How 'Bout Them Economy.(The Talk of the Town)(economic condition of the United States)

Nobody knows anything, although some know-nothings know more than others. The economy is a stalwart, a shambles, or some combination of the two. The pronouncements and analogies fly: we've reached the end of a sixty-year cycle, or a twenty-five-year cycle, or a six-year cycle, or the end of nothing. It's 1929, 1969, 1981, 1990, 1997, or 2001 all over again. The closer you are to the markets, the gloomier you are, although the less likely you may be to suffer the consequences, and the more likely you are to act as though nothing were wrong: first rule of recession is you do not talk about recession. That is, unless you are in Davos, or heavily invested in gold. The preferred terms are "softening," "crunch," "correction," and, best of all, "interesting," as in "This is an interesting time"--a grudging corollary to the popular and meaningless Wall Streeter declaration "It is what it is." Yes, and the faster we go the rounder we get.

The debate over whether we're in (or slipping into) a recession is not purely semantic--a recession, capital "R," is a term of art--but it recalls the argument over whether the Sunni insurgency in Iraq was actually an insurgency or merely stuff happening. Whatever you call it--"rough patch," "adjustment process," "perfect storm"--it's here. Stuff is happening.

What's most befuddling is the question of the worthless paper. By worthless paper, the experts don't mean the one that people no longer read in the morning. They mean the I.O.U.s that stand no chance of being paid--the debt held by the person or institution who or which was foolish enough to buy it from the next-most-foolish person or institution, who or which may in fact have been not so much foolish as conniving (the F.B.I. is on the case). In recent years, the financial industry has concocted an arcane array of structured investment vehicles, in which the debts of individuals are bundled together by banks, stripped into pieces, and sold to ...