The only solution is a massive chapter 11, and forced cutting up of the failing banks into small chunks, then sell those of.
Only capitalism can save capitalism.
Doc Searls
· 1 year ago
Asses the masses may be, but not just because of idiocy. Incurious rectitude is far more common.
Also a quibble. You have readers and viewers. Not an "audience". If we were just that, all we could do is clap or boo.
Gary
· 1 year ago
The house did the right thing by not passing this rush-rush fix. The last time the government stepped in to "fix" the problem we had the Great Depression. This bill was loaded with pork and special projects like most of the junk that comes out of Washington. When a government agent tells you to trust them, GRAB YOUR WALLET. One party is no better than the other.
Robert Scoble
· 1 year ago
Doc, you're right. Sorry for the poor choice of words.
Robert Scoble
· 1 year ago
Gary: you are wrong. You forgot the savings and loan bailout, didn't you? The government actually ended up getting a lot of our money back from that. Sigh, this is what I'm talking about. We make statements on the Internet without knowing a damn thing about what we're talking about.
Worse, it's done by someone who is anonymous. I know Doc. I meet him often. Who the hell is "Gary?" This kind of discourse infuriates me. It doesn't make us better or smarter. Just is done to tear someone down. Phhhhbbbbbtttttttddddd!!!!!
Ben
· 1 year ago
Does anyone catch the irony of the US government owning 45% of the country's mortgages?
What annoys me is all the hand-wringing about "look what will happen if we don't do anything" - I say look what has already happened because you refused to do anything. That's neo-liberal economics for you. Get over it.
"The market will decide." Too bad for the collateral damage.
Sorry this isn't the positive stuff you wanted - how about "let's make sure this can't happen again"?
dan
· 1 year ago
Sorry folks, I see this as the biggest fire sale in history, the biggest opportunity since 2001, this is the time to go forth and do wonderful things and get started today. When ever we have something like this happen (just look at the last 40 years), every time we pull out, we have a bumper crop of opportunity, people should be getting ready for those opportunities now.
Sure make plans for the bail out, but what better time is there for being part of the next wave of innovation and invention? With everyone's attention focused elsewhere, it does not matter who does what, it matters what you do with your ideas, and it matters how you support them.
My 2 cents, not an economist, but this might just be the next best time to be alive outside of 2000/2001.
Gary Byron
· 1 year ago
Sorry for just the first name. This is the first time I've posted on your website. And you've made my point. The Banking bailout was causes by the same thing that has caused this mess: Loans to people who cannot pay them back along with Government involvement. (http://www.econlib.org/Library/Enc/SavingsandLo...) Only this time the mortgage companies made the bad loans because they "knew" Uncle Sam would bail them out. It may be argued that all of this is the result of several factors, but that is the basic truth. Here is a list of 160 plus economists that are against this:
Acemoglu Daron (Massachussets Institute of Technology) Adler Michael (Columbia University) Admati Anat R. (Stanford University) Alvarez Fernando (University of Chicago) Andersen Torben (Northwestern University) Barankay Iwan (University of Pennsylvania) Barry Brian (University of Chicago) Beim David (Columbia University) Berk Jonathan (Stanford University) Bisin Alberto (New York University) Bittlingmayer George (University of Kansas) Boldrin Michele (Washington University) Brooks Taggert J. (University of Wisconsin) Brynjolfsson Erik (Massachusetts Institute of Technology) Buera Francisco J.(UCLA) Carroll Christopher (Johns Hopkins University) Cassar Gavin (University of Pennsylvania) Chaney Thomas (University of Chicago) Chari Varadarajan V. (University of Minnesota) Chauvin Keith W. (University of Kansas) Chintagunta Pradeep K. (University of Chicago) Christiano Lawrence J. (Northwestern University) Cochrane John (University of Chicago) Coleman John (Duke University) Constantinides George M. (University of Chicago) Crain Robert (UC Berkeley) Culp Christopher (University of Chicago) De Marzo Peter (Stanford University) Dubé Jean-Pierre H. (University of Chicago) Edlin Aaron (UC Berkeley) Eichenbaum Martin (Northwestern University) Ely Jeffrey (Northwestern University) Eraslan Hülya K. K.(Johns Hopkins University) Faulhaber Gerald (University of Pennsylvania) Feldmann Sven (University of Melbourne) Fernandez-Villaverde Jesus (University of Pennsylvania) Fox Jeremy T. (University of Chicago) Frank Murray Z.