DAVID GREENE, host: And we're back with ALL THINGS CONSIDERED from NPR News. I'm David Greene.
MARIA BARTIROMO: Panic selling on Monday causing U.S. markets to take a big plunge.
UNIDENTIFIED MAN #1: The economy stinks.
BARTIROMO: The Dow Jones Industrial Average traded in a 640-point range in a massive seesaw day for the market.
UNIDENTIFIED MAN #2: It's madness...
BARTIROMO: Another day of big losses for the markets on Wednesday.
UNIDENTIFIED MAN #3: Is there anything...
UNIDENTIFIED MAN #4: We can do to get our mojo back?
BARTIROMO: The rebound in the market over the last two days has taken a bit of the edge off of nervous investors.
GREENE: It was one wild week on Wall Street. That was Maria Bartiromo and some of the voices from CNBC this past week as they try to sort through the market's fluctuations. To help us sort it out, we've brought in James Fallows of The Atlantic. He joins us, as he does most Saturdays. Hi, Jim.
JAMES FALLOWS: Hello. Nice to talk to you, David.
GREENE: So the Dow Jones Industrial Average, I mean, down 634 on Monday, up 429 the next day, down, up. I mean, these huge swings all week. What did you make of all this?
FALLOWS: Well, I think most people feel that the problem or the phenomenon is that all the world's markets now seem to be connected, and when things are going badly in North America, the same thing in Europe, and the same thing in Asia. So you see these worldwide magnified swings up and down, and that's what everyone is coping with now.
GREENE: And I guess it used to be that you sort of counted on world markets to buffer some of these large gyrations, and now it seems to actually encourage them. Talk about that difference, if you can.
FALLOWS: Yes. I think that during most of modern times, as the last generation or two, the world economies have, of course, been connected. When the U.S. went off the gold standard in 1971, that had effects all around the world. But it's until about 10 years ago, it was more the case that when the U.S. was struggling, you would find maybe the Japanese economy doing better or the German.
And as the Chinese economy has risen in importance in the last while, we have seen instead the phenomenon that since the Chinese economy depends so heavily on markets in the United States, and since the United States has all of the sort of flows of its economic and financial forces around the world, instead we've seen a worldwide coordinated market as opposed to the somewhat more modified phenomenon we would've known in previous panics. You know, panics have always been bad, but they used to be somewhat buffered.
GREENE: Some news in Washington. The 12 members of the supercommittee have been chosen. That's, of course, the committee in Congress that's tasked with finding $1.5 trillion in federal budget cuts before November 23rd. No easy task. And I know one thing that's been sort of bogging you about this whole debate is maybe a kind of misunderstanding about what effect the deficit has on the economy.
FALLOWS: I've thought a lot about the presidential debate in the 1992 campaign, which was in a town hall forum where the first George Bush and Bill Clinton and then Ross Perot were taking questions from average people in the audience. And there was a woman who asked then current incumbent President Bush how the deficit was affecting him. And the president gave this sort of technical answer about how actually the federal budget deficit didn't make that much difference at all.
And then Bill Clinton stepped in to answer the question the woman was really asking with the wrong words, which was how was the economy affecting him and affecting her and affecting the whole world. And perversely, the very measures that would reduce deficit problems can make economic problems worse.
GREENE: It almost sounds like for voters that they're looking for a way to express their economic concerns. I mean, something that they can sort of feel connected to is the idea that, god, I don't want to have debts for my family, and so I don't want my government to have debts. And it's just an expression of sort of economic concern.
FALLOWS: Yes. And I think Tea Party representatives have captured the general trans-party unhappiness with how things are going right now and saying here is something to do about it. And I think the Democrats, particularly President Obama, have in a way played into this. The more the president says families have to tighten their belts, so, too, do we have to tighten our belt, the more he has advanced this narrative too.
In fact, since the Great Depression, the government has played a contrary role to individual families. When families tighten their belts, the government makes things worse for them by tightening its belt.
GREENE: James Fallows is national correspondent with The Atlantic, and you can read his blog at jamesfallows.theatlantic.com. Jim, thanks so much.
FALLOWS: Thank you, David. Transcript provided by NPR, Copyright NPR.