Posted on 10/27/2008 2:33:04 AM PDT by The Raven
About a year ago Stephen Moore, Peter Tanous and I set about writing a book about our vision for the future entitled "The End of Prosperity." Little did we know then how appropriate its release would be earlier this month.
Financial panics, if left alone, rarely cause much damage to the real economy, output, employment or production. Asset values fall sharply and wipe out those who borrowed and lent too much, thereby redistributing wealth from the foolish to the prudent. This process is the topic of Nassim Nicholas Taleb's book "Fooled by Randomness."
David GothardWhen markets are free, asset values are supposed to go up and down, and competition opens up opportunities for profits and losses. Profits and stock appreciation are not rights, but rewards for insight mixed with a willingness to take risk. People who buy homes and the banks who give them mortgages are no different, in principle, than investors in the stock market, commodity speculators or shop owners. Good decisions should be rewarded and bad decisions should be punished. The market does just that with its profits and losses.
...
There are many more examples, but none hold a candle to what's happening right now. Twenty-five years down the line, what this administration and Congress have done will be viewed in much the same light as what Herbert Hoover did in the years 1929 through 1932. Whenever people make decisions when they are panicked, the consequences are rarely pretty. We are now witnessing the end of prosperity.
(Excerpt) Read more at online.wsj.com ...
LOL! Actually, I think it’s politically much easier to do nothing - publically. Apparently Barry went to DC and pitched such a fit at the private meeting held a day or so before the vote that he completely blew up the reasonable plan that had been designed. This was mentioned only briefly by the press, of course, and then he sailed back onto the campaign trail and since has been announcing that he remained out of the whole thing.
This is the same man who voted “present” on just about everything except pro-abortion bills, which are apparently the only ones that he feels are not a political risk. Doing nothing and then blaming everybody else is by far the safest course.
This whole situation is constantly being played here as an US-good them-bad thingy, and that is not realistic.
The pubbies enjoyed the Wall Street looseness just as much as the dems.
It’s not like the high powered lobbyists were saying to themselves “Which dem do we work on tonight? We might as well not even bother with trying to bribe the pubbies, because they’re such and upstanding group”.
They both made out like bandits.
Ha! If only Congress would more often do nothing on the economy. The unfortunate truth is that when people start to hurt economically Congress feels compelled to act, almost always for the worse.
There is enough blame to go around to everyone on this one. I was particularly disappointed in the Republicans when they had control of the Federal Government. What I have difficulty comprehending is when Congress has record low evaluations, why do we (the people) keep reelecting those same people.
I also recognize that running against a rich and powerful incumbent is like sticking your arm into a meat grinder. The incumbent will relentlessly attack you not answer your charges.
May God have mercy on this country.
None of us will, but I admire the fact that you’re willing to say so.
Wall Street doing well isn’t in and of itself a problem.
Fannie and Freddie having been forced to enable banks to continue cranking out the bad loans that they were being forced to make was a problem. Wall Street’s reeling in the cash while overlooking the eventual fallout from the loans was only an amplification of the core mortgage issue.
sarbanes oxley was another example of over-reaction to the enron problem. All that did was ship finance to London.
Whats sending companies to the poor house isn’t the mortgage situation. Total mortgage exposure in the country is probably in the 7-10 trillion dollar range.
It’s the Credit Default Swaps and the hedge funds. Legalized crap shooting! 50-60-75 trillion? Who knows. Whatever it is, it totally dwarfs the housing sector.
And the president was the worst of the lot.
CDS were definitely a weak stressor in the system, as were the high leverage and some of the incentives in credit ratings, but bad mortgages are indeed the issue, not hedge funds, for example.
It is the uncertainty of the quality of mortgage-based assets on the books of financial firms that is making inter-bank lending and the other party in some CDS excessively risky. Now you can add on top of it the negative effects of bad governmental intervention and fear of compounding fear to what at the core is bad mortgages.
Well, anybody who looked at it and watched it knew and stated that the explosion in real estate prices could only end one way. Just like a game of musical chairs.
Except instead of taking one chair away per round, it was like taking ten chairs.
It is not "no qualms": it is causing the crisis in order to create the pretext to seize power.
Cheers!
You’re right. The Fed kept money too easy, it had to go somewhere, and any and everyone should have seen it coming. Those making out from it, of course, didn’t want to push themselves away from the trough sooner than they had to!
Would have been nice if more of it could have gone into savings for funding plain old good, rather than spectacular, business investments and loans.
I was just talking with an old high school friend about this the other night. (stress on the word "Old" because we are getting there!)
We grew up not prosperous. We both had decent careers, and some years made a lot. Unlike the local recently-prosperous widow-fleecing paper shufflers, we actually have these survival skills. Rather than condescendingly abusing our local tradespeople (And thereby getting ripped off on every repair), they know we can do the work ourselves if need be, and there is mutual respect.
Like everyone, we are not going to like what is coming-But we are ready to deal with it, because we remember how to paint our houses, fix our lawnmowers and cars and appliances, and if needed, grow our own food and raise chickens, if it comes down to that.
We'll live.
My father grew up on a small farm. When the Depression came, they heard about it. The only significant change they saw was the coalman was paid in eggs, and the carpenter got meat.
Bring it on.
-~~Ludwig Von Mises
“Several brokerage houses tumbled; blue-sky investment companies formed during the happy bull market days went to smash, disclosing miserable tales of rascality; over a thousand banks caved in during 1930, as a result of marking down both of real estate and of securities; and in December occurred the largest bank failure in American financial history, the fall of the ill-named Bank of the United States in New York.”
~~"Only Yesterday: An Informal History of the 1920’s" by Fredrick Lewis Allen
mark for later
Some of us still know how to can and sew and scrimp and save.
Well said!
Our Congress critters milked their cash cow until it died, then said they were 'shocked' by its untimely death and asked for an investigation to get to the bottom of it. Later that evening they ordered steaks all around, after all, there is fresh meat on hand, right?
I am glad I got to tell my father, "When I was a teenager I resented you making me work on the house, painting, remodelling, plumbing, and all that when I really wanted to hang out with my friends. Now I thank you every day."
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.