(University of Minnesota) Fuchs William (University of Chicago) Fudenberg Drew (Harvard University) Gabaix Xavier (New York University) Gao Paul (Notre Dame University) Garicano Luis (University of Chicago) Gerakos Joseph J. (University of Chicago) Gibbs Michael (University of Chicago) Goettler Ron (University of Chicago) Goldin Claudia (Harvard University) Gordon Robert J. (Northwestern University) Guadalupe Maria (Columbia University) Hagerty Kathleen (Northwestern University) Hamada Robert S. (University of Chicago) Hansen Lars (University of Chicago) Harris Milton (University of Chicago) Hart Oliver (Harvard University) Hazlett Thomas W. (George Mason University) Heaton John (University of Chicago) Heckman James (University of Chicago - Nobel Laureate) Henderson David R. (Hoover Institution) Henisz, Witold (University of Pennsylvania) Hertzberg Andrew (Columbia University) Hite Gailen (Columbia University) Hitsch Günter J. (University of Chicago) Hodrick Robert J. (Columbia University) Hopenhayn Hugo (UCLA) Hurst Erik (University of Chicago) Imrohoroglu Ayse (University of Southern California) Israel Ronen (London Business School) Jaffee Dwight M. (UC Berkeley) Jagannathan Ravi (Northwestern University) Jenter Dirk (Stanford University) Jones Charles M. (Columbia Business School) Kaboski Joseph P. (Ohio State University) Kaplan Ethan (Stockholm University) Karolyi, Andrew (Ohio State University) Kashyap Anil (University of Chicago) Keim Donald B (University of Pennsylvania) Ketkar Suhas L (Vanderbilt University) Kiesling Lynne (Northwestern University) Klenow Pete (Stanford University) Koch Paul (University of Kansas) Kocherlakota Narayana (University of Minnesota) Koijen Ralph S.J. (University of Chicago) Kondo Jiro (Northwestern University) Korteweg Arthur (Stanford University) Kortum Samuel (University of Chicago) Krueger Dirk (University of Pennsylvania) Ledesma Patricia (Northwestern University) Lee Lung-fei (Ohio State University) Leuz Christian (University of Chicago) Levine David I.(UC Berkeley) Levine David K.(Washington University) Linnainmaa Juhani (University of Chicago) Lucas Robert (University of Chicago - Nobel Laureate) Luttmer Erzo G.J. (University of Minnesota) Manski Charles F. (Northwestern University) Martin Ian (Stanford University) Mayer Christopher (Columbia University) Mazzeo Michael (Northwestern University) McDonald Robert (Northwestern University) Meadow Scott F. (University of Chicago) Mehra Rajnish (UC Santa Barbara) Mian Atif (University of Chicago) Middlebrook Art (University of Chicago) Miguel Edward (UC Berkeley) Miravete Eugenio J. (University of Texas at Austin) Miron Jeffrey (Harvard University) Moretti Enrico (UC Berkeley) Moriguchi Chiaki (Northwestern University) Moro Andrea (Vanderbilt University) Morse Adair (University of Chicago) Mortensen Dale T. (Northwestern University) Mortimer Julie Holland (Harvard University) Muralidharan Karthik (UC San Diego) Nevo Aviv (Northwestern University) Ohanian Lee (UCLA) Pagliari Joseph (University of Chicago) Papanikolaou Dimitris (Northwestern University) Paul Evans (Ohio State University) Peltzman Sam (University of Chicago) Perri Fabrizio (University of Minnesota) Phelan Christopher (University of Minnesota) Piazzesi Monika (Stanford University) Piskorski Tomasz (Columbia University) Rampini Adriano (Duke University) Reagan Patricia (Ohio State University) Reich Michael (UC Berkeley) Reuben Ernesto (Northwestern University) Roberts Michael (University of Pennsylvania) Rogers Michele (Northwestern University) Rotella Elyce (Indiana University) Ruud Paul (Vassar College) Safford Sean (University of Chicago) Sandbu Martin E. (University of Pennsylvania) Sapienza Paola (Northwestern University) Savor Pavel (University of Pennsylvania) Scharfstein David (Harvard University) Seim Katja (University of Pennsylvania) Shang-Jin Wei (Columbia University) Shimer Robert (University of Chicago) Shore Stephen H. (Johns Hopkins University) Siegel Ron (Northwestern University) Smith David C. (University of Virginia) Smith Vernon L.(Chapman University- Nobel Laureate) Sorensen Morten (Columbia University) Spiegel Matthew (Yale University) Stevenson Betsey (University of Pennsylvania) Stokey Nancy (University of Chicago) Strahan Philip (Boston College) Strebulaev Ilya (Stanford University) Sufi Amir (University of Chicago) Tabarrok Alex (George Mason University) Taylor Alan M. (UC Davis) Thompson Tim (Northwestern University) Tschoegl Adrian E. (University of Pennsylvania) Uhlig Harald (University of Chicago) Ulrich, Maxim (Columbia University) Van Buskirk Andrew (University of Chicago) Veronesi Pietro (University of Chicago) Vissing-Jorgensen Annette (Northwestern University) Wacziarg Romain (UCLA) Weill Pierre-Olivier (UCLA) Williamson Samuel H. (Miami University) Witte Mark (Northwestern University) Wolfers Justin (University of Pennsylvania) Woutersen Tiemen (Johns Hopkins University) Zingales Luigi (University of Chicago)
Given the number of respected economists who are against this, we should at least take some REAL time before we burden taxpayers with more government "fixes".
My apologies for A. Not giving my full Name, and B. being so long winded, but because this is about our long term future I felt I had to make my case.
Sylwia Presley
· 1 year ago
I hope Dan is right. I was following the events with a sense of scepticism, but I am terrified now. We all depend on US economy, obviously, and we all are - and should be - worried.
