Those Magical Beans

I'm continuing my newfound archaic term binge. Beancounters is the derisive way the accounting department of a business was referred to sometime back, in my youth. Assuming no one exciting enough to notice would ever deal with the money, we sailed on towards glamor fields.

The Revenge of the Beancounters is upon us.

The economy almost stalled in the final quarter of last year with a growth rate of just 0.6 percent, culminating its worst year since 2002.

The Commerce Department's report on the gross domestic product, released Wednesday, showed an economy that had deteriorated considerably during the October-to-December quarter as worsening problems in the housing market and harder-to-get credit made individuals and businesses more cautious in their spending. Fears of a recession have grown.

For all of 2007, the economy grew by just 2.2 percent, the weakest performance in five years, when the country was struggling to recover from the 2001 recession. The housing collapse dealt the economy its biggest blow last year. Builders slashed spending on housing projects by 16.9 percent on an annualized basis, the most in 25 years.

The fourth-quarter's performance was much weaker — half the pace — than economists were expecting. They were forecasting growth to clock in a 1.2 percent pace.
(snip)
Consumers whose spending is critical to the economy's well-being tightened their belts.

See, you might have thought that you weren't buying up all those precious goodies because you couldn't afford them, but it's all in your mind. You're cautious because you 'fear' recession, you tightened your belt. No way did you barely make it from one payday to the next without feeding your kids gruel and hitching a ride since your car doesn't run on the fumes you can afford.

The economics writers are carefully taught that times are not hard, no, it's about self-fulfilling prophecies and consumer confidence.

The clever accounting that sold houses at far above any value they reasonably could represent, to buyers whose incomes were far below that traditional level that could justify the expense, at interest rates that were only affordable for the limited time the buyers were supposed to rampage through getting the next ludicrous loan - that is the beancounters' way of printing valueless money. In the ARM world, value has disappeared, and the investors who were sold that fiction are now holding not the cow but the magical beans (Jack and the Beanstalk for the M.B.A.).

I really expected that the Dr. Strangelove persona was going to pop out from behind the occupied White House puppet at the SOTU Monday, and we'd hear "Go Shopping!!" once again. The 'stimulus' plan seems to have served as an adequate substitute, so the Go Shopping concept is understood for now.

When the Democratic administration to come is in place, our financial planners will be able to start reviving our economy by such sound economic practices as; ending war on Iraq, eliminating tax breaks for corporations to offshore jobs and income, ending income inequalities, discouraging exorbitant corporate welfare, regulating financial manipulation of investments, and returning services to our wounded veterans, retirees and dispossessed. The scam of consumer confidence games needs to end before serious efforts will begin.

Business and individual spending is not done because of hope for the economy, but out of actual performance by that economy that gives them the means to spend.

It's called earnings.