I was looking around MSN today and found this article to be interesting. I was thinking of posting it to the things of the day thread, but it fits this discussion better.
I was looking around MSN today and found this article to be interesting. I was thinking of posting it to the things of the day thread, but it fits this discussion better.
I breezed over that article and I agree with it for the most part. I think these people should be held accountable and such, but congress needs to put together the rules of the bailout really quick.
I just want to know more about why you think this is so. If you can't defend what you said, maybe you were wrong.
It's simple, cause Bernanke told people it's all falling apart. When the chairman of the Federal Reserve says the economy is crumbling, he is the guy who knows best.
I just want to know more about why you think this is so. If you can't defend what you said, maybe you were wrong.
It's simple, cause Bernanke told people it's all falling apart. When the chairman of the Federal Reserve says the economy is crumbling, he is the guy who knows best.
The Federal Reserve is a private bank, not a public institution. The chairman is appointed by the government, and they are pretty much the bank for the united states government, but this does not necessarily make him the guy who knows best.
I mean, how come a number of other economists were able to see this coming over the last months and years, but the man who "knows best" did not? If other people knew better than the guy who "knows best", what does that make them?
I just want to know more about why you think this is so. If you can't defend what you said, maybe you were wrong.
It's simple, cause Bernanke told people it's all falling apart. When the chairman of the Federal Reserve says the economy is crumbling, he is the guy who knows best.
That is still unresponsive. In your article, Bernanke didn't say that anyone needed $700 billion and he didn't say it was needed immediately.
This is certainly not an optimal situation. I believe that it will only be made worse by this rush to throw nearly a trillion dollars to the same people who have proved to us that they can't be trusted to do a good job.
I think I need to invest in a nice hat, tommy gun, and model t. When the big crash hits, I can more easily transition to my new career as an old-timey bank robber.
I think I need to invest in a nice hat, tommy gun, and model t. When the big crash hits, I can more easily transition to my new career as an old-timey bank robber.
To my understanding you do not want the major banks to fail because it takes time for other institutions to take their place. Ideally other banks would fill their roles immediately or near immediately, so it would not be a jarring event. You let the companies that made bad decisions die, and the world goes on all happy. In reality it takes infrastructure, capital, expertise, time to establish, etc…for new institutions to fill the roles the old ones left behind. If your talking about a shoe factory that goes under. No big deal. If your talking about financial institutions that allow the economy to function, sort of a problem. You can’t allow America to exist for an extended period of time without something doing the roles of these collapsed banks, or else the economy will slow down, faith lost in the market, and recession.
Now this is just my understanding. How is my logic flawed or at least not complete? (I assume I am missing something or there would be no argument)
"Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief," he told the House Committee on Oversight and Government Reform.
. . .
Waxman noted that the Fed chairman had been one of the nation's leading voices for deregulation, displaying past statements in which Greenspan had argued that government regulators were no better than markets at imposing discipline.
"Were you wrong?" Waxman asked.
"Partially," the former Fed chairman reluctantly answered, before trying to parse his concession as thinly as possible.
. . .
The Federal Reserve had broad authority to prohibit deceptive lending practices under a 1994 law called the Home Owner Equity Protection Act, or HOEPA. But it took little action during the long housing boom, and less than 1 percent of all mortgages were subjected to restrictions under that law.
See, I know how it can be seductive to think that the free market will make people act in their own best interest, and that in turn will cause them to do what's right for others, and that competition will give us the best goods and services, but this is an example of how that sort of thinking can be dead wrong. It's just like the conservative meme about lowering taxes on the wealthy, hoping that it will somehow inspire them to create jobs. It doesn't always inspire them to create jobs. It inspires them to hold onto their money tighter.
See, I know how it can be seductive to think that the free market will make people act in their own best interest, and that in turn will cause them to do what's right for others, and that competition will give us the best goods and services, but this is an example of how that sort of thinking can be dead wrong. It's just like the conservative meme about lowering taxes on the wealthy, hoping that it will somehow inspire them to create jobs. It doesn't always inspire them to create jobs. It inspires them to hold onto their money tighter.
The free market does make people act in their own best interest. That assumes that people are smart enough to know what is in their own best interest. We have a situation where people buy lottery tickets, fake medicines, penis pills, and fall for Nigerian scams. People do what they think is best for them, but they are wrong. Just about every failing of the free market leads back to the fact that one of the major players in the economy is a huge blob of ignorant and uneducated people. If people weren't smart, we wouldn't have this mortgage problem because people never would have signed a mortgage that they wouldn't be able to afford.