I personally think it's all uncertain. If the US Congress made a mistake once - there are two ways out - repeat it and cause a revolution (maybe? hopefully? - apologies for my Eastern-European thinking:)), or learn from the voices on and off-line and make a better move next time possible. Let's see...:(
FedBen is a big believer in the fact that the Fed in the 1930's could have prevented the Depression.
Ryan
· 1 year ago
Part of the problem is our urge to call opposing viewpoints "idiocy". It's not a productive way to communicate. Don't agree with me? You're an idiot.
See?
Robert Accettura
· 1 year ago
In reality, recession isn't a bad thing. An *healthy* economy works in cycles. Growth followed by recession followed by more growth. What's important is the longer term growth. That's right, recession is actually good. I said it.
The two biggest problems are: 1. Nobody is willing to accept anything less than growth in our country. 2. Few want to correct the economy. Most just want a bandaid and worry about it later.
You can't loose what you didn't have. Saying that the economy is collapsing because the smoke-and-mirrors wall street used to look big are gone is a fallacy. The money was never really there. That's the root cause of the problem. Bad loans. You can't say money was "lost". True, people were mislead and cheated out of money, but money wasn't "lost".
If the economy doesn't correct hard and fast, it's going to hurt more later on. In retrospect this should have happened 12 months ago.
I'm a bit more worried about if we try to postpone the necessary cycle of the economy. We wouldn't have had Web 2.0 if the Web 1.0 stupidity and poor business plans didn't die. That's just the reality of it.
Yea the depression was brutal... but the economy did recover and grow (as expected).
Trick is to prevent the excessive growth which is often the result of BS, which is what the Pecora Commission was trying to figure out in 1929, and the feds are trying to do today. If they had been paying attention and regulated things better, economic growth would have slowed a few years ago but we wouldn't be subjected to the sudden instability and drops of today.
But of course in the early 2000's anything short of record growth regardless of it's foundation was "unamerican" and "letting the terrorists win". So low interest rates for everyone.
Gary Byron
· 1 year ago
Right on Mr. Accettura. There is a cylindrical nature to this kind of thing, and not knowing this, or accepting this is like "Global Warming." We're not seeing the current events in the context of history, so we make the wrong conclusion in a rush to judgment, and may end up killing the patient in our haste. Better to suffer a little discomfort now, than a long lingering death in our haste. Let's give this process some time. Screaming the patient is bleeding to death NOW after Washington and New York have had YEARS to fix this problem, which THEY knew about is the real idiocy. Our society has been running on "fake" money for some time. This will help fix the problem a bit I think.
Scott
· 1 year ago
Do you have a stake in FriendFeed ? So often, I hear you push friendfeed, and its making me wonder whether your investor or something. Why do you push friendfeed so much?
Indra
· 1 year ago
I don't think it's idiocy, Mr. Scoble. I believe it's greediness pushed to the max...
VeeJay Burns
· 1 year ago
At this point in time we may face Idiocy, maybe even frenzy, but at its core is something much darker: It is greed. A 'little while ago'' Descarte wrote: "Cogito Ergo Sum", I think therefor I exist. In the past century -and especially in the USA -it has grown to I shop, therefor I am.
Marketing guru's like Edward Bernays have found the triggers that make us buy things we don't need, all to keep the economy running. Now throw in a bunch of greedy stockowners and shortsellers and you've got a volatile mix, focussed on short term profits. Profit is the main driver in our present economy. We lack long term vision and that's what's killing us now.
In our drive for profits and growth we have overextended ourselves. Where did sound economics go that said "Don't buy if you can't afford"? Instead we've invented credit card debt. We let go of the gold standard an have invented trillions of dollars of State Debt. We started speculating with money we don't have.
Well, now we drop dead shopping. Back to thinking, looking at what we're doing out there. What do we need, and why do we think we need more? Why do we desperately want to have a bigger car than our neighbours, or a bigger house than our colleagues.
If you've done healthy financial management, didn't overextend and are debt free, the storm will pass. Maybe we've got to accept the fact that in other cases it's a dreadfull, yet necessary correction to our unbridled greed.
Roger von Oech
· 1 year ago
Scoble says: "In the past 18 hours I’ve read literally thousands of posts and have done almost nothing but hang out on FriendFeed"
If I wanted to keep a cool head and put the day's events in perspective, this is about the last thing I'd do. It's time for some reflection . . . away from the noise.
Good luck with your serenity.
Web 1.0, meet my friend Wall S
· 1 year ago
"I find I’m looking to experts and elites more and more, because the crap I’m seeing out of all of our mouths is just so, um, wrong."
And this surprises you????
I've been saying for the past couple of years that the democratization of media/citizen journalism movement that the Web 2.0 Idealists have been cheering has one fundamental flaw -- a belief that the masses are capable of holding a rational, elevated worldview in the face of crisis.
Much like the failure of Greek democracy (a little research will reveal how Athens simply slid into mob rule, which led to the collapse of their likewise trade-based empire in the closing years of the Peloponnesian War -- http://en.wikipedia.org/wiki/Peloponnesian_War ), the pending collapse of the US is a self-made crisis.
