La Voz

Issue date: 6/22/09 Section: Economics for Everyone

Media Credit: La Voz Reports

With summer break soon upon us, it seemed appropriate to use this academic year's last installment to look back and update everyone on (you guessed it) the state of the economy. And as promised in last quarter's grande finale, let us do so by returning to the land of the United States of Amnesia, where, after going through a rather traumatic economic crisis of their own, the country was rescued by its new Prince and his Knights of the Economic Square Table, who, with swift and decisive action, cured the land of its ills.

It was once again, a glorious and magical day in that land not so far away, where one of its more popular young denizens, Goldilocks Ekonomie, could be found frolicking near the banks of the mighty river known as the Great Moderation. Now, Goldie wasn't the only one enjoying herself that day, as she had been joined by many others to bask in the prosperity created by the US of A, the land of the mighty Consumer. Suddenly, there was a CLUNK! What the!?

Oh, apparently I had been dreaming. Weird. I looked up at the clock on my bedroom wall, which features the names of many famous economists (jealous?) - a bit after 4 a.m. The clunk that woke me from my slumber was due to the delivery of The Wall Street Journal. Might as well go get it. Though I was anxious to get back to bed, I slipped off the rubber band to take a look at the headlines: "Rate Rise Clouds Recovery," "World Economy to Contract Even Further." Not exactly what pleasant dreams are made of, but oh well. Fortunately, I fell back asleep, and, lo and behold, the dream continued, except the scene had darkened somewhat...

Things suddenly did not seem so sanguine. There was a rumble, then a crash, as one of the primary tributaries that fed the Great Moderation, the Stream of Credit, appeared to be causing the mighty river to overflow her banks, sending Goldilocks and the others that had gathered for the day scurrying toward safety... Again I woke up, this time with a need to hit the restroom.

When I finally fell back asleep, the dream had transformed into a nightmare, because apparently the river had receded, leaving in its wake a path of destruction not seen for over 70 years. It seemed that after causing a flood of catastrophic proportions, a sudden change in the weather froze the great Stream of Credit, leaving the Great Moderation a stagnant mess. In addition, many of its neighbors, who had been believed to be immunized (we call it "decoupled") by any disasters arising from the seemingly crisis-proof U.S. of A, were, alas, adversely affected. And what is that near the bank? Is it? Yes, our beloved Goldilocks lies trampled in the frenzy caused by the overflow, and in dire need of a big sip from the still icy Stream of Credit. This time I woke up rather thirsty, a bit afraid to go back to sleep.

At this point, I may never sleep again. So allow me to finish our fractured fairy tale without the aid of a dream/nightmare and with, unfortunately, a not-quite-so-happy ending. Let's just say that on closer inspection, Goldilocks does appear to be breathing, but it is a bit unsure and unsteady. And what are those things sprouting up around her prostrate body, "green shoots" or "yellow weeds"? Nevertheless, most of the land's soothsayers and physicians (we call them media pundits and economists) believe, though she will likely recover - prognosis times vary - our Goldilocks will be a bit grayer and frolic much less frequently. With that, allow me to say, go forth, frolic frequently and enjoy your summer break!

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