Friday, June 27, 2008

Where's this headed?

Steven Pearlstein's column today in the Washington Post argues that we are at the beginning of our economic woes rather than near the end.

He writes

The real problem is that the underlying fundamentals had gotten badly out of whack, making the economy susceptible to a shock. The only way to make things better is to get those fundamentals back in balance. In this case, that means bringing what we consume in line with what we produce, letting the dollar fall to its natural level, wringing the excess capacity out of industries that overexpanded during the credit bubble and allowing real estate prices to fall in line with incomes.

The diagnosis seems right on track to me. All that is missing, as some of those writing comments on the Washington Post noted, is a solution. I continue to believe that the solution in Trading Away Our Future is an appropriate one.

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