Crazy Libertarians, What Do They Know About Economics?

[copernicus 0]

We produce a whole lot of debt, I can agree with you on that....and we do import a lot of scientists/engineers/intellectuals because we're not graduating them here in the US so we can agree there...but infrastructure?? Where have you been living?Debt is our biggest export. We borrow, borrow, borrow and then spend money on useless shit (2/3rds of our economy driven solely by consumption). Getting yourself into debt can be a good idea if for example you use the money to build a factory that produces something and then you sell it, make a profit, and reduce/eliminate your debt. We saw it work 100 or so years ago but all we're doing is borrowing money to buy "sneakers with lights in them" as Carlin once said, so I'd say the fundamentals are pretty pathetic.

then you quite clearly dont know what youre talking about.

[Balloon guy 158]

then you quite clearly dont know what youre talking about.

No it's true.We import scientist here because the demand for their jobs is so low in their home countries because they only want to make sneakers with lights in them.Plus we export debt, meaning we print pieces of paper, and people across the pond trade their stuff for these pieces of paper. Many of these pieces of paper are being held by other countries just in case things go bad, which is kind of funny because it means that only when everything else in the world goes bad will our paper go bad.But other than those things, he's spot on. But I'm not sure he knows why.

[KONGOS 0]

I get it now...teh aconomee is grate!

[KramitDaToad 0]

He was correct, and McCain is correct that the fundamentals of the economy are strong. In the midst of the worst crisis in the financial markets in 20 years or more, stocks have gone down less than 15%. Do you have a clue why?

Because you're bad at math?Since thier peak/beginning of the 'credit crunch'/a year ago the US stock indicies have fallen > 25%

[Nimue1995 1]

then you quite clearly dont know what youre talking about.

Ok so if this isn't true then why is everyone panicked that credit is drying up? So panicked that the government thinks the only solution is a $700 billion bailout (I refuse to call it a rescue)? If we're not a debt driven consumer nation then what's the worry?

[akoff 0]

If we're not a debt driven consumer nation then what's the worry?

Oh my God, Nimue I found somthing I can agree with you on!!!! We are on a personal finance level a debt driven nation. There is no arguement that can be made against that. It is unfortunate but true. we have record levels of personal debt and most importantly delinquency.In the business sector that is not always the case...depends which side of the equation you are working on.

[Nimue1995 1]

This guy seems to have a pretty good idea about what may happen post-bailout. I'd be interested in what you all think of his assessment. Bailout a Done Deal, So What Happens Now?Posted Oct 01, 2008 10:04am EDT by Henry Blodget in Investing, Recession, BankingRelated: jpm, wfc, c, bac, gs, ms, ^gspcFrom ClusterStock, Oct. 1, 2008:Now that the government has been terrified into rubber-stamping the bailout, what happens now? In our opinion, here's the most likely scenario:Hank Paulson & Co. survey the banking industry and decide who will stay and who will go. JP Morgan (JPM), Citi ©, Wells Fargo (WFC), and Bank of America (BAC) will stay. Goldman (GS) will probably stay. Morgan Stanley (MS) might stay. Everyone else in trouble could go. The government doesn't need to save all banks. It just needs to save some.Within a month or two, Paulson buys $250 billion of crap assets. He pays more than market value, but not an egregious amount more (because the public will be watching these early rounds). Over the next six months, he buys $700 billion of assets...and then he--or his successor--asks Congress for more money.Confidence improves modestly, but banks continue to hoard capital and credit markets stay tight. Loans stay expensive and hard to get. This keeps pressure on the economy.The credit crunch filters through to consumers: Credit cards, home equity loans, mortgages, car loans, etc., get more expensive, putting more pressure on consumers and forcing them to cut back further.The economic news continues to get worse: American consumers continue to pull back, housing continues to fall (as of July, the year over year declines were still accelerating), companies begin to cut back, which leads to layoffs--which puts more pressure on consumers.The global economy continues to weaken: Europe, Asia, and, eventually, emerging markets. This is already happen, and everyone else is later in the cycle than we are.The stock market continues to fall, as corporate earnings come under increasing pressure and hope for an early 2009 recovery fades. Analysts are still expecting huge growth in S&P 500 earnings for next year. These estimates will get cut by at least a third.The government enacts further measures to try to stop the fall in asset prices (stocks, houses)--including an expansion of the bailout plan--but these don't work. Governments always try to do this. They never succeed. All they do is delay the inevitable.A new round of white-collar prosecutions send a new posse of corporate villains to jail. Some will be guilty. Some won't. All will be hated.The government announces a new New Deal, finally investing in the country's infrastructure, in the hopes that this will stimulate the economy (which it will). Investments include broadband, green tech, wireless, physical infrastructure, et al.Eventually, asset prices will bottom: Housing down 40% in real terms, the stock market down at least 50%. With luck, this will happen by early 2010, so the recovery can begin. Warren Buffett loads the boat with stocks, but by that time, most people are too depressed (and poor) to follow him.Unlike Japan, we finally force our banks to write down assets as far as they need to be written down...and then recapitalize them. This is what we should have done in the current bailout, but we'll get it right next time (we hope). We gradually begin a long-term economic recovery, one in which consumers save a greater percentage of income, thrift and saving again become admirable qualities, we gradually begins to wean itself off international oil, and the bacchanalian decades of the 1990s and 2000s become an embarrassing memory.The stock market finally begins a new, long-term bull market, in which stocks once again return 10%+ per year. Unfortunately, most Americans will be so sickened by the stock losses they've sustained since 2000 that they'll miss many years of it.

