A Sickly Economy With No Cure In Sight

NY Times -- Even if tax cuts and carefully chosen words represent a sensible form of insurance, they seem unlikely to accomplish what everybody agrees is the ultimate goal: the creation of a truly healthy economy, one in which stocks, wages and company payrolls are rising, without an enormous financial bubble as a main cause.

On balance, in fact, the steps being taken to pull the economy back from the precipice may delay the arrival of one able to stand on its own. "What we're doing now is trying to create a cyclical pop with a massive policy response," said James W. Paulsen, one of the few forecasters to predict the 2001 downturn and the chief investment strategist at Wells Capital Management in Minneapolis. "That may well succeed — I think it will. But very little of it will solve the problems that got us into this situation."

Instead, those problems — consumers who remain financially stretched, a corporate sector that has not yet won back the trust of many investors and a government living well beyond its means — will weigh on the underlying strengths of the American economy.

The falling dollar may help some exporters even if it brings inflation back.