Simple solution. Only let smart people have money.
See, I know how it can be seductive to think that the free market will make people act in their own best interest, and that in turn will cause them to do what's right for others, and that competition will give us the best goods and services, but this is an example of how that sort of thinking can be dead wrong. It's just like the conservative meme about lowering taxes on the wealthy, hoping that it will somehow inspire them to create jobs. It doesn't always inspire them to create jobs. It inspires them to hold onto their money tighter.
The free market does make people act in their own best interest. That assumes that people are smart enough to know what is in their own best interest. We have a situation where people buy lottery tickets, fake medicines, penis pills, and fall for Nigerian scams. People do what they think is best for them, but they are wrong. Just about every failing of the free market leads back to the fact that one of the major players in the economy is a huge blob of ignorant and uneducated people. If people weren't smart, we wouldn't have this mortgage problem because people never would have signed a mortgage that they wouldn't be able to afford.
Simple solution. Only let smart people have money.
What you say is at least partly true, but that is not my point. Many people have been saying over the last few years that the incentive the free market provides people to act in their own best interest will also necessarily cause them to act in ways that are in the best interests of others, somewhat like the "Invisible Hand". I don't believe that. I believe that, when a bunch of investors act in their own self interest, they don't give a damn about what happens to other people and they will inevitably begin engaging in shady and questionable practices. Also, even if their actions contribute to the good of others in the short term, the long term consequences of unfettered self interested action are not going to be good for the majority of people.
The only way I know to balance this is a healthy dose of GOVERNMENT REGULATION.
The only way I know to balance this is a healthy dose of GOVERNMENT REGULATION.
The problem is that the free market capitalism that is pushed by so many people is even more laissez faire than Adam Smith ever proposed. Smith actually was in favor of a great deal of regulation. He viewed capitalism as a game. And like any game, it must be played fairly, with set rules and referees to enforce those rules.
What we're seeing now is a free market system which lacks all of the necessary referees to prevent cheating. As a result, people reflexively hate on capitalism and try to push socialism. The real answer is to keep capitalism, but to do it right. Bust up monopolies. Eliminate companies that do nothing, like patent trolls. Raise minimum wage to a living wage for any full time job. Make the system very easy for new and small businesses, and very difficult for large businesses, by way of taxes. Reverse the age-old decision to give corporations the rights of a human being. Hold actual people responsible for crimes committed by their corporations. Enhance the FTCs power to fight false advertising and coercion. I could go on.
Capitalism is getting a bad rap because the almost anarchic markets we have today are labeled as capitalism, while they are anything but.
What we're seeing now is a free market system which lacks all of the necessary referees to prevent cheating. As a result, people reflexively hate on capitalism and try to push socialism. The real answer is to keep capitalism, but to do it right. Bust up monopolies. Eliminate companies that do nothing, like patent trolls. Raise minimum wage to a living wage for any full time job. Make the system very easy for new and small businesses, and very difficult for large businesses, by way of taxes. Reverse the age-old decision to give corporations the rights of a human being. Hold actual people responsible for crimes committed by their corporations. Enhance the FTCs power to fight false advertising and coercion. I could go on.
I heartily agree with everything you say above. It makes me so happy you think this way that I'm tempted to print out the above quote, frame it, and put it on my wall.
However, don't let any republicans hear you say that or they'll brand you a terrorist.
I really like the way that there's an economic crisis because people think there's an economic crisis. They're worried that everything is going to go into a recession, so they sell off stocks and create said recession.
Good times.
Yeah, I know there's more to it than that, but still, stocks decline because people sell them off in fear of them declining.
Yeah, stocks are in the basement, foreclosures are up seventy-one percent, Greenspan says he was wrong . . . circumstances are not very far away from the point where hoarding and having a planned escape route become rational behaviors.
Maybe each of us on the forum could hoard one specific thing . . .
Am I the only one that find this funny?
Ando! We must go back in time to save the stock market!
You know what amazes me? I remember enough history to know that the circumstances leading up to these problems we have now are pretty much identical to the circumstances leading up to the Great Depression. Like, on the nose. It'd be nice if we could learn from our mistakes, y'know?
You know what amazes me? I remember enough history to know that the circumstances leading up to these problems we have now are pretty much identical to the circumstances leading up to the Great Depression. Like, on the nose. It'd be nice if we could learn from our mistakes, y'know?
We did learn our lesson. That's why we have been able to get by for so long.
