“What is going on is a financial panic, not an economic collapse”

Writer Gregg Easterbrook brings the overlooked details of college & NFL football to our attention every Tuesday, but usually there’s a fair amount of non-sports commentary sprinkled in as well. Recently he’s been pointing out some of the misconceptions of the financial “crisis”:

What is going on is a financial panic, not an economic collapse.
Financial panics are no fun, especially for anyone who needs to cash
out an asset right now for retirement, college and so on. But financial
panics occur cyclically and are not necessarily devastating. The most
recent financial panic was 1987, when the stock market fell 23 percent
in a single day. Pundits and politicians instantly began talking about
another Depression, about the “end of Wall Street.” The 1987 panic had
zero lasting economic consequences — no recession began, and in less
than two years, stocks had recouped all losses. (See John Gordon’s
excellent 2004 book on the history of financial panics, “An Empire of
Wealth.”) Perhaps a recession will be triggered by the current
financial panic, but it may not necessarily be severe.

And there’s also some reassuring words from (gulp) Ronald Reagan:

We’ve also fallen into panic because we pay way too much
attention to stock prices. Ronald Reagan said, “Never confuse the stock
market with the economy.” Almost everyone is now making exactly that
mistake. The stock market is not a barometer of the economy; it is a
barometer of what people think stocks are worth. These are entirely
separate things. What people think stocks are worth now depends on
their guess about what stocks will be worth in the future, which is
unknowable. You can only guess, and thus optimism feeds optimism while
pessimism feeds pessimism.

You can read the full article (which also dwells on how awful the Patriots have become) here.