Market Meldown

[senseinobaka]

Aiemond said:

senseinobaka said:

akuma587 said:

senseinobaka said:

akuma587 said:

Yeah, well I mean we are faced with two shitty alternatives, let the market correct itself and have everyone in the financial sector shit a brick when mass defaults on loans occur, or try to ease the transition by bailing out a bunch of people who in no way shape or form deserve a bailout (especially the idiots who accepted a variable interest rate and now can't pay).

So either way we are pretty screwed, and will be screwed for several months if not years.

 

Both options are not great, but one leads to more problems. We have a situation here where these banks and investment houses have thrived and advocated for a free market. And now that the free market is telling them to go screw themselves, they cry for government help. It doesn't work like that.

Even worse, bailing out businesses that fail causes more problems down they road. To name one, it gives no incentive to correct or fix the problem. To name another, smaller more innovative organizations (read: less corrupt and more responsible) are not given the chance to fill in the gaps, instead they are obstructed by government intervention.

 

The free market actually caused this problem, you know, because there weren't enough government regulations on unscrupulous lending practices.

 

I think you have that wrong. This correction (read failure) is a free market function. Unscrupulous lending practices do not last long in a free market and the free market eventually rips a new anus into corporations that practice them. Now, I dont agree with economic fascism (fascism = government legislative control of private business and property, it's different than socialism which is government seizure of private business and property), so I definately dont think the government should dictate how a business uses it's own money, but I dont think the government should protect the business from the consequences of using their own money unwisely. Facist policies have been shown to be more damaging in the long run than the free market. Just think about it, how often do you hear about large free market businesses failing compared to large businesses in a fascist market. Compare financial institutions to airlines for starters.

 

 

 

Airlines have problems because the price of operation is so high due to fuel costs and only SW makes a profit because of deals they have made for better fuel prices (which other airlines do not have). These are NOT govt deals either. Govt saved airlines because its an important part of the american system. What are you gonna do if all but one Airline goes down? But they don't save every one because you can only save the ones that are managed the best.

 

You are fixated on facism (which this is not). So should the market go to hell and take SIGNIFICANTLY longer to be fixed because you don't like the feds helping out in this situation? This does not just hit the "rich". No, this affects EVERYONE. Small Bussnesses have a MUCH harder time getting loans in an economy like this, people with good credit and shining bussiness models even. People who can afford a house even have toruble getting mortgages. People with retirement plans loose money as market goes down. European and Asian markets go down too. Its not just the rich getting owned. What do you propose to do to help fix this?

The govt has to help make sure shit dont hit the fan. It has to make sure that companies are not engaged in corruptioin and that their practices are not setting up for a MAJOR economic downturn. Free Market will not fix everything if everyone, or almost everyne, in an industry is doing the same bad practice.

Whoa. This is the failure of a financial institution not a complete market collapse. The doomsday scenario you depict just isnt going to happen. What will happen is the feds using tax money, our money, to bail out private funds that were mismanaged. This bailout coming from a government that is 10 trillion in debt. All this will accomplish is to remove the consequences from risky investment (which is called risky for a reason) and devalue the dollar. The latter will have REAL adverse implications for the populace.

 

To Illustrate: The market lost 600 points based on this news yesterday. 24 Hours later it has regained 200+ points. Thats a 33% recovery in 24 hours. A failing financial institution can cause damage, but not enough to destroy the market. In a month or so this will all be fixed on it's own, naturally. The feds stepping in is really uneccessary.