You know what amazes me? I remember enough history to know that the circumstances leading up to these problems we have now are pretty much identical to the circumstances leading up to the Great Depression. Like, on the nose. It'd be nice if we could learn from our mistakes, y'know?
I would again like to point out that my personal economic situation is no better or worse than it was when this thread started. I have a job. It pays well. My bank account has plenty of cash in it. My 401k went down, but prices on gas and houses have also gone down, which evens out. The odds of me losing my job are very very small, unless I quit. I want to see the market go down as much as possible. The more red I see the more I laugh because it has nothing to do with me.
You know what amazes me? I remember enough history to know that the circumstances leading up to these problems we have now are pretty much identical to the circumstances leading up to the Great Depression. Like, on the nose. It'd be nice if we could learn from our mistakes, y'know?
ALARMIST!
It is alarmist. The Dow is still trading at double its volume from 1995.
Did you really think that after hitting 14,000 last year, there would be no bubble correction, artificial or from market forces? We're dealing with 8,500 points now -- which is still higher than in 2001.
But it's important to remember the stock market is not the sole indicator of economic status. It only measures how one particular kind of trade and investment is doing. It does not measure non-public corporations and it does not measure real domestic output.
From Fortune/CNN Money: Just one problem: There isn't any recession. The latest figures show that we clearly were not in one as of midsummer, whether you use the rule-of-thumb definition - two consecutive quarters of GDP shrinkage - or the looser concept of a sustained and significant economic decline.
The economy shrank marginally (-0.2%) in the fourth quarter of 2007, but otherwise it's been growing steadily for years. In the most recent quarter it grew at a vigorous 3.3%, fueled not by government stimulus checks but by a strong rise in net exports. The OECD has just raised its forecast of U.S. growth for the full year from 1.2% to 1.8% - not blistering, but still the fastest growth of all the G-7 countries.
Did you really think that after hitting 14,000 last year, there would be no bubble correction, artificial or from market forces? We're dealing with 8,500 points now -- which is still higher than in 2001.
But it's important to remember the stock market is not the sole indicator of economic status. It only measures how one particular kind of trade and investment is doing. It does not measure non-public corporations and it does not measure real domestic output.
Don't bring your facts into their chicken little circle jerk.
Did you really think that after hitting 14,000 last year, there would be no bubble correction, artificial or from market forces? We're dealing with 8,500 points now -- which is still higher than in 2001.
But it's important to remember the stock market is not the sole indicator of economic status. It only measures how one particular kind of trade and investment is doing. It does not measure non-public corporations and it does not measure real domestic output.
Don't bring your facts into their chicken little circle jerk.
Try again. This "bubble" has burst what, maybe six times now? That's not a bubble. That's an indication of a long term downward trend. Greenspan says that the downward trend will continue unabated for a long time to come. Even the White House says that some parts of the country are in a recession. I think the weight of the facts is on the "chicken little" side of the argument.
Of course, it's easy for Andrew to be a jerk about this. It's not like he actually has to worry about paying any bills right now. We might hear a somewhat different tune after he graduates and tries to find a job.
No, says James Pethokoukis, senior writer for U.S. News & World Report (Money & Business). "Unless you redefine 'recession' to mean any period where unemployment increases from record low levels' or 'any period where the economy shrinks if exclud[ing] trade' or 'any period where politicians benefit by badmouthing the economy.' But using commonly accepted data, nope."
Are we in a recession?
No, says Donald L. Luskin, chief investment officer fr Trend Macrolytics. "Of course we are not. Don’t be silly. Over history, average real GDP growth (quarter annualized) is negative 1.5%, and the second quarter was just reported at positive 1.9%. Over history, adjusting for the size of the labor force, payroll job losses average 266,000 in recessions. In July we just lost 51,000. Over history, the average unemployment rate in recessions is 6.2%. In July it was only 5.7%. Anyone who thinks this is a recession has obviously never learned any economic history. Are we headed into a recession? Maybe. At least that’s something we can debate. But if the word 'recession' is to have any meaning, then we certainly are not in one now."
Of course, it's easy for Andrew to be a jerk about this. It's not like he actually has to worry about paying any bills right now. We might hear a somewhat different tune after he graduates and tries to find a job.
How about not? Unlike most working Americans right now, I haven't become accustomed to massive and unsustainable economic growth. Oh noes, I can't run up my credit on a second home in Maui when my paycheck is only 50k a year! Despite all the gloom and doom you espouse, I understand that my economic future will not be as easy or simple as my parents. However, the demand for my skills in the market are up. More and more companies are looking for CS majors while Universities are putting out less and less majors. A rise in demand with a decrease in available workers means I'll bet set for a while. As long as I don't spend above my means, stay smart with my retirement funds (I've already started a ROTH IRA and a 401k), and maintain my value in the workplace, I'll be fine.
