year that lunatic predictions from George Gilder and James Glassman were seriously debated, even as the stuffing was dropping out of the structure.

Here's the WP today:

Reports Suggest Economic Recovery
Experts See Clear Signs Recession Is Fading by John Berry
"For the first time in many months, a series of economic indicators, released yesterday, all contained solidly positive news, suggesting to many analysts that the recession that hit the U.S. economy last spring may end soon.

The Labor Department reported that initial claims for unemployment benefits last week remained below the 400,000 level for the third week in a row....

Meanwhile, the Conference Board, a New York-based business research group, said its consumer confidence index jumped nearly nine points, to 93.7 this month, after being depressed in October and November following the Sept. 11 terrorist attacks. The increase brought the confidence index back in line with the University of Michigan's consumer sentiment index, which began to recover last month."

But let's look at what that index means. Here's the AP version:

"The Conference Board said consumers� assessment of the current economic climate was slightly more positive in December than November. Consumers rating current business conditions as good increased to 17 percent from 16.8 percent.

However, the board said consumers who felt business conditions were bad rose to 21.7 percent from 20.7 percent last month.

Nontheless Americans are still feeling more optimistic about the near future. The percentage of consumers who expect business conditions to improve rose to 22.2 percent from 17.7 percent in November, the report said. Those expecting conditions to sour declined from 11.6 percent from 16.9 percent."

In essence, Schopenhauerians still seem to outnumber optimists among the hoi polloi.

Limited Inc would like to be optimistic. No, that's not quite right -- Limited Inc would like to benefit from the optimism of others by placing beaucoup articles among the resurgent media. But Limited Inc would also like to be contrarian and hip and regard it all as a bubble. And the small contradiction can only be maintained if there is some wave of money coming in from the East. In the media world, though, it is hard to see that wave. More newspapers are cracking down on freelancers, shrinking book sections, getting the business editor to take over the recipe section when the old coot that used to do it died, etc. Magazines are still not seeing that advertising outreach to the highly confident consumer postulated by the Conference Board. And there's the gnawing question of debt -- as was remarked in the nineties, public debt shrank while private debt exploded. Now public debt is growing -- and there's only so much room in debt space, even with the whacky Fed jiggling us down to 0 down, O percent. I do have to say that the Fed has the best spin in the business -- articles like the WP one are routinely full of the goodies that Greenspan has given us because we were nice, not naughty -- all those car sales! all those home sales! without paying attention to the red that is accumulating because of all those car sales! and the debt load that is not shifting because of all those home sales! and the propadeutic example of Japan, liquidity trap city, which we are all politely avoiding -- a car wreck we are passing by, or at least we hope we are passing by.