Boomers, Doomers Give Opposite Views
SOMEHOW there's always a market for books by doomsayers - or, for that matter, "boomsayers."
Here are the latest examples:
Harry S. Dent Jr. has written "The Great Boom Ahead: Your Comprehensive Guide to Personal and Business Profit in the New Era of Prosperity." It's published by Hyperion. That's the name of a Greek god, but it may be appropriate since the book is "hyper."
"Get ready for an unprecedented economic boom," the book starts. "Forget what some experts are saying about a slow, measured growth of the economy. Forget what the doomsayers are saying about a depression. I have some welcome news for you, news of a dramatic upswing in the economy, news of a dawning new era of prosperity in which many of you will actually feel wealthy."
Wow! Dig up $19.95 in a hurry. Or $16.95 for a tape version.
Then there is "The Great Reckoning: Protect Yourself in the Coming Depression," by James Dale Davidson and Lord William Rees-Mogg, published by Simon & Schuster. It seems that doom is more expensive than boom. The book is priced at $23. Or maybe it's because the Great Reckoning runs 607 pages and the Great Boom only 273.
A representative quote from William Playfair, author of a decline and fall book in 1805, starts Reckoning: "The general conclusion is that wealth and power have never been long permanent in any place ... and that they travel over the face of the earth, something like a caravan of merchants. On their arrival everything is found green and fresh; while they remain, all is bustle and abundance, and, when gone, all is left trampled down, barren and bare."
In a section entitled "Financial Armageddon," the authors write about the buildup of debts in America: "One way or the other, we expect a great reckoning. A settling of accounts. We expect the long economic boom and credit expansion that began with World War II to come to an end. The end, when it comes, will not only reveal the insolvency of many individuals and corporations, it may also bring bankruptcy to the welfare state and widespread breakdown of authority within political economies. Such far-reach ing transitions cannot occur without touching your life and the lives of those you love. More than you may now imagine, you are vulnerable to financial, economic, and political collapse. You may even be vulnerable to physical violence."
Mr. Davidson was around the other day on a book-promotion tour. It turns out that his depression is spelled with a small "d."He says he's talking about credit-cycle depression without as much misery as the Great Depression of the 1930s. However, he adds, unemployment is really in the double-digit area rather than 7 percent of the labor force as measured by the Department of Labor. Added to that percentage should be 1 million people living on severance payments, another 3 to 4 million people living on per manent disability insurance, and those millions that are too discouraged to seek work, he says. And then there are the record number of people getting food stamps.
It's difficult to gauge whether Davidson truly believes the voluminous one-sided arguments for gloom in the book. Another such doomsday book, The Great Depression of 1990 by Ravi Batra, was on the New York Times list of bestsellers for weeks. Of course, the recession of 1990 was not a Great Depression. But doom certainly sells books.
Davidson is founder and chairman of the National Taxpayers Union, though he emphasizes that the book has nothing to do with that position. He and Lord Rees-Mogg publish an investment letter. They probably would not want to be termed doomsayers, especially since their writing shows financial sophistication.
Nonetheless, don't count on a real depression in this decade. If the Federal Reserve System detects even a slight reversal in the present recovery, it will step on the monetary gas in a hurry.
Right now, partly because the Fed has allowed a shrinkage in the money supply and partly because of weak statistics, some economists do see some evidence of the economy stalling.
"We believe that the Fed should act promptly to ease the Federal funds rate," writes Sam Nakagama, a Wall Street economist. "There's too much at stake for the Fed to delay action."
But what's at stake is not Depression with a big "D."