Reticence, Reticence Everywhere
Tom Fomby
Tom Fomby, professor of economics in Dedman College, agrees that any stimulus initiative is better than nothing.
“It’s like exploratory surgery,” he says. “We will finally get to the cancer and remove it, but there’s a lot of repairing to be done in the process. It doesn’t always work as we may like, but we have to do something.”
Fomby, who is also a research associate with the Federal Reserve Bank of Dallas and a consultant to the World Bank,
visualizes “an L-shaped recovery” forming. “The economy will slide down, then stay flat for a long period” before steadily ticking upward.
“The unusual nature of this recession is that it’s happening worldwide,”
he says. “In previous recessions, other countries weren’t affected in the
same way at the same time, so we could rely on them to help pull us out. Now, we’re a global economy and world trade is stymied.
“There’s reticence to lend. There’s reticence to buy. There’s reticence here, reticence there, reticence, reticence everywhere,” he says, adding an economics spin to Coleridge’s poem, The Rime of the Ancient Mariner.
Trade protectionist rumblings in Washington worry Fomby. His research tracking Texas’ financial status indicates that if the North American Free Trade Agreement is dismantled, “Texas will be seriously affected and we could see the unemployment rate go up. On a national scale, trade wars potentially could deepen and prolong the recession,”
he says.
“New economic history is being written as we speak.”
Such unprecedented global circumstances pose intriguing questions for economists. “There’s more contemplation of market regulation and rules of commerce,” Fomby says. “We’re coming to better understand efficient regulation – which markets need more regulation, which markets need less.”
The interconnectedness of links in
the world economy is becoming clearer. “What has happened in the past two years has demonstrated how important the credit market is to our global economy. When the markets freeze up, there’s a much more profound effect than we have appreciated in the past,” he says.
“New economic history is being written as we speak.”
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