Rampant deregulation since the '80s, and mis-management/lax oversight of the financial markets particularly during the Bush tenure, led to a Wild West mentality on Wall Street -- much like what we saw in the Valley during Web 1.0... Remember how it was when one didn't even need a business model, and barely needed an idea, to get funding?
Without adequate safeguards, history repeats. The stage may change (this time, it was Wall St.), but the plot remains the same...
What's coming is our own fault. And frankly, if one removes one's emotional involvement, this coming shakedown & collapse is sorely needed if we are to ever gain the political will and fortitude to enact the regulation, etc. which will prevent this sort of thing from happening in something so tied into our national security and economic well-being as our financial & real estate markets... ever again.
The system we have is flawed. We need something better. Best not to continue to bailout and prop up this dead horse any longer.
Here's hoping for something better after the dust settles in a decade or so....
Ted Murphy
· 1 year ago
Here's a poll from The Motley Fool, taken after the House rejected the bailout plan and sent the market down an extra 400 point. Only 33% (3,561 out of 10,804) said that they did NOT agree with the House's rejection. That's an absurdly low number, given the source of this poll.
Do you agree with the House's rejection of the bailout plan?
Yes, I do agree. The plan is an obvious bailout for people who don't deserve it. Let free markets reign -- we'll get over this problem someday. 3231 votes - 30%
The plan needs to be passed, but not in its current form. Tell the House to revise it and get it into law as soon as possible. 3391 votes - 31%
No, I don't agree with today's moves. The plan should be passed and put into law as quickly as possible. 3561 votes - 33%
The economy is doomed either way. RIP, U.S. of A. 621 votes - 6%
Would you expect intelligent dialogue on quantum physics from a used car salesman? Then why would you expect it from journalism majors (writers) or lawyers (government) on finance issues. It is too easy to voice an opinion these days and too hard to filter through the BS.
Bill Sanders
· 1 year ago
I have to agree that the level of discourse I'm seeing on FriendFeed is not encouraging. Regarding the bailout, I find myself unable to research what is being proposed fast enough to form a solid opinion/argument before the situation changes. Should we do something? Yes. But I'm not encouraged that anyone can accurately forecast the consequences of the proposed legislative actions. And I have very little faith that our elected representatives will make their decisions based on the good of the country vs. their own political objectives. Principles, character, and a comprehensive economic worldview seem oddly absent from the conversation. - My Friendfeed is the same as my website if you choose to follow...
Ken Stewart
· 1 year ago
Robert, thank you for the post. I will interject that I think all of this passion is a wonderful thing. The fact that people are responding is wonderful!
I believe your issue is how they are responding... at what level. One thing I have learned in my own life is people go through various stages of (actually wrote a post on handling change in uncertain times due to some personal issues I'm currently facing):
Nonetheless, it warrants mentioning in this scenario b/c people go through various stages of denial and fear - and the strong ones come to grips with hard reality and triumph! That is the America I know and love.
However, in this situation very few people on the outside know how this got started or even how to fix it. It is not a simple solution. What you are seeing is totally normal - a backlash of emotion.
The leaders are the ones who see there way clear by taking a step back and surveying the landscape, then acting decisively. There is always a sense of urgency, but we should not allow fear to guide us.
I think this may be a point you are talking around, but I wounder if you, yourself, are reacting negatively b/c you are a decisive person and cannot bear to watch others make "wrong choices".
I would offer you encouragement that America will see it self clear of this and we will all learn lessons. However, I do worry we may have quite a bit of collateral damage no matter which direction we move.
I, for one, am not convinced the package is viable in its current state. But I do have confidence our country will see its way through this... and perhaps a little smack on the face is what we all need.
Thank you for sharing your thoughts.
From 1 American to Another, Ken Stewart
Robert Scoble
· 1 year ago
Scott: I do not have a stake in FriendFeed. I am not being compensated by them. It is simply the best community and aggregator out there right now. If you have one that's better, I'd love to hear about it.
John Lopez
· 1 year ago
Robert Accettura speaks great wisdom in my book. Housing values haven't crashed, they have returned (are returning?) to the ballpark of what they should be without the artificial inflation caused by insane loan practices and a "housing prices never fall" mentality. I wish this chart was updated with the current situation:
However, there are even more fundamental issues at play here. Our economy has been based on binge spending via credit for a long time, and the crows are now roosting.
Looking at these old articles, one can see the house of cards at the height of being built. Today, we see the cards falling around us, yet act surprised. I think that is the most disappointing part of the whole cycle, that we walk into them with eyes wide open.
bonnieL
· 1 year ago
Idiocy Mr. Scoble?
To me idiocy is taxing us on savings account interest and NOT taxing us on credit card balances.
best, bonnieL
Salam Adil
· 1 year ago
For goodness sake Robert, snap out of it! The world does not end at the edge of the Pacific Ocean. When the economy is tight at home sensible companies look abroad. There is a whole world out there. The Arab world is flush with cash and nothing to spend it on but real estate. It is only a pity that the US burnt its bridges with a pretty stupid foreign policy. Why don't you do yourself a favor, take a short break in Dubai and cheer up.
