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jpinpb
Posts:1450
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| 10/03/2008 5:49 PM |
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Also, as mentioned by Longbrake
"Longbrake is not done giving dire warnings. He supports the $700 billion bailout approved by Congress this week, but he says it won't solve the central problem. He points out that this crisis was set off when inflated home prices started to fall. They're not done falling yet, he predicts.
"Many expect those prices to drop by 15, 20 percent," he says. "You'll still going to have losses that the system has to absorb, and until that's completed there will be negative pressure on financial institutions and probably negative consequences for the economy as a whole" |
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BigTrace
Posts:194
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| 10/03/2008 6:44 PM |
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Posted By lurknomore on 10/03/2008 4:36 PM
Big Trace--I can see we are making progress. You have stated, "We should all revisit this subject again in about 6 months and I think you'll find things worse, not better."
Now you just need to tell us which "things" you believe will be "worse," and how we will know (measure) that. Also, what "things," if they were "better" (and measured how) would show you were wrong. It is a truism in science that falsifiabiliity is a requirement for any testable hypothesis: If no possible set of outcomes could show that it was incorrect, then no evidence can ever show it was right, either. Is your claim potentially falsifiable, or it is just an a priori "fact" based on your economic/political ideology?
The world (well, the small part of it represented here) is waiting.
The "things' I am refering to would include unemployment, inflation, growth (GDP) which are all measurable, along with your 401k holdings (personally known for some), and consumer sentiment / confidence (which is reported).
For instance, the DOW today is 10,325, where a year ago, it was roughly touching 14,000 so we've already been hit about 30%. Are we looking at some Miraculous recovery to 12,000?? We started this week over 11,000, people complained when we shot down to 10,222 so it shot back up about 500 on Tuesday and gradually has gone down. News happens today, DOW down another 158. The market could go down even more in the near future so do we shoot another 700B bullet like Toto said to fix it again?? What I'm saying is that we will see worse numbers in 6 months rather than better and the suffering that is already being felt will continue without much light at the end of the tunnel. Crime, in general, will also go up.
Maybe this is too doomsday, but just throwing money at banks to "make them feel better about lending again" isn't going to work. I truly hope I'M wrong and this is all just fodder, but nothing leads me to believe this. |
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wilson
Posts:541
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| 10/03/2008 6:56 PM |
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| Wahooooooooooooooooooooooooooo!!!!!!!!!!!!!!!!!!!!!!!!!!! |
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jpinpb
Posts:1450
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| 10/03/2008 7:19 PM |
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| When the expected outcome does nothing except tighten the noose and hands are held out for more bailouts, I wonder if the same sentiments will be held. |
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wilson
Posts:541
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| 10/03/2008 7:24 PM |
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| When they put the noose around your neck, they generally bind your hands so you cant grab the rope. So it may be difficult to have your hands held out. |
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Goingup?
Posts:150
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| 10/03/2008 7:31 PM |
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First off, those that believe the economy would recover quicker without this bailout only need to look to history to see how that would have played out.
In 1929 the Federal Reserve and the gov had the opportunity to pump money into the economy to jump start it. They choose not to (actually tighened), and a decade of misery followed.
Japan in the 80's faced the same dilema when real estate prices collapsed overnight. There was no bailout package from the gov, and 15 years of stagnant growth followed as banks kept the bad loans on the books (less than 1% real GDP growth).
Contrary to popular belief, the US can afford this. The total current US debt is less than 1X GDP (14T GDP vs 11T debt). How many here have total debt lower than 1X their annual earnings? This is less than most countries and GDP has and will continue to grow slower than debt.
Now for the blame: While many in the world blame China (buying all that US debt diving the dollar lower and tanking interest rates...causing the housing bubble), I place the blame exactly where it belongs....on the Arabs.
In Aug last year the credit crisis was upon us. It was managable, as the Fed was lowering interest rates and the economy was continuing to grow. Banks were solvent, and the stock market was near record highs. Then along came the commodities bubble.
Once oil shot up so far and so fast the Fed had no option but to start shutting down the money supply and interest rate cuts due to inflation worries (the Fed's number one objective is fight inflation). Right when the economy was on the verge of a recovery, it's legs were cut off.
The Fed couldn't bet that 150 oil wasn't here to stay, or even that 150 would be the top. Inflation was permeating through the economy and had to be stopped.
The result was instead of a slow recovery the patient went critical. But the Arabs/OPEC could have prevented this...and profited themselves in the long run.
They could have pumped as much oil as possible into the system, instead of stating "market forces" are at work. They were short term greedy, and will pay for it later on (oil could have stayed around the 100 range if managed properly....now it's headed to 50 and they'll be lucky if that holds).
So what happens now? The commodity bubble is over and inflation will soon be seen for what it is, a non factor. This will allow the Fed to cut rates and pump up the money supply. The huge bailout signed to today will jump start the economy like nothing before.
We will be lucky if another bubble doesn't form in the next couple years.
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jpinpb
Posts:1450
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| 10/03/2008 7:43 PM |
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| You're not the one w/the hands out. You're not the one w/the hand out now. |
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wilson
Posts:541
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| 10/03/2008 7:51 PM |
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I want my share of the bailout!
I have my hands out and a noose around my neck, mixed metaphors be damned! |
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wilson
Posts:541
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| 10/03/2008 7:54 PM |
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By the way, goingup has it right: liquidity and stimulus is needed. It won't avoid pain to come but it will ease the pain and tend to speed recovery.
To do nothing would have been suicide (there's that noose again). |
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jpinpb
Posts:1450
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| 10/03/2008 8:01 PM |
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| wilson - I believe you were in favor of the last stimuls package. That didn't save the day. Now we have a larger bailout. How soon do we wait before we can see this miraculous economic recovery from this $700+ billion bailout, any idea? |
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wilson
Posts:541
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| 10/03/2008 8:06 PM |
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Faster than without!!!!!!
Duhhhhhhhhhhhhhhhhhh.
It is that simple. |
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showboat
Posts:67
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| 10/03/2008 9:35 PM |
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| Wilson, there were other options suggested than only the bailout which is what everyone has focused on. They didn't bother to explore those other options for some unknown reason. No one is saying or has said that nothing should have been done. |
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wilson
Posts:541
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| 10/03/2008 9:53 PM |
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I dsagree. A lot if not the majority were posting to let the banks fail, it won't affect me!
If there are other options, we can still look at those options now. |
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BGinRB
Posts:67
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| 10/03/2008 11:58 PM |
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| A few people with some credibility proposed 'Scandinavian' model, whish was most recently applied today on Fortis, by the Dutch government. And two weeks ago on AIG, by the US government. |
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jpinpb
Posts:1450
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