Comments on: Evidence that we should freak out, episode II

By: Thomas Brownback

Thomas Brownback — Sun, 12 Oct 2008 11:10:37 +0000

Some evidence that we shouldn't:

1) University of Chicago Economist Casey Mulligan's Op-Ed in the NY Times, arguing that this is a banking crisis, and banks are isolated from the rest of the economy (albeit counterintuitively and counter to the examples given on rc3 so far).

2) The markets are beginning to show some resistance to lower movement.

3) "The $150 oil shock... worsened the credit crunch... But now oil is about $80 a barrel. When the dust finally clears, lower energy prices will be an important tax-cut, pro-recovery factor. Meanwhile, the exchange value of the U.S. dollar is up 16 percent in recent months. That's an anti-inflationary sign of confidence." - Lawrence Kudlow

By: Chris Adams

Chris Adams — Sat, 11 Oct 2008 18:08:20 +0000

Yes – it’s not that the costs are unmanageable, it’s just that a lot places are frozen: that translates into orders not being placed, bills not being paid, etc. If that lasts for too much longer, the sky really will fall because companies are going to have trouble making payroll and everyone is going to stop spending anything which they don’t have to.

I’m fortunate to be employed by a well-funded university but I have friends who work as independent web developers. One scary bit of news is that work is really hard to find at the moment: not because clients aren’t interested but simply because there’s a lot of wait-and-see going on, which isn’t sustainable when you still have to pay the rent.

By: Rafe

Rafe — Fri, 10 Oct 2008 20:57:31 +0000

I worry more about companies who cannot get credit at all.

By: Jacob Davies

Jacob Davies — Fri, 10 Oct 2008 20:55:35 +0000

And yet that's like a 7-8% rate. It's not impossible to borrow at that rate and still make money from whatever you're funding. It's just more expensive.

I'm not saying everything's fine. I'm just saying that the sky hasn't fallen yet.