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An Economic Mixed Bag

As always, things are too complicated to warrant either taking to the bomb shelters or uncorking the champagne.

12:00 AM, May 15, 2010 • By IRWIN M. STELZER
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So who has got it right? The cheerful CEOs, the consumers who are opening their purses a bit, the estate agents who claim to be busier than usual, or those with a vague feeling that the next unstoppable disaster lurks around the corner? The answer is that both groups exaggerate. People who think there is nothing to do but sit and wait for the next blow to fall forget that Europe has for the moment forestalled a liquidity crisis, proving that even its slow-moving governing mechanism can take action, even if a bit too slowly. The anti-terror agencies are doing a better job of tracking down would-be terrorists before they can strike, and it is likely that “circuit breakers” will be installed on all exchanges to head off future precipitous 1000-point drops in the price of any share. Not much can be done about butterfly wings.

The economic optimists also have gone a bit overboard. We have yet to see how the economy will perform once the Fed implements its exit strategy, which seems already to be underway; the effect of the stimulus wears off; the dicey commercial property loans still on the banks’ books are written down or off; and the politicians are forced by the bond markets to get the deficit under control.

As always, things are too complicated to warrant either taking to the bomb shelters or uncorking the champagne.

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