[ExI] Sudden outbreak of democracy baffles US pundits
sjatkins at mac.com
Mon Oct 13 03:34:51 UTC 2008
On Oct 6, 2008, at 11:31 AM, The Avantguardian wrote:
> --- On Sun, 10/5/08, Stathis Papaioannou <stathisp at gmail.com> wrote:
>>> I suspect this bailout solution will solve nothing,
>> for it leaves in place
>>> the root cause: government requirements on banks to
>> give out what they
>>> already know are bad loans. I find plenty of good
>> explanations in the
>>> internet commentary, but almost nothing in the
>> mainstream press.
> Yes, and all the panicked sheep that are selling off their stocks at
> ridiculous losses and buying Treasury Bills at pitifully low
> interest rates are fools because they are rewarding the government
> for the stupid, corrupt, and self-serving policies that got us here
> in the first place. The U.S. stockmarket will outlive the U.S.
> government because the whole world has a stake in our markets but
> most countries would not shed a tear for our government.
Holding stocks during this major dive across the board is idiotic.
Buying bargains when you think you see a bottom and great value makes
sense but is of course dangerous. Buying T-bills doesn't make a lot
of sense. Buying gold, commodities and hard assets does.
>> Why not simply admit that boom/bust cycles are a natural
>> part of any
>> market system? Leave things alone, and there will be a
>> depression. In
>> a decade or two when people have forgotten about 2008
>> they'll start
>> bidding up the price of shares and property, banks will
>> start lending
>> again to get a slice of the long-awaited recovery or risk
>> behind and being taken over by more adventurous players,
>> high-regulation governments and central banks will be under
>> to loosen things up in the interests of boosting economic
>> and the whole thing will start again.
There is nothing natural about artificial manipulation of the interest
rates and standard practices and regulation for political reasons
leading to the largest market bubble in our financial history. That
bubble could not have been create by the free market.
> I agree with the gist of what you are saying, but it won't last that
> long. Great Depressions are no longer possible because the markets
> and everything else react far too quickly to any bit of information
> in the age of the Internet.
Not helpful if the really bad news spreads really quickly leading to
an internet speed crash.
> What others call a depression, I call a white-sale on blue-chip
> stocks. And my only regret is that I don't have the money to go on a
> wallstreet shopping spree. Besides I have other investment
> priorities at the moment. Fear is useless *after* the bubble bursts
> because it is too late to sell.
When the market is still falling and demonstrably has not hit bottom
it can be better to take the current loss rather than a much greater
loss. Many learned this during the dot com bust the hard way.
For assets directly inflated by the bubble there will be no full
recovery, ever. Add in the over $200 billion in direct liabilities
hanging over financial institutions due to Friday's pricing of Lehman
bond based CDS instruments. There is no reason whatsoever to expect
financials to come back for many years. There is no reason for
housing or related industries to come back to pre crash levels.
Housing will not hit bottom until the price of houses drops a great
deal more sucking up the over supply of homes on the market. And
this is the best outcome right now. There could easily be a great
deal of economic ill yet to come. So no, this is not time for a
Wall Street shopping spree. Not yet. Keep your powder dry and
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