Markets refuse to join the Paulson & Bernanke Fan Club


Ouch.  The bailout plan details start to be discussed as Bernanke lays out some of his plans and his take on the crisis.  It also seems like the Government keeps spending and doing even more to shore up our aching economy.

Yet the markets remain unimpressed as the DOW drops another 500 today, much of that in the final minutes of trading.

My intuitive take has always been to question the idea that growth rather than efficiency is the cornerstone of a healthy economy.    One thing that is now clear is that we are seeing the effects of unsustainable economic “growth” in the sense that the Real Estate price increases were unsustainable and they in turn created a huge surge in paper wealth that encouraged people to live above their means and banks to create bizarre speculative financial instruments.

I suspect the markets are recognizing and/or suggesting to us that we are in for years – perhaps even a decade – of economic contraction where the growth we’ve come to expect will no longer fuel our prosperity.

This does not have to be catastrophic.   In fact to the extent folks replace big houses and cars with little ones, take more responsibility for healthy lifestyles, and seek new efficient solutions we could be in for a period where we won’t gain abundance but we might gain some …. wisdom.