vit_r

...There are two faulty assumptions here. First, saving America’s banks won’t save the economy. And second, the economy doesn’t really need saving. It’s stronger than we think.
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So, if you are not employed by the financial industry (94 percent of you are not), don’t worry. The current unemployment rate of 6.1 percent is not alarming, and we should reconsider whether it is worth it to spend $700 billion to bring it down to 5.9 percent.

An Economy You Can Bank On

The United States is indisputably undergoing a financial crisis. Here we examine four claims about the way the financial crisis is affecting the economy as a whole and argue that all four claims are myths. Conventional analyses of the financial crisis focus on interest rate spreads. We argue that such analyses may lead to mistaken inferences about the real costs of borrowing and argue that, during financial crises, variations in the levels of nominal interest rates might lead to better inferences about variations in the real costs of borrowing.

Facts and Myths about the Financial Crisis of 2008
V.V. Chari, Lawrence Christiano, and Patrick J. Kehoe
Working Paper 666

A recession could save your life. Christopher Ruhm, an economist at the University of North Carolina, Greensboro, argues that death rates go down during economic slowdowns. Professor Ruhm’s research indicates that suicides rise but total mortality rates drop, as do deaths from heart attacks, car accidents, pneumonia and most other causes.

A bear market might benefit you, if you are in your working years and won’t have to sell your stocks soon. That’s because you’re probably accumulating stocks now in your retirement account, and you’ll accumulate more when share prices are low.

Falling housing prices harm landlords and speculators but benefit renters and first-time buyers (if they can still get mortgages). These beneficiaries tend to be low-income families, thus in this respect the poor may benefit. Likewise, a recession lowers prices of gas, oil and food, which disproportionately affect the poor.

Income doesn’t have much to do with happiness. Americans haven’t become any happier as they have prospered in the last half-century. And winning the lottery doesn’t make people happier in the long term.

The Downturn’s Upside