- In a trillion dollar pie what are the odds that the politicians can keep their fingers out ? 0 in case you have trouble with this
- What will rationalize our economy more quickly? We have had 30ish years of coastal oil drilling ban. A financial solution will delay this more. Tough times will force people to "get real" and push for the practical realistic things that clearly must be done
- There is no guarantee this bailout will have the desired effect. You can however be assured of the undesirable effects. In the end I think it might be that we suffer just as much with a bailout as without.
- Foregoing a bailout might result in a depression but the last time we did a "New Deal" it did not work out well for democracy.
- One can reasonably suggest that a "financial dictatorship" might be the result of this government intervention similar to the military dictatorship in Brazil 1964-1985
- The longer the federal government head fakes towards this bailout the longer the private capital markets will hold off doing what they know they need to do waiting for a more favorable outcome from Uncle MoneyBags.
Alot of people use the language of the Religion of the Left and say "greed" on Wall Street caused this problem. However when totally logical results occur from totally predictable situations we should not be surprised that people do what just about anyone would do. Who is wrong there? The guy on Wallstreet who grabs the cash or we who collectively have sexual fantasies about the Beatles and use totally impractical economic policy? At least the guy on Wall St. is in touch with reality. Excessive liquidity is the ultimate scoundrel here. When interest rates are too low you get excessive speculation. Reasonable levels of speculation result in everything new. You have to speculate to develop new ideas. Excessive speculation is in the eye of the beholder but most people will agree we have had excessive real estate speculation.
Its a bit scary though to think about letting it all slide into failure. I have the feeling we’re precious close to a depression even if they do the bailout. In reality a bailout might cause a depression. It certainly is going to stretch the collective credit of the nation even further while prolonging the unreality.
If people were truly healthy an economic depression would not be an issue as long as we have adequate food. The panic of 1819 was caused by excessive use of banknotes that were used as currency. While you can not issue "banknotes" today you could package up CDO’s and sell them. Sounds equivalent to me and they lived through that. I know. Its tough to get up everyday. You don’t need more trouble in your day.
The good news
We live in the internet age. The Great Depression took 12 years and World War II to work its way through the system. Since communications is much more rapid in our era I suspect a more rapid resolution. The market system is resolving and developing solutions visibly more rapidly than even the era of the 70’s. An example of system solutions is the electric car. 10 years ago the electric car appeared dead. Technology in the form of lithium ion batteries has revived this technology and we are on the cusp of exiting the thermodynamic age and entering the quantum age because of it. We likely have less to fear from a "great depression" than one might calculate if one used the 1930’s as a starting point for calculation.
And thus I say Viva la Revolucion. I expect the populace to be comprised of many newly minted fiscal conservatives. We’re about to be taught a mongo economics lesson.
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