A statue of George Washington overlooks the entrance to the New York Stock… (Stan Honda / AFP / Getty Images )
After 35 years in daily journalism, this is a farewell: I'm leaving The Times on Dec. 2 to see what else I might do with the rest of my working life.
I've had a dream of a career, which began in the newsroom of the student paper at the Ohio State University. The best of it has been working among the incredibly talented staffers of The Times since arriving here in 1990.
I'm stepping away at a time that is strikingly reminiscent of my first few years in the business of covering financial markets and the economy. That was 1979-82, in what was then considered the worst U.S. economy since the Great Depression.
Like today, short-term interest rates were at extremes in 1979, but at the opposite end of the spectrum: Today short rates are near zero; in '79 they were in double digits because people feared that the nation was about to enter hyperinflation.
Many Americans' attitude toward the stock market was exactly the same then as now. In 1979 the market was mistrusted or outright despised. What was the point of owning stocks? The Dow Jones industrial average was no higher in 1979 than it had been in 1964.
The economy got worse until 1982, when unemployment finally peaked just under 11% — above the current rate of 9%. I remember economists that summer warning about the potential for another depression.
Instead, an economic expansion began in late 1982 that lasted until 2007, with only minor interruptions along the way. The Standard & Poor's 500 stock index produced returns averaging 12.7% a year from the end of 1982 through 2007.
If we escaped that terrible economy of the early 1980s, why can't we get out of this one?
It's quite possible that America will surprise itself, and the world, with its economic resiliency.
But it will be far more difficult climbing back for the reason that is well-known to all: the debt.
The federal government began a borrowing binge in 1982 that helped pull the economy out of its funk but also set a dangerous precedent. Annual budget deficits of more than $200 billion became routine by the early 1990s, which gave way to red ink of more than $300 billion by the early 2000s. Now we're in the trillions.
Consumers also began to pile on debt in the 1980s at a rapid pace, which continued into the 2000s as incomes stagnated.
To varying degrees, European countries followed down the same path. So did Japan.
So the debt crisis that began with the U.S. housing bust in 2007 has become the defining issue of our era. Too many people, and governments, simply owe too much.
Think of it this way: The prosperity of the 1990s and 2000s was in part stolen from the future. Borrowing allowed for immediate gratification. Now the bills are coming due.
The situation has become critical in Europe, as investors keep demanding ever-higher yields on government bonds, reflecting growing doubts about countries' abilities to repay their debts.
On Friday, the market yield on 10-year Italian bonds was 7.26%, a new euro-era high and up from 5.95% a month ago and 4.39% a year ago.
Every jump in borrowing costs makes it that much harder for Europe to dig out of its hole. Yet why should investors be willing to accept lower interest rates given that the continent seems at serious risk of a financial meltdown? Catch-22, anyone?
How do we get out of this? The answer is the one nobody wants to hear: We need time to work through the debt. A long time.
The doomsday scenario is that it's already too late, and that Western capitalism will be a victim of its own wretched excesses.
I've heard that plenty of times in the last 35 years. If it's finally coming true, the only advice worth offering is to stock up on canned food, water and ammunition.
Assuming you want to believe that life somehow goes on, here are some parting thoughts about the future of the economy and markets:
• As someone once said, "hope" is not an investment strategy. But it's what keeps civilization advancing. The debt weight notwithstanding, the world — and particularly the developing world — isn't going to stop wanting to live better, to succeed, to move up.
• Apropos of the above, consider the social revolutions in the Middle East and North Africa this year. If not for Europe's crisis dominating the headlines, financial markets might well be celebrating the long-term implications of the demise of authoritarian regimes.
• Afraid to invest, individuals and businesses have built up enormous cash hoards since 2007. There is $8.6 trillion sitting in U.S. bank savings accounts and money market mutual funds, earning virtually nothing. Cash feels good to have right now, but that is a massive amount of capital that one day could look for more productive uses, like financing new businesses.