Addressing economic fears
THE wild ride on Wall Street is, evidently, not yet over. If this Monday did not repeat ``Black Monday,'' Oct. 19, it was probably at least a ``Charcoal Gray Monday.'' Hopes of a quick bounceback are more subdued.
This doesn't mean, though, that we are in for economic disaster, or even necessarily a recession. A ``correction'' in the stock market - whose five-year-old bull run antedates even the current economic expansion - was widely expected. But fundamentals of the United States economy remain strong. Growth is up to 3.8 percent (annualized) for the third quarter, from 2.5 percent in the second. Personal income is up. Inflation remains in abeyance, despite the trade deficit. And unemployment remains quite low.
Public fear about the economy, however, has yet to be squarely addressed. The ``budget summit'' the President called for at his press conference Thursday night was a good idea. But White House officials and congressional leaders involved are having trouble enough finding a relatively trifling $23 billion in deficit reduction, even as paper losses on Wall Street head toward the trillion-dollar mark. As economist Barry Bosworth noted, ``It doesn't sound like they have a plan.'' The markets are surely responding to that sense.
We would continue to urge the budget summiteers, on both sides, to move swiftly toward a compromise, preferably one that clearly demonstrates conscious decisionmaking rather than merely yielding to automatic cuts. Statesmanship in all this will have more to do with flexilibity than sticking to ``principles'' that have lost relevance.
Individuals, meanwhile, can help by continuing to ``vote'' for economic stability by spending and saving appropriately - neither holding back out of fear or plunging recklessly ahead out of greed. It may be a good time to get a good deal on a used BMW.
We would have liked to hear more Thursday night about the presidential commission to investigate the stock market. The banking reforms of the 1930s were a major means of containing the damage caused by last week's crash. What Wall Street is now experiencing is sure to lead to reforms in the areas of computer trading, options and futures, and the ``specialist'' system of marketmakers.