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Dear Recession, you're not so bad

No one likes you, but you bring economic sanity.

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Dear Recession,

There has been quite a bit of commentary about you recently, nearly all of it bad. Just about everyone wants to see you gone.

But I believe that where the business cycle is concerned, if you cannot be with the one you love, you should love the one you're with. I want to talk about your good qualities.

Statistical purists and incumbent politicians say you aren't real, since the GDP has yet to decline.

But it is no daydream that you are already having a welcome impact on several fronts. First is the US trade deficit. By tamping down our outsized appetite for the products of other countries, you combined with a weak dollar to erase nearly one-fourth of the trade deficit, excluding oil, since 2006.

Second, you're helping Americans save again. Imports were part of the all-consumption-no-savings behavior that helped create you in the first place.

In 1984, American households held an average debt of 60 percent of annual income. That number is now 120 percent. We can be thankful you showed up before it got even bigger, as the reckoning would be that much worse.

Nowhere was borrowing more fevered than in housing. In healthier times, one person's savings would be put in a local bank, where it might become the money needed to allow a young family to take out a loan and build a new home.

That simple picture became convoluted as financial innovation and outright greed pulled massive amounts of foreign savings into the US economy, allowing us to ignore our own lack of thrift. The resulting boom in housing construction that became one giant pyramid. When it became clear that the wealth being created on paper was out of line with the real value of the homes themselves, the pyramid fell under its own weight. You, the dreaded recession, appeared from the rubble.


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