Brian Wilson
· 1 year ago
Hey Scoble, great post. I've just got a thought on your point about the experts being wrong. I think it's critical this early in the game that we keep level heads and think before we make our decisions. The only thing I am currently sure about regarding the economy is that neither Barack Obama nor John McCain are going to be able to solve this problem. It is going to take a more educated public (that doesn't spend more than it makes) and a more cautious or more regulated Wall Street. But it is probably not likely that average Joes will become more financially savvy and Washington lobbyists might be able to block regulation of Wall Street.
Michael Hellein
· 1 year ago
It seems to me that the Internet is just as bad a place as any to get advice from strangers. I'm happy to put my shoulder to the wheel on friendfeed, but my assumption is that we're each producing a lot more noise than signal, and, inherently, making sense of that can't be crowdsourced - we'll just generate more noise. As far as individual experts go, I follow Dean Baker, Robert Reich, and Nouriel Roubini. (Not David Brooks, however. His explanation above of capital "floods" and "sloshes" does not seem like a description of the real-world problem: banks took fantasy money out of a series of markets, and that delusion is now being revealed in no uncertain terms. There's no flood or slosh: money that never existed is now assigned its correct value, though the companies affected have done their best to conceal the true "losses".) Props to Robert Accettura, Veejay Burns, and John Lopez above. It's a mystery to me why more folks weren't worried when home prices began their unprecedented climb - perhaps it takes a gyrating Dow to puncture our reveries.
Tom
· 1 year ago
Scoble, I don't recall you getting a PhD. in Economics. What's next, you giving out medical advice?
As far as idiocy goes: "Physican, heal thyself!"
Speaking of idiots, the same idiots that were the catalyst for this problem (Democrats) are keeping this bill from being passed. (94 Dems voted "no". In case we've forgotten, the Dems control the majority in the House). And when it does pass why would we trust the same idiots that caused this problem (Dems) to fix it?
dahowlett
· 1 year ago
@scobleizer: opinions are like assholes - everyone's got one. I have to admit that even though I do understand most of what's going on, the roots causes and so on, the bailout plan seems ill conceived. My concern is not whether it unclogs the arteries in what has become an ossified banking system but whether it becomes a test for what government is prepared to hand over on the taxpayer's behalf in what increasingly looks like a very high stakes games of Texas Hold'em.
The bailout is badly conceived. In addition to the bailout of the known entities, the government had additional riders attached that were pure pork barrel garbage.
Over the last few years, I've started changing my political outlook to that of the libertarians. It's the only logical choice. I should never have to pay for someone else's mistakes. The onus should not be on the taxpayers for stupid economics. The leaders of those entities that cratered should be tried and imprisoned much like the Enron and Worldcom bunch.
When will people realize that the less government is involved, the better off everyone is.
Joe B. Wharton
· 1 year ago
Scoble:
Most of us read your blog for what you are an expert in - technology. If we want to read about politics or economics, we'll go to another website. You are an expert in neither.
And the way you responded to Gary, you showed yourself to be an ass (so I guess according to your buddy, Doc, you're one of the masses). I think you owe Gary an apology. Who the hell does Robert Scoble think he is anyway?
John Ahrens
· 1 year ago
We've had 14+ years without a recession, far longer than any time in the past. The good times have been pushed along by bubbles artificially created. First the internet bubble, then the housing bubble. In between was a terrorist bubble. All this paid for by more borrowing. The correction is coming, we'd be better off allowing it to self-correct and quit trying to micromanage via government fiat. That's not what government is good at.
Some Guy
· 1 year ago
Robert,
Take the time to read Bastiat, and try to get your head around the concept of the broken window fallacy.
When you say that we got back most of our money from the S&L bailout, you're ignoring the fact that the money spent on bailing out those failed institutions wasn't available to fund other activities. Worse than that, it was money taken by force (taxes) to give to managers who had already demonstrated their incompetence to manage it. There's an old saying that goes "you get what you pay for", and that certainly holds true when you're talking about paying incompetent speculators.
As for Gray's claim that there are no experts, he's full of crap. There are hundreds of people who saw this coming, said it was coming, and know how to make it as short and painless as possible, and those experts are being ignored because what they have to say doesn't support a power-grab.
It's all there in Mises's book, The Theory of Money and Credit. How and why bubbles are created, how they fail, who benefits from causing these cycles, and what it takes to recover from them.
Right now, our government is trying to keep asset prices at unrealistic levels, and is interfering with the repricing that must (and eventually will) happen. They're still following their 1929 game plan, and it's as wrong today as it was then.
The choice at hand is whether to have a bad year or two, or a bad decade or two. If the bailout goes through, we'll be right back in the same situation in another year, only the problem will be far larger. The idea that this can be fixed by inflating the money by another 700 billion is asinine; if it were possible to "stimulate" an economy by inflation, Zimbabwe would be the healthiest economy on the planet.
Some Guy
· 1 year ago
"When will people realize that the less government is involved, the better off everyone is."
There was a time when most of the people in this country realized it, and we overthrew our king.
Let me give you a bit of hope, though: Because of Ron Paul's campaign, tens of thousands of people now understand what the Federal Reserve is doing to us.
