The 'R' word

"World markets fall on US recession fears."

That headline's not quite as scary as the monster that kicks the head of the Statue of Liberty through Manhattan in "Cloverfields." But for many people, especially in the press, the "R" word has lots of symbolic and political power, and is being trotted out, in some places, with a sense of glee. Meantime, it's scaring the bejesus out of investors, whether big or small. (Story here.)

But as the CSM points out in an editorial today, now is not the time go all wobbly, as Margaret Thatcher once chided George H.W. Bush.

Though it's been jumping at times unsteadily from bubble to bubble, and has a surfeit of challenges facing it, the US economy is fundamentally strong and viable. One is reminded of Jimmy Carter's fixation on the worst of America when confronting high gas prices and runaway inflation in the 1970s. Today's leaders, including President Bush, need to avoid that path.

Key graf:

The wise need to look at the healthy fundamentals more than to the Chicken Littles who sell fear as a commodity and revel in their self-reinforcing predictions.

But such an act of confidence in economic basics isn't a leap of faith, as in "we may have talked our way into believing the economy is bad, so let's talk our way out." Nor does future economic growth rely on bottom-feeding speculators who wait to buy fire-sale "deals" in falling stocks, house prices, or other sectors. Therein lie more bubbles.

Any renewed confidence needs to start at the top, and so far President Bush appears more ready to speak of government rescue packages than to use his bully pulpit to spotlight the market's many bulls. He needs to hit the road rather than the panic button.

Wise words, but let's see who heeds them. Meanwhile stocks rallied today as the Fed adjusted short-term rates by 75 basis points. (Story here).

(PIX: The Kuwaiti stock market.)