Comments
Let's Not Rush to Blow 700 Billion Dollars
I mean, how come a number of other economists were able to see this coming over the last months and years, but the man who "knows best" did not? If other people knew better than the guy who "knows best", what does that make them?
(maybe the "bestest"?)
This is certainly not an optimal situation. I believe that it will only be made worse by this rush to throw nearly a trillion dollars to the same people who have proved to us that they can't be trusted to do a good job.
The Director of the CBO says that the bailout could make things worse.
Now this is just my understanding. How is my logic flawed or at least not complete? (I assume I am missing something or there would be no argument)
See, I know how it can be seductive to think that the free market will make people act in their own best interest, and that in turn will cause them to do what's right for others, and that competition will give us the best goods and services, but this is an example of how that sort of thinking can be dead wrong. It's just like the conservative meme about lowering taxes on the wealthy, hoping that it will somehow inspire them to create jobs. It doesn't always inspire them to create jobs. It inspires them to hold onto their money tighter.
Meanwhile, foreclosures are up seventy-one percent! Those republicans sure are good at managing money.
Simple solution. Only let smart people have money.
The only way I know to balance this is a healthy dose of GOVERNMENT REGULATION.
What we're seeing now is a free market system which lacks all of the necessary referees to prevent cheating. As a result, people reflexively hate on capitalism and try to push socialism. The real answer is to keep capitalism, but to do it right. Bust up monopolies. Eliminate companies that do nothing, like patent trolls. Raise minimum wage to a living wage for any full time job. Make the system very easy for new and small businesses, and very difficult for large businesses, by way of taxes. Reverse the age-old decision to give corporations the rights of a human being. Hold actual people responsible for crimes committed by their corporations. Enhance the FTCs power to fight false advertising and coercion. I could go on.
Capitalism is getting a bad rap because the almost anarchic markets we have today are labeled as capitalism, while they are anything but.
However, don't let any republicans hear you say that or they'll brand you a terrorist.
Good times.
Yeah, I know there's more to it than that, but still, stocks decline because people sell them off in fear of them declining.
Maybe each of us on the forum could hoard one specific thing . . . Ando! We must go back in time to save the stock market!
Did you really think that after hitting 14,000 last year, there would be no bubble correction, artificial or from market forces? We're dealing with 8,500 points now -- which is still higher than in 2001.
But it's important to remember the stock market is not the sole indicator of economic status. It only measures how one particular kind of trade and investment is doing. It does not measure non-public corporations and it does not measure real domestic output.
From Fortune/CNN Money:
Just one problem: There isn't any recession. The latest figures show that we clearly were not in one as of midsummer, whether you use the rule-of-thumb definition - two consecutive quarters of GDP shrinkage - or the looser concept of a sustained and significant economic decline.
The economy shrank marginally (-0.2%) in the fourth quarter of 2007, but otherwise it's been growing steadily for years. In the most recent quarter it grew at a vigorous 3.3%, fueled not by government stimulus checks but by a strong rise in net exports. The OECD has just raised its forecast of U.S. growth for the full year from 1.2% to 1.8% - not blistering, but still the fastest growth of all the G-7 countries.
Of course, it's easy for Andrew to be a jerk about this. It's not like he actually has to worry about paying any bills right now. We might hear a somewhat different tune after he graduates and tries to find a job.
No, says James Pethokoukis, senior writer for U.S. News & World Report (Money & Business).
"Unless you redefine 'recession' to mean any period where unemployment increases from record low levels' or 'any period where the economy shrinks if exclud[ing] trade' or 'any period where politicians benefit by badmouthing the economy.' But using commonly accepted data, nope."
Are we in a recession?
No, says Donald L. Luskin, chief investment officer fr Trend Macrolytics.
"Of course we are not. Don’t be silly. Over history, average real GDP growth (quarter annualized) is negative 1.5%, and the second quarter was just reported at positive 1.9%. Over history, adjusting for the size of the labor force, payroll job losses average 266,000 in recessions. In July we just lost 51,000. Over history, the average unemployment rate in recessions is 6.2%. In July it was only 5.7%. Anyone who thinks this is a recession has obviously never learned any economic history. Are we headed into a recession? Maybe. At least that’s something we can debate. But if the word 'recession' is to have any meaning, then we certainly are not in one now."