RE: Oil on its own today!!!As I started my last post I will continue with this one in saying that I mean no disrespect Tgarfield. Exchange of ideas is what this is all about and I appreciate your views .
You made some good points in your rebuttal and some that I felt were kind of missing my point. However, I agree that governments are doing what they can in hopes of keeping the economies functioning in these difficult times.
To counter some of your points:
1. I agree that the government cannot control things to a great degree but they do exert a lot of influence with policies and programs. I believe many of the problems we are experiencing today are as a result of Government decisions on interest rate policies that were far to loose for too long, creating bubble after bubble. There is essentially no control (like the former gold discipline) over the monetary supply. After the tech crash, Instead of allowing some painful resetting from boom to bust they took us into this housing sector boom/collapse & financial crisis.
2. Lehmans was chosen as the fall guy and they were GS's chief rivals. You don't think Hank Paulson and the like had influence in this decision? All investment banks were in deep leverage with diminished asset bases, not just Lehmans. Why do you think that JP Morgan and GS (investment banks) magically applied for and immediately were approved to become commercial banks, but to qualify for TARP payout to shore up their asset bases and avoid collapse.
3. You say that no-one is in trouble with depreciated home values unless they have to refinance or sell. That is like saying that no-one is the poorer with their portfolios as long as they do not sell depreciated stocks. How many trillions have been lost in the past year? It took 25 years to re-take the market highs after the 29 crash. It can happen again & it is naive to think it is impossible. Another problem with all this is of course a good chunk of consumerism and economy in the States and Canada was finance from home equity. A nice game as long as prices go up ...but now not so good when you owe 20-40% more than the home is worth.
4. Of course the government(s) did not want this crisis but they do bear a good deal of responsibility for creating it. They should have led away from pitfalls not help us along the way (loosening mortgage rules, persistent low interest rates).
Potential solutions IMO:
- the deleveraging process should be allowed to take place so that we can return to sustainable growth, not leveraged to the teeth with make-believe money and enormous debt.
- personal savings should be encouraged. A country of savers builds that country's wealth and a country of borrowers will put that country in the poor house. We need reasonable interest rates that rewards savers and does not promote more bad debt.
-Ultimately, people (and companies) need to take responsibility for their own financial decisions and not expect government bailouts with borrowed money that will likely never be paid back.
Take care,
Drainman