Don't worry, be happy

The subprime meltdown gathers pace, and still no one in the vast crowd that constitutes conventional wisdom seems to worry. 

Three paragraphs capture the essence of that conventional wisdom — and the irony therein — in today's A1 story in the Wall Street Journal:

Most economists, though, haven't changed their outlooks as a direct result of the subprime mess, surmising that the risk of the type of credit crunch that would trigger a recession — though rising — remains too small.

Treasury Secretary Henry Paulson, in an interview with The Wall Street Journal, echoed that relatively upbeat assessment. He acknowledged that the wave of foreclosures has been "distressing" to "individual mortgage holders," but said that "the distress of the subprime-mortgage market is something that should have been anticipated, given the housing correction." Mr. Paulson said: "From the standpoint of the overall economy, it's largely contained."

Mr. Paulson's comments came as Goldman Sachs Group Inc., his former employer, reported record earnings and said it is pushing deeper into the subprime-mortgage business, ramping up its own operations and pondering the purchase of a troubled lender. It didn't specify a potential target.

Move along now, nothing to see here…