Please educate me on the ramifications of a bail out vs doing nothing (employment, Congress)

[Tricky D]

Originally Posted by saganista

No promises, hence no transactions, hence no sales, hence no production, hence no jobs, hence no incomes.

I've always found it curiously odd that (some) renowned economists don't want to air their opinion about the current economical crisis publicly, with the excuse that their opinion could influence the stock market.
To me this sounds as stupid as a physics professor who doesn't want to comment on the laws of gravity, because he's afraid that his opinion might change the laws of gravity.
To me this only proves that the economical world is not based on reality.

[Mircea]

Originally Posted by Tricky D

I've always found it curiously odd that (some) renowned economists don't want to air their opinion about the current economical crisis publicly, with the excuse that their opinion could influence the stock market.

It's because they're afraid to stake their reputation. If they're wrong, they will be relegated to the world of has-beens and no one will ever listen to them again.

Economics is a little different than archeology. In archeology you simply shout down your opponents and critics, black-ball and black-list them and force them out of the field.

[Tricky D]

Originally Posted by Mircea

It's because they're afraid to stake their reputation.

I only believe that this is partly why they don't want to comment.
Most economists simply don't want to sound negative out of fear of summoning another stock crash.
Simple rumours do affect the stock market, because a bank is nothing without the trust of his clients.

[saganista]

The laws of physics at least appear to be immutable. A physicist will confidently predict that a ball dropped off the top of a building tomorrow will fall at the same rate as one dropped today. So will an economist who has read anything about physics.

The laws of economics deal with change...T1 versus T2. What happens tomorrow relative to today depends on what might happen this evening. No economist can confidently predict what will happen tomorrow, and neither can any physicist, even if he has read all about economics.

In this sense, physics is a static system and economics is a dynamic system. That's a very big difference...

[Tricky D]

Originally Posted by saganista

In this sense, physics is a static system and economics is a dynamic system. That's a very big difference...

According to Quantum Mechanics the laws of physics is as dynamic as economics.
Then again I confess to not understand Quantum physics at all.

[saganista]

Originally Posted by Tricky D

According to Quantum Mechanics the laws of physics is as dynamic as economics. Then again I confess to not understand Quantum physics at all.

True in a sense and funny. But I don't think quantum effects on the gravitational equation are significant enough to alter the validity of the earlier example.

[Tricky D]

Originally Posted by saganista

But I don't think quantum effects on the gravitational equation are significant enough to alter the validity of the earlier example.

True, but the laws of physics just aren't as immutable as most people believe.

[GloryB]

Thanks Mircea for a great explanation in the beginning of this thread. I think so few of us really understand how the national financial system works, that it is easy to start accepting any internet or media scenario as fact. This is a time when we really need to have confidence in our politicians we have voted into office and as sad as it is....most people do not have that confidence. So, we end up floundering around wondering who is really telling the truth.

Most people disagreed with the bail-out without understanding why it may be the lessor of two evils.

[stycotl]

the only problem with it that i see is that they are turning it into the lesser of two evils for those of us in the public, while allowing, as mentioned earlier, the biggest players that caused the mess to walk away with the hands clean and their pockets loaded.

and as far as the physics example, saganista had it correct. economics is waaay more mutable than physics, especially when the ebb and flow of the system largely is based off of the ignorant, emotional responses of the masses.

EDIT: five minutes after i wrote this, i read in the news that they are including a clause that does not support the personal rewards of CEO's whose companies are sold to the government. i would have to learn more about that clause though, before i decide that it is indeed going to fairly divest those in charge of this ridiculous event.

aaron out.

[stycotl]

well, nevermind...

House Blocks Bailout Bill; Markets Plunge : NPR