U.S. economic indicators: smoke and mirrors?

Mary Dejevsky opines that one of the advantages in the current economic crisis will be a shift towards the U.S looking to gauge itself in 'live-ability' indicators and factors like healthcare, education and emotional security. Whether this will actually happen or will it get washed away with the next ephermal bubble remains to be seen. Of course, a sign of the times might be Obama's renewed focus on universal health care and the administrations vigorous tone on reforming education.

From her article here: Why, if the US was doing so splendidly compared with France, was so much of the infrastructure – roads, railways and municipal offices – so neglected? How come there was so much money around, in theory (on the ballooning stock market and in those dot-com share options), when so little effort seemed to be put into making it? Was it just lack of state benefits that kept unemployment down? And why could the US have one of the worst perinatal mortality rates in the industrialised world without this affecting its economic standing? The answer to all these questions, of course, is that it depends what you count and how you count it. The US topped so many economic rankings because, for the most part, it chose the indicators.
One of the beneficial, and less noticed, consequences of the current crisis is that it has spawned new interest in ways of judging a country's economic soundness and overall success. There have long been quality-of-life indices that include the "live-ability" of cities, including standards of health, housing, schools and public transport. But only rarely are the results amalgamated with officially recognised indicators, such as growth rate, productivity and per capita income.

Strangely, the government might be the solution...

On reading the following piece of news, that the next time the mavericky people tell me that government is the problem and not the solution, I might have to politely tell them that they suffer from an extreme state of delusion and might need checking into the nearest mental institution...

Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials. Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.

First, they tried bailing out individual companies, then they tried a large scale 700 billion dollar bailout, then they tied lending to the banks directly, then they tried buying up short term commercial paper. The latest today is to take up ownership stakes in large banks directly. This might just work. This will give the taxpayers a larger stake in the game, might actually produce return on taxpayer monies invested rather than the previous ideas that were designed purely with the private enterprise in mind. Yes, the ownership stakes idea put out by the Treasury might work, but the downstream effects of locked up credit markets will be long drawn.

The caller on NPR this morning had a term for the current crisis where one is witnessing stocks, wealth and capital simply vanish into thin air so quickly: He called it ‘evaporational exuberance’.