Today’s issue of The News & Observer contains a story summarizing a discussion between the paper’s staff and Mark Vittner, an economist at Wachovia. While the story is right to note that the economy is mired in one of the most serious recessions in decades, it provides no explanation of what happened.
The article implies that the economy is struggling due to a credit contraction. That is patently not true. The economy’s woes stem from the bursting of a speculative housing bubble that has eliminated some $6 trillion in housing wealth and another $8 trillion in stock wealth. Most of the problems facing the economy — including credit problems — are the logical consequences of that fact.
It is hardly surprising that economists affiliated with Wachovia don’t want to call attention to the housing bubble. After all, the firm profited handsomely from it and then either ignored or missed the bubble completely. As a result, the bank made silly choices that caused it to essentially fail. As a result, the federal government was forced to basically seize and sell the bank.
While Wachovia officials can think whatever they want about the economy, the N&O shouldn’t uncritically report their views, especially when those views have no bearing to reality.
In April, Ted Vaden, The N&O’s public editor, wrote a column lamenting the paper’s poor coverage of structural economic issues. By reporting economic nonsense in today’s paper, the N&O not only proves, sadly, that little has changed but also does a disservice to the public.