THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, January 29, 1995 TAG: 9501270021
SECTION: COMMENTARY PAGE: J6 EDITION: FINAL
TYPE: Editorial
LENGTH: Short : 34 lines
On the economic front these days, any good news is bad news.
Life would be unbearable except that any bad news is good news.
A recent business page headline captured the insanity pretty well:
Stocks extend winning streak
on news of ``very slow economy''
In other words, the bad news that the economy was very slow was the good news that caused the stock market to go up.
If the economy had been robust, that good news would have been the bad news that caused the stock market to go down.
It's all easy to understand, provided you're a little nutty.
Whenever the economy shows signs of rapid improvement, the Federal Reserve Board, fearful of inflation, is likely to drive interest rates up to slow things down. So at the first sign of economic good news, the likelihood of interest-rate increases knocks stock and bond markets down.
Conversely, whenever the economy slows, the Federal Reserve Board relaxes. With interest-rate increases unlikely, stock and bond markets go up.
Hence good news is bad news, and bad news is good news.
Life works the same way. If you get a $30-a-week raise, your car breaks down or the heat pump goes out. by CNB