Irrational Expiation

Stock investors, consumers, government budgeters, even the Federal Reserve, all seem to be acting like it's payback time after an eight-year-long economic fling.

The nation is skirting recession. Growth in the second quarter was a thin-ice 0.2 percent. The federal budget surplus has nose-dived. That old standby, consumer confidence, has notched down just before the holiday shopping season. And most other big economies are in the same boat.

An unnecessary guilt pervades this downturn, a feeling that too much confidence was put into dotcom investments, ever-rising stocks, Alan Greenspan, and a thrifty Congress.

But if irrational overconfidence is a sin worth expiating, then surely Americans must be equally on guard against excessive caution. Public attitudes matter more than financial numbers in today's economy. Investors can learn from past mistakes while still venturing forward.

Those who've been through recessions know the drill: Plan for a cyclical upturn. The economy's strengths remain solid, with many of the digital-age gains of the '90s locked in.

All eyes need not turn to Washington for more spending and more interest-rate cuts. The answers lies in restoring faith in ourselves as smart investors and intelligent consumers.