Ron's put things back on the agenda that had been given up as lost causes nearly a century ago. He's made a lot of people understand that patriotism doesn't mean supporting an empire. He's gotten a lot of people to think twice about the drug war. Most of all, he's gotten a lot of people to move beyond the idea that government is our mommy and it should fix everything for us.
Some Guy
· 1 year ago
Tom,
It doesn't take a PhD in economics to understand what's going on today. It's not complicated, it's just being obfuscated by the culprits. So, knocking Scoble for lacking the degree is kind of beside the point. Knock him for being wrong, not for whatever sheepskin he does or doesn't have.
Don't forget that John Maynard Keynes and John Kenneth Galbraith had PhDs in economics, and they were both dead wrong on the question of what role government should play.
Forex
· 1 year ago
I wish the answer was simple i miss the days we blieved democracy is the cure for all the humanity problems i guess it is not.
oldtimerock
· 6 months ago
We’re in wild economic times. What should be done now? I’d still do the bailout, although that will lead to inflation and a devaluation of our dollar. Ha! i totally agree with this tought.
All Comments
http://www.saveusnotthem.com/
Ah, and this pretty image by Winer: http://www.flickr.com/photos/scriptingnews/2899...
:-)
The only solution is a massive chapter 11, and forced cutting up of the failing banks into small chunks, then sell those of.
Only capitalism can save capitalism.
Also a quibble. You have readers and viewers. Not an "audience". If we were just that, all we could do is clap or boo.
Worse, it's done by someone who is anonymous. I know Doc. I meet him often. Who the hell is "Gary?" This kind of discourse infuriates me. It doesn't make us better or smarter. Just is done to tear someone down. Phhhhbbbbbtttttttddddd!!!!!
What annoys me is all the hand-wringing about "look what will happen if we don't do anything" - I say look what has already happened because you refused to do anything. That's neo-liberal economics for you. Get over it.
"The market will decide." Too bad for the collateral damage.
Sorry this isn't the positive stuff you wanted - how about "let's make sure this can't happen again"?
Sure make plans for the bail out, but what better time is there for being part of the next wave of innovation and invention? With everyone's attention focused elsewhere, it does not matter who does what, it matters what you do with your ideas, and it matters how you support them.
My 2 cents, not an economist, but this might just be the next best time to be alive outside of 2000/2001.
Here is a list of 160 plus economists that are against this:
Acemoglu Daron (Massachussets Institute of Technology)
Adler Michael (Columbia University)
Admati Anat R. (Stanford University)
Alvarez Fernando (University of Chicago)
Andersen Torben (Northwestern University)
Barankay Iwan (University of Pennsylvania)
Barry Brian (University of Chicago)
Beim David (Columbia University)
Berk Jonathan (Stanford University)
Bisin Alberto (New York University)
Bittlingmayer George (University of Kansas)
Boldrin Michele (Washington University)
Brooks Taggert J. (University of Wisconsin)
Brynjolfsson Erik (Massachusetts Institute of Technology)
Buera Francisco J.(UCLA)
Carroll Christopher (Johns Hopkins University)
Cassar Gavin (University of Pennsylvania)
Chaney Thomas (University of Chicago)
Chari Varadarajan V. (University of Minnesota)
Chauvin Keith W. (University of Kansas)
Chintagunta Pradeep K. (University of Chicago)
Christiano Lawrence J. (Northwestern University)
Cochrane John (University of Chicago)
Coleman John (Duke University)
Constantinides George M. (University of Chicago)
Crain Robert (UC Berkeley)
Culp Christopher (University of Chicago)
De Marzo Peter (Stanford University)
Dubé Jean-Pierre H. (University of Chicago)
Edlin Aaron (UC Berkeley)
Eichenbaum Martin (Northwestern University)
Ely Jeffrey (Northwestern University)
Eraslan Hülya K. K.(Johns Hopkins University)
Faulhaber Gerald (University of Pennsylvania)
Feldmann Sven (University of Melbourne)
Fernandez-Villaverde Jesus (University of Pennsylvania)
Fox Jeremy T. (University of Chicago)
Frank Murray Z.(University of Minnesota)
Fuchs William (University of Chicago)
Fudenberg Drew (Harvard University)
Gabaix Xavier (New York University)
Gao Paul (Notre Dame University)
Garicano Luis (University of Chicago)
Gerakos Joseph J. (University of Chicago)
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Goettler Ron (University of Chicago)
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Hagerty Kathleen (Northwestern University)
Hamada Robert S. (University of Chicago)
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Harris Milton (University of Chicago)
Hart Oliver (Harvard University)
Hazlett Thomas W. (George Mason University)
Heaton John (University of Chicago)
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Keim Donald B (University of Pennsylvania)
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Levine David I.(UC Berkeley)
Levine David K.(Washington University)
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Luttmer Erzo G.J. (University of Minnesota)
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Given the number of respected economists who are against this, we should at least take some REAL time before we burden taxpayers with more government "fixes".
My apologies for A. Not giving my full Name, and B. being so long winded, but because this is about our long term future I felt I had to make my case.
I personally think it's all uncertain. If the US Congress made a mistake once - there are two ways out - repeat it and cause a revolution (maybe? hopefully? - apologies for my Eastern-European thinking:)), or learn from the voices on and off-line and make a better move next time possible. Let's see...:(
FedBen is a big believer in the fact that the Fed in the 1930's could have prevented the Depression.
