03-17-2009, 06:02 PM
Hi,
Not true since the majority of the economy did not buy bad paper. Indeed the majority of the economy does not buy any paper at all, they manufacture, provide services, generate raw materials, grow food, fight fires, teach schools, etc., ad nauseum. The part of the economy that was shuffling paper around was primarily the banking sector. Since the rest of the economy relies on the banking sector to furnish the liquidity that keeps everything flowing, when the banking sector tanked, it tanked everything. Poor logic since blaming everyone for the problem is like blaming the passengers on the bus for a crash caused by driver error. The passengers may depend on the driver to get them to their destination, but it is not their responsibility to monitor the driver.
Simplistic because the balance between a laissez faire economy and complete state control is not a binary issue. There is a broad spectrum of needed and unneeded regulations (look at India). A slight relaxation of a strong state control can generate a robust economy (China). A system can run well under one set of controls (or none) and then go amok (US stocks '29 and finances -- most recently last fall). Sometimes the indicators of impending disaster are there but not seen (the dot com bubble) sometimes they are ignored. As often as not, there are honest differences of opinion. And, often, the disaster has many contributing factors, some of which (two unnecessary wars, a moron in the White House, and poor understanding of globalization by all levels of the American people) are, strictly speaking, outside of 'economy'.
The mess we're in now is as much the fault of 'bad vibes' as it is of 'bad paper'. A mattress is not the equivalent of a bank, but if many believe it is then that is where the money will be instead of funding an economy.
--Pete
Quote:The funds managers just watched the dow nearly halve in value; they may be very, very good, but they just did very, very badly. Nearly every major player was holding dynamite, and anyone who told them so was either ignored, or just drowned out.Neither true nor good logic. And simplistic to boot.
Not true since the majority of the economy did not buy bad paper. Indeed the majority of the economy does not buy any paper at all, they manufacture, provide services, generate raw materials, grow food, fight fires, teach schools, etc., ad nauseum. The part of the economy that was shuffling paper around was primarily the banking sector. Since the rest of the economy relies on the banking sector to furnish the liquidity that keeps everything flowing, when the banking sector tanked, it tanked everything. Poor logic since blaming everyone for the problem is like blaming the passengers on the bus for a crash caused by driver error. The passengers may depend on the driver to get them to their destination, but it is not their responsibility to monitor the driver.
Simplistic because the balance between a laissez faire economy and complete state control is not a binary issue. There is a broad spectrum of needed and unneeded regulations (look at India). A slight relaxation of a strong state control can generate a robust economy (China). A system can run well under one set of controls (or none) and then go amok (US stocks '29 and finances -- most recently last fall). Sometimes the indicators of impending disaster are there but not seen (the dot com bubble) sometimes they are ignored. As often as not, there are honest differences of opinion. And, often, the disaster has many contributing factors, some of which (two unnecessary wars, a moron in the White House, and poor understanding of globalization by all levels of the American people) are, strictly speaking, outside of 'economy'.
The mess we're in now is as much the fault of 'bad vibes' as it is of 'bad paper'. A mattress is not the equivalent of a bank, but if many believe it is then that is where the money will be instead of funding an economy.
--Pete
How big was the aquarium in Noah's ark?