Blaming the Wrong Group

Dan Gross is one of America’s best financial journalists, but that doesn’t mean he always gets it right (He did, after all, publish a book in the spring of 2007, just before the financial world fell apart, which claimed that “bubbles are great for the economy”).

In his latest column for Newsweek, “The Failure Caucus,” Gross maintains that those who are skeptical about the near term prospects for a sustainable recovery have a vested interest in a different kind of outcome — they want to see the U.S. economy fail.

Most Americans have a lot riding on the success of the government’s efforts to pull the U.S. economy out of its ditch: individual investors, bankers, Federal Reserve Chairman Ben Bernanke, Democratic politicians, and taxpayers. A somewhat smaller group has a lot riding on the failure of these efforts. I’m not simply talking about investors who are betting against the markets and who believe the recent stock-market rally is overdone. I’m talking about the Failure Caucus, a group spanning the political spectrum that has invested reputations, egos, and, in some instances, their political futures on the notion that we’re in for several more years of economic trauma.

Unfortunately, Gross relies on the old propagandist’s trick of lumping fools and crazies together with rational observers who have legitimate cause for concern, in a way that discredits them all.

Worse, he fails to see the irony of his position: it’s actually the permabull posse of policymakers and financial leaders — not to mention the cheerleaders in the media  — who failed to see the disaster coming, and who now argue that a debt-and-speculation-fueled overdose can only be cured with more of the same, who are the ones betting on failure.

In fact, the real risk right now, to paraphrase Michael Darda, an optimistic economist cited by Gross, is in being too positive.


The Failure Caucus
Daniel Gross
Newsweek, September 02, 2009 11:47 AM ET

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