Oh, boy, the New York Times does it again . . . Today's headline reads, "The Economy Shrinks with Consumers Leading the Way." After explaining that consumer spending (which constitutes 70% of "the economy," apparently) declined in the last quarter, the article goes on to say, "Economists saw in the data a testament to the degree to which many households are so strapped that the very culture of American consumption has been altered."

One can only hope. I can't even figure out how it came to pass - what sleights of hand of accounting were involved - that consumer spending could be considered a "product," in the same way that cars and iPods and furniture are. I can't understand how the nation's fiscal health could come to depend on the spending of individual consumers in that way. From Enron to AIG to Merrill-Lynch to Bear Sterns, I keep wondering, "How could they cook - hell, char - the books that badly and get away with it?" Not even "get away with it" in the criminal sense - but in the mathematical, 2+2=4 sense. Aren't numbers, numbers? If they don't add up, they don't add up . . . and you can dress 'em up however you want, but they still won't add up. The first whiff I ever got about the subprime mortgage business was in 2005 when Emil came home one day and said that the mortgage company he worked for was considering getting into the subprime business (a market they'd determinedly shied away from previously). He told me how the subprime market worked - make loans and then sell them off real quick - and we laughed at how ludicrous it all was: Sell adjustable-rate mortgages to people who can't afford them, and by the time they default, you're well out of Dodge. (Whatever that deal had been, it fell through, and so did his employer. Sort of like the canary in the mine shaft, in retrospect . . .)

Usually when I say that I don't understand the economy, people are quick to jump in and explain how it works. (Like the guy on NPR at the beginning of the mortgage crisis, who was explaining "leveraging" in a slow, measured voice as if he was talking to nine-year-olds.) It's not that I don't understand HOW it works, it's just that it SHOULDN'T work. It's like imagining a flying penguin, or something. Yes, I can make that up and dream about it and draw pictures and so forth . . . but at the end of the day, the penguin has short wings. And is too heavy to fly. "Falling with style" is not flying. As we now know.

But not to worry. The article ends - tries to end - on an optimistic note:

Another continued source of economic growth is government spending, which expanded at a 5.8 percent annual pace in the third quarter. Military spending surged at an 18.1 percent annual rate, and federal spending over all jumped at a 13.8 percent annual clip.

“There’s a message in that,” said Mr. Bernstein, the Economic Policy Institute economist, who has urged Congress to create another package of government spending measures to stimulate the economy. “The one part of the G.D.P. we can reliably count on in these times is government.”

Oh, terrific. I feel better now. It's just a double comfort to realize that those wars are keeping us afloat (Never mind the death and destruction - which is what I really mind, of course. The bills for those wars will never come due, right? and governments never go bankrupt, right?), and that bright, insightful, creative minds like Bernstein's are there in D.C. to think us out of this dilemma . . .