See?
The two biggest problems are:
1. Nobody is willing to accept anything less than growth in our country.
2. Few want to correct the economy. Most just want a bandaid and worry about it later.
You can't loose what you didn't have. Saying that the economy is collapsing because the smoke-and-mirrors wall street used to look big are gone is a fallacy. The money was never really there. That's the root cause of the problem. Bad loans. You can't say money was "lost". True, people were mislead and cheated out of money, but money wasn't "lost".
If the economy doesn't correct hard and fast, it's going to hurt more later on. In retrospect this should have happened 12 months ago.
I'm a bit more worried about if we try to postpone the necessary cycle of the economy. We wouldn't have had Web 2.0 if the Web 1.0 stupidity and poor business plans didn't die. That's just the reality of it.
A healthy economy is cyclical:
http://bigpicture.typepad.com/comments/2005/12/...
I like this graph in particular:
http://bigpicture.typepad.com/.shared/image.htm...
Yea the depression was brutal... but the economy did recover and grow (as expected).
Trick is to prevent the excessive growth which is often the result of BS, which is what the Pecora Commission was trying to figure out in 1929, and the feds are trying to do today. If they had been paying attention and regulated things better, economic growth would have slowed a few years ago but we wouldn't be subjected to the sudden instability and drops of today.
But of course in the early 2000's anything short of record growth regardless of it's foundation was "unamerican" and "letting the terrorists win". So low interest rates for everyone.
Marketing guru's like Edward Bernays have found the triggers that make us buy things we don't need, all to keep the economy running. Now throw in a bunch of greedy stockowners and shortsellers and you've got a volatile mix, focussed on short term profits. Profit is the main driver in our present economy. We lack long term vision and that's what's killing us now.
In our drive for profits and growth we have overextended ourselves. Where did sound economics go that said "Don't buy if you can't afford"? Instead we've invented credit card debt. We let go of the gold standard an have invented trillions of dollars of State Debt. We started speculating with money we don't have.
Well, now we drop dead shopping. Back to thinking, looking at what we're doing out there. What do we need, and why do we think we need more? Why do we desperately want to have a bigger car than our neighbours, or a bigger house than our colleagues.
If you've done healthy financial management, didn't overextend and are debt free, the storm will pass. Maybe we've got to accept the fact that in other cases it's a dreadfull, yet necessary correction to our unbridled greed.
If I wanted to keep a cool head and put the day's events in perspective, this is about the last thing I'd do. It's time for some reflection . . . away from the noise.
Good luck with your serenity.
And this surprises you????
I've been saying for the past couple of years that the democratization of media/citizen journalism movement that the Web 2.0 Idealists have been cheering has one fundamental flaw -- a belief that the masses are capable of holding a rational, elevated worldview in the face of crisis.
Much like the failure of Greek democracy (a little research will reveal how Athens simply slid into mob rule, which led to the collapse of their likewise trade-based empire in the closing years of the Peloponnesian War -- http://en.wikipedia.org/wiki/Peloponnesian_War ), the pending collapse of the US is a self-made crisis.
Rampant deregulation since the '80s, and mis-management/lax oversight of the financial markets particularly during the Bush tenure, led to a Wild West mentality on Wall Street -- much like what we saw in the Valley during Web 1.0... Remember how it was when one didn't even need a business model, and barely needed an idea, to get funding?
Without adequate safeguards, history repeats. The stage may change (this time, it was Wall St.), but the plot remains the same...
What's coming is our own fault. And frankly, if one removes one's emotional involvement, this coming shakedown & collapse is sorely needed if we are to ever gain the political will and fortitude to enact the regulation, etc. which will prevent this sort of thing from happening in something so tied into our national security and economic well-being as our financial & real estate markets... ever again.
The system we have is flawed. We need something better. Best not to continue to bailout and prop up this dead horse any longer.
Here's hoping for something better after the dust settles in a decade or so....
Do you agree with the House's rejection of the bailout plan?
Yes, I do agree. The plan is an obvious bailout for people who don't deserve it. Let free markets reign -- we'll get over this problem someday.
3231 votes - 30%
The plan needs to be passed, but not in its current form. Tell the House to revise it and get it into law as soon as possible.
3391 votes - 31%
No, I don't agree with today's moves. The plan should be passed and put into law as quickly as possible.
3561 votes - 33%
The economy is doomed either way. RIP, U.S. of A.
621 votes - 6%
http://www.fool.com/investing/general/2008/09/2...
http://worldreports.org/news/174_latest_false_p...
I just don't know for sure what to make of it but looks intriguing.
This problem started growing in the 70's, but times like the link below didn't help
http://www.youtube.com/watch?v=_MGT_cSi7Rs
Would you expect intelligent dialogue on quantum physics from a used car salesman? Then why would you expect it from journalism majors (writers) or lawyers (government) on finance issues. It is too easy to voice an opinion these days and too hard to filter through the BS.