[copernicus 0]

No it's true.We import scientist here because the demand for their jobs is so low in their home countries because they only want to make sneakers with lights in them.Plus we export debt, meaning we print pieces of paper, and people across the pond trade their stuff for these pieces of paper. Many of these pieces of paper are being held by other countries just in case things go bad, which is kind of funny because it means that only when everything else in the world goes bad will our paper go bad.But other than those things, he's spot on. But I'm not sure he knows why.

Hes not spot on about corporate infrastructure. Hes not spot on in not recognizing that you get something in exchange for debt. He's not spot on in not recognizing that we train most of those scientists that are being "imported".

[jmkiser 0]

IdkPeter Schiff was the crazy one?With these kinds of predictions, it could be worth a little to invest in his opinionWhat does everyone think about this relation?Bernanke's continual destruction of the dollar = price of gold skyrocketsEdit: I'm just trying to understand how all of this works (Hblask, Guapo, help!). Assuming the dollar continues to go to shit (because we print money get out of trouble instead of raising taxes or changing policies), would it make sense to just be investing our current money into items that retain their value?

[jmkiser 0]

http://www.youtube.com/watch?v=drJ6QxSO5gw...feature=relatedEdit: Also http://europac.net/videomessage.aspIs his point of view legitimate?

[copernicus 0]

IdkPeter Schiff was the crazy one?With these kinds of predictions, it could be worth a little to invest in his opinionWhat does everyone think about this relation?Bernanke's continual destruction of the dollar = price of gold skyrocketsEdit: I'm just trying to understand how all of this works (Hblask, Guapo, help!). Assuming the dollar continues to go to shit (because we print money get out of trouble instead of raising taxes or changing policies), would it make sense to just be investing our current money into items that retain their value?

Everything is cyclical. If you try and time the markets you are just gambling. The long term annual rate of return on gold is about 4%. If you bought it when all of the doomsdayers were making their predictions in the 70s/80s and youd be so far behind the stock market...yes even todays stock market...its silly.commodity values ultimately are subject to the same supply and demand laws as anything else. Obviously gold and the dollar are going to be inversely correlated...gold is seen as a hedge against the dollar and against inflation, so when one moves the other is going to move the opposite way. Its not a cause and effect relationship with each other as much as it is both being strongly (but oppositely) correlated with other factors.

[Kenny Banya 0]

Not a difficult assumption to make in this case, since to do nothing would clearly send the economy into a prolonged recession...at best. And even though it would only be token amounts against whatever this costs, people like Mr. Obama's friends Raines and Johnson should be sued by the US for their compensation while running their companies into the ground. Their stockholders will sue also, but I have no sympathy for people who invest in companies so obviously mismanaged.

Cop, you were for the bailout? To do nothing would clearly send the economy into a prolonged recession? Hate to break it to you, but the US economy was in recession since Dec 2007 new reports say. But wow, cop for a bailout...a bailout that did absolutely nothing to starve off what he was so worried about.

That 700 billion could end up being quite the investment in the U.S. , if done right. Anyone want to venture a guess why?

Opps!

Could be, if done right. Settle down and see if you can figure out why. If you can't then you literally have no business having an opinion. I mean, go right ahead but it's worthless,more so than I usually find it to be. So, settle your pretty little head down and see if you can think of ways this could be profitable over time, and reasonable ways to help that goal. Let's see if you can think for yourself.

Define "done right." You were for the bailout...wasn't done right I guess by your standards. It was doomed to fail...you know why? Let's see if you can think for yourself.

Laffer FTW. The problem with Schiff's analysis is that he doesnt recognize that all markets are cyclical. Yes, RE and stocks may have been overvalued at one point, and a correction was due. That doesnt mean that they give back all of their gains, and it doesnt mean that they dont resume their growth after the correction.Net wealth has grown both in nominal terms and in purchasing power as Laffer says.

http://www.youtube.com/watch?v=2I0QN-FYkpwYikes. Laffer FTW? Ouch.

He was correct, and McCain is correct that the fundamentals of the economy are strong. In the midst of the worst crisis in the financial markets in 20 years or more, stocks have gone down less than 15%. Do you have a clue why?

The fundamentals of the economy were strong? In the midst of the worst crisis in the financial markets EVER, stocks have gone down 40.2% in the last year. Do you have a clue why?

No, it refers to the productivity, intellectual capital and infrastructure which is still the best in the world by far.

Oh the US GDP that is 70% based on the consumption with infrastructure falling apart is still the best in the world. Oh, I didn't see it like that. If the economy was so strong, would it not need these bailouts in the first place. Wouldn't it just be able to withstand the hard times and move on. $8.5 trillion committed now to bailouts and toxic assets, is it going to work? I think not.Do we still need to debate if the economy has failed or not??

[strategy's_touch 0]

yeah, the bailout planning was garbage, but what do you expect? the bomb dropped just before elections. the system isn't perfect, but I (and most people who have some grasp of what happens when a huge credit crunch occurs) am still glad that something was done. I am hoping this doesn't become a trend, but I think it was a risk worth taking considering the alternative.all of that aside, I do think that a lot of really shameful shit went down with the way that money was handled.