Mark Carney and the rock and roll economy
An economic lesson from Voyage to the Bottom of the Sea
Until recently I didn't even know it had a name, but the image has popped into my mind a number of times lately. That image comes from childhood viewing of the '60s science fiction show Voyage to the Bottom of the Sea.
If you're much younger than me, it's very likely you haven't heard of the show, never mind watched a program through. I can't even remember its premise except that it involved adventures aboard a giant submarine, the Seaview.
But something that has stuck with me these many years, besides the background looped track of sonar beeps, is what happened whenever there was an explosion outside the sub. On these frequent occasions — often more than once per episode — crew members would throw themselves vigorously from side to side on the set of the submarine deck while the camera tilted and shook. There are some great examples toward the end of this trailer for the 1961 film that started the whole thing rolling.
The technique was copied on Star Trek and parodied elsewhere, but according to multiple sources, it was given its own name: "Seaview rock and roll." Who knew? You can picture the director using hand signals for "Left. Now right." Get a few friends and a video camera and you can try it yourself.
As economist and market traders try to understand where the world is going next, it feels as if they are on the bridge of the Seaview. One bit of data, everyone plunges to the left, hanging onto a map table for dear life. The next bit of data, everyone runs to the right and presses their cheeks against the giant pressure dial.
It's true that markets never go straight up or straight down. There's always a bit of a zigzag. But lately the signals have been decidedly mixed. For Mark Carney and his team of economists, the crystal ball has been hazier than usual.
Should they be worried about deflation or inflation?
A week ago Friday, the Canadian economy created thousands of jobs, house prices were shooting up, and car sales were booming. The recovery was on. Everyone agreed that the Bank of Canada would have to raise interest rates on July 20.
One week later a new set of numbers hit the fan. Data from the United States showed consumer confidence falling sharply. U.S. prices fell for the third month in a row, a bad thing to economists. Gold plunged $20, showing fear of inflation had suddenly switched to fear of deflation.
Meanwhile stock markets, after zigging up on Monday last week, zagged down even more on Friday.
In Canada, after one company crowed about the hot first-half housing market, the Canadian Real Estate Association stepped in and showed that sales and prices were falling countrywide. And that was even before the HST kicked in for British Columbians and Ontarians.
Clearly we are in a period of uncertainty.
Where does the economy go from here?
It is not obvious whether the world is on the verge of an economic rebound or ready to tumble off a cliff, but in our current state of excitement, either prospect seems possible.
And so we move from urgent gloom to headlong optimism.
High-speed market trading just accentuates the rush from side to side of the submarine. That's because for day traders, if markets are moving right, it can be highly profitable to have your cheek pressed against the exterior wall just seconds before everyone else, so you can start the run the other way and win again.
We in the media, including our coterie of economists and opinionators, play our own role. In these quiet summer months with little to talk about but incremental changes in the BP oil spill, it makes more thrilling copy to talk about either doom or boom, or better yet, one of each on alternating weeks.
There is an alternative, of course. It is oddly unappealing. Perhaps that's why people don't like to talk about it. That is that the economy is neither about to fall off a cliff, nor shoot to new heights.
Instead, it is just as likely that the world economy will trudge on for many months without changing much. Little ups, little downs. But no real explosions to rock the boat. It is the way that economies, and lives, often are.
Fortunately the level-headed Mr. Carney will see through our thrill-seeking. He will look at his advance copy of the inflation statistic that we won't see till Friday, and calmly, serenely, decide what to do.
I hope the governor can be sympathetic with the rest of us, understanding that when you are stuck on a long submarine journey, checking monitors and gauges and trying to keep busy, with that irritating and monotonous ping of sonar in the background, sometimes it's a nice break to get up and rock and roll.