I believe your issue is how they are responding... at what level. One thing I have learned in my own life is people go through various stages of (actually wrote a post on handling change in uncertain times due to some personal issues I'm currently facing):
http://www.changeforge.com/2008/09/20/how-do-yo...
Nonetheless, it warrants mentioning in this scenario b/c people go through various stages of denial and fear - and the strong ones come to grips with hard reality and triumph! That is the America I know and love.
However, in this situation very few people on the outside know how this got started or even how to fix it. It is not a simple solution. What you are seeing is totally normal - a backlash of emotion.
The leaders are the ones who see there way clear by taking a step back and surveying the landscape, then acting decisively. There is always a sense of urgency, but we should not allow fear to guide us.
I think this may be a point you are talking around, but I wounder if you, yourself, are reacting negatively b/c you are a decisive person and cannot bear to watch others make "wrong choices".
I would offer you encouragement that America will see it self clear of this and we will all learn lessons. However, I do worry we may have quite a bit of collateral damage no matter which direction we move.
I, for one, am not convinced the package is viable in its current state. But I do have confidence our country will see its way through this... and perhaps a little smack on the face is what we all need.
Thank you for sharing your thoughts.
From 1 American to Another,
Ken Stewart
http://www.speculativebubble.com/videos/real-es... (scroll to the bottom for the chart, or watch the video for an amusing portrayal) .
However, there are even more fundamental issues at play here. Our economy has been based on binge spending via credit for a long time, and the crows are now roosting.
We save little (around 4% in 2005): http://www.nationmaster.com/graph/eco_gro_dom_s...
And spend much via credit (around 19% in 2003): http://money.cnn.com/2003/10/02/markets/consume...
Looking at these old articles, one can see the house of cards at the height of being built. Today, we see the cards falling around us, yet act surprised. I think that is the most disappointing part of the whole cycle, that we walk into them with eyes wide open.
To me idiocy is taxing us on savings account interest and
NOT taxing us on credit card balances.
best,
bonnieL
As far as idiocy goes: "Physican, heal thyself!"
Speaking of idiots, the same idiots that were the catalyst for this problem (Democrats) are keeping this bill from being passed. (94 Dems voted "no". In case we've forgotten, the Dems control the majority in the House). And when it does pass why would we trust the same idiots that caused this problem (Dems) to fix it?
In the meantime, this is instructive: http://hnewlands.typepad.com/cardboard_spaceshi...
Over the last few years, I've started changing my political outlook to that of the libertarians. It's the only logical choice. I should never have to pay for someone else's mistakes. The onus should not be on the taxpayers for stupid economics. The leaders of those entities that cratered should be tried and imprisoned much like the Enron and Worldcom bunch.
When will people realize that the less government is involved, the better off everyone is.
Most of us read your blog for what you are an expert in - technology. If we want to read about politics or economics, we'll go to another website. You are an expert in neither.
And the way you responded to Gary, you showed yourself to be an ass (so I guess according to your buddy, Doc, you're one of the masses). I think you owe Gary an apology. Who the hell does Robert Scoble think he is anyway?
Take the time to read Bastiat, and try to get your head around the concept of the broken window fallacy.
When you say that we got back most of our money from the S&L bailout, you're ignoring the fact that the money spent on bailing out those failed institutions wasn't available to fund other activities. Worse than that, it was money taken by force (taxes) to give to managers who had already demonstrated their incompetence to manage it. There's an old saying that goes "you get what you pay for", and that certainly holds true when you're talking about paying incompetent speculators.
As for Gray's claim that there are no experts, he's full of crap. There are hundreds of people who saw this coming, said it was coming, and know how to make it as short and painless as possible, and those experts are being ignored because what they have to say doesn't support a power-grab.
It's all there in Mises's book, The Theory of Money and Credit. How and why bubbles are created, how they fail, who benefits from causing these cycles, and what it takes to recover from them.
Right now, our government is trying to keep asset prices at unrealistic levels, and is interfering with the repricing that must (and eventually will) happen. They're still following their 1929 game plan, and it's as wrong today as it was then.
The choice at hand is whether to have a bad year or two, or a bad decade or two. If the bailout goes through, we'll be right back in the same situation in another year, only the problem will be far larger. The idea that this can be fixed by inflating the money by another 700 billion is asinine; if it were possible to "stimulate" an economy by inflation, Zimbabwe would be the healthiest economy on the planet.
There was a time when most of the people in this country realized it, and we overthrew our king.
Let me give you a bit of hope, though: Because of Ron Paul's campaign, tens of thousands of people now understand what the Federal Reserve is doing to us.
Ron's put things back on the agenda that had been given up as lost causes nearly a century ago. He's made a lot of people understand that patriotism doesn't mean supporting an empire. He's gotten a lot of people to think twice about the drug war. Most of all, he's gotten a lot of people to move beyond the idea that government is our mommy and it should fix everything for us.
It doesn't take a PhD in economics to understand what's going on today. It's not complicated, it's just being obfuscated by the culprits. So, knocking Scoble for lacking the degree is kind of beside the point. Knock him for being wrong, not for whatever sheepskin he does or doesn't have.
Don't forget that John Maynard Keynes and John Kenneth Galbraith had PhDs in economics, and they were both dead wrong on the question of what role government should play.
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