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Friday, the government basically declared martial law in the financial markets.
Anybody who thinks the local bank is going to be immune from a meltdown is eating drugs for breakfast. At the same time, while this is a welcome relief, I think all it is is a reprieve. And if we don't see some serious market reform, it's going to get really really bad.
Reduce your debt as much as possible. It would be a really good idea.
Your talking as if the banks are on your side. Remember, it was the banks who were out to get rich quick. They took the risks and now they are paying for it. we should let the stupid banks go bust. these recessions clear all the inefficient companies and make room for the new. Yes it will greatly hurt the economy but we will be better off later on. If we keep bailing out this and that company then free market economics does not play out. That is the reason we are in this mess in the first place - government trying to bailout companies.
^^^ Yeah, the banks were looking to "get rich quick" with 30-year notes at historically low interest rates.
The government needs to assume some responsibility for creating the situation specifically by trying to stamp out "redlining" (leading to the boom in the "sub-prime" category to comply with "anti-redlining" directives) and generally by creating the moral hazard of privatizing profit and socializing risk. The lesson the finance industry has learned today is "go ahead and assume bigger risks than you can manage, the government will bail you out if you get in over your head." At some point the government needs to tell private industries raking in private profits that they privately own the attendant risks. Today is obviously not that day, and I doubt tomorrow will be either. Or any other day in my lifetime. So I guess I'll just keep watching as the government bails out some industry or another about once a decade, with each bailout being even bigger than the last. So much for "free markets."
It seems that some of the most conservative opinions are against the bail out the way it is structured, and for some pretty darn good reasons:
Quote:
But is the administration’s proposal the right way to do this? It would enable the Treasury, without Congressionally approved guidelines as to pricing or procedure, to purchase hundreds of billions of dollars of financial assets, and hire private firms to manage and sell them, presumably at their discretion There are no provisions for — or even promises of — disclosure, accountability or transparency. Surely Congress can at least ask some hard questions about such an open-ended commitment.
And I’ve been shocked by the number of (mostly conservative) experts I’ve spoken with who aren’t at all confident that the Bush administration has even the basics right — or who think that the plan, though it looks simple on paper, will prove to be a nightmare in practice.
The fully detailed op-ed column can be found here:
I think it is you that is misinformed... if you think there would be no more America because the banks failed... then you are living in la-la land... is there a financial crisis.. absolutely.. is it so great as to bring down America... absolutely NOT... try your fearmongering somewhere else..
I dread the possibility of loosing my 401k but am amused by the possibility of some Saudi sheik loosing hundreds of millions. Talk about shared pain. In finance, as in life, all good things come to an end.
The problem is not economics, it is ethics. It is lack of ethics that caused the financial mess, and unless there is severe pain, there will be no improvement in ethics. It will be the pain that makes people demand the imbeciles are removed from positions of power and replaced with competent, ethical leaders. It is a 80 year cycle called the long wave. You begin with the innovators, who are replaced by the imitators, who are then replaced by the imbeciles, and the cycle starts over.
The problem is not economics, it is ethics. It is lack of ethics that caused the financial mess, and unless there is severe pain, there will be no improvement in ethics. It will be the pain that makes people demand the imbeciles are removed from positions of power and replaced with competent, ethical leaders. It is a 80 year cycle called the long wave. You begin with the innovators, who are replaced by the imitators, who are then replaced by the imbeciles, and the cycle starts over.
I agree to a degree in the whys you laid out. I think this can all be traced back to the end of a currency backed by gold. Fiat money is a absurd notion. I mean, you create money from effing debt. There is no real value in that. That is really creating money from gambling (gambling your borrower will actually be able to pay back). We need all the things you mentioned as far as innovation and such but we also need to dumb our current system of utter retardedness.
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