The Wall Street Journal-20080131-Is the U-S- Economy Mostly Healthy or Is It Headed Downhill-

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Is the U.S. Economy Mostly Healthy or Is It Headed Downhill?

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Thanks to Brian Wesbury ("The Economy Is Fine (Really)," op-ed, Jan. 28) for providing some perspective on our current market challenges. It is easy to understand why the hand-wringers running for office prefer to ignore the broader context of the powerful economic performance of the recent past as well as the underlying resilience of the U.S. private sector. Predicting economic disaster is a sure vote- getter for non-incumbents riding to the rescue on their white chargers. It also works well to divert the electorate's attention away from improving conditions in Iraq. Spice up the pitch with the myth that anti-Americanism world-wide is something new since the Bush administration and the voter appeal is irresistible.

Maggie McGirr

Greenwich, Conn.

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I just want you to know that the implications of your running Mr. Wesbury's opinion, plus "Bernanke Revisits 'Financial Accelerator'" in "Best of Real Time Economics," plus your front page article about Mervyn King, was not lost on your readers.

That Mr. Bernanke is using a theory that he formulated 25 years ago to solve a depression that occurred 75 years ago came through clear.

Now, how do we send Bernanke back to school where he can formulate some new theories without doing anymore harm?

Steve Carroll

Warwick R.I.

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Brian Wesbury's assessment of the economy was really fine. Mind you, I'm no cockeyed optimist. But for the reasons Wesbury cites and more, I've confidently made friendly bets with some former Clinton administration Treasury Department colleagues that our economy will avoid recession this year.

Nevertheless, dire predictions of recession have dominated the mainstream media in recent months as, not coincidentally, "the economy" has reportedly replaced the war in Iraq as voters' leading concern. Why? Mr. Wesbury is too polite to say so, but the simplest answer is that a coordinated left -- Democratic candidates and the media who love them -- has realized that a general election campaign against the surge in Iraq won't likely succeed.

Meanwhile, deficit spending (on a non-stimulative stimulus package) is back in vogue, and American and foreign investors are being talked out of sound growth opportunities in the U.S. economy just so Hillary Clinton or Barack Obama -- and their tort-lawyer-loving, antigrowth- attorney-general-in-waiting, John Edwards -- can have a better chance of beating the GOP's candidate come November. And you thought Bill Clinton's race-baiting was Machiavellian.

Darren McKinney

Washington

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Mr. Wesbury states that 20 of 24 Standard & Poor's tech companies have reported earnings that have beaten Wall Street estimates, but fails to mention that many of these estimates have been lowered. It's a small consolation that a company outperformed a lowered estimate.

Mr. Wesbury quotes Ben Bernanke that a $100 billion loss on subprime loans would represent only 0.1% of the $100 trillion in combined assets of all U.S. households and U.S. non-farm, non-financial corporations. What percentage would it represent of the combined "net" assets, which would more accurately reflect the severity of the situation?

What would the $100 billion loss represent if stated only as a percentage of individual net assets? Perhaps Mr. Wesbury might then re-think just how fine the economy is. What if added to this figure was the amount of net assets that Americans have lost because the value of their homes has dropped significantly over the last year. Would that alter his opinion?

How convenient his rose-colored glasses are. I lost mine.

Rene Boutin

Colorado Springs, Colo.