perfidy

Leaving a comment simply so I can be notified if there are comments ...

I don't know what the answer is, but I'm fairly sure that the only way to solve this problem is to treat the cause and, if necessary, the symptoms too. Not just the symptoms.

The cause, from what I have read, is government meddling in the lending markets. Stop it! Deregulate them. THEN they can worry about how to fix what they broke. No point fixing it superficially, it's just throwing good money after bad.

If it were up to me, after deregulating the market, I would set up a committee to assess those facing foreclosure on a case-by-case basis. Those who behaved more or less responsibly but were caught in the cross-fire of others' idiocy should be bailed out. Those who were in it to make a quick buck shouldn't.

This still doesn't address the biggest issue which is the psychology of the markets. I'm fairly sure a large part of the financial problems are due to perceptions, and that is what a bailout would address more than anything else. I'm not sure what to do about that. I do know that the government can't act to eliminate risk in the markets in order to buoy investor confidence, because the markets would cease to operate properly if they did so.

Here, this guy is basically saying what I was saying except he knows what he's talking about.

Nicholas - I agree with what he says in principle, but in practice, what would that mean for retirees who don't have time to wait for the markets to come back around? Would we wind up with a nation of poverty-stricken Baby Boomers? I'd hate to see people who've worked hard their entire lives lose everything due to the unavoidable entropic confluence of government lack-of-foresight and corporate irresponsibility. Gah! Why can't this be easier? Why can't I live my life in blissful ignorance? :-)

Yes, well, as it stands, I believe my pension is pretty well set, but one never knows. I hope the Commonwealth of Pennsylvania won't go belly-up and take the employees retirement fund with it.
HOWEVER, you dad's pension could take a big hit if things go south. As you know, all of our equity is in real estate. But, if his pension goes bye-bye, we would probably have to sell this house if it isn't paid off before he retires. There are worse things that would happen, though. But if downsizing is the answer, there we go!

I think it depends on whether there are any fundamental problems with the economy or whether it's just this bubble. My guess is that the economy is fundamentally OK if a bit slow, and markets would recover fairly quickly. Granted it may not be quick enough for some people - my parents are in a similar position, but don't live in the USA and so are somewhat shielded from all this, but our markets are still affected.

Really the problem is I think that the damage is already done. It should have been fixed long ago but wasn't. The gov't can try to minimize the knock-on effects but realistically can't eliminate them. What we want to avoid is a situation where the cure is worse than the disease.

So basically my instinct is that the gov't should act to minimize the impact to people who are innocent victims in this case but by specifically targeting them rather than opening up a money hose. How to do that is something I think only economists are really qualified to answer.

If there's a more repellant food than black olives, I don't know what it is. They look like poop, smell like a skunk's afterbirth, and taste like a little of both wrapped in oily rubber.

There must have been 20 of them in this chef's salad I just tried to eat, and although I got alot of it down eating around those nasty bits, their stench became more pronounced as everything else was consumed. Their proximity to all the better stuff also increased, and ultimately my fork became contaminated with their loathesome residue. There came a point when I just couldn't go any further; while robust, even my gag reflex can only be suppressed against such strong stimuli for so long. Got everything closed up and in the trash before I had to vom. Made it just in time.

So, yeah. Olives. Guh.

What were you talking about?

Black olives are OK. I like to destroy them in a food processor with some garlic and rosemary, then eat the resulting slop (or "tapinade," if you wanna sound all fancy-like) on crackers.

Kalamata olives, though? Mmmmmm. Love them.

Tapinade? Sounds like a sports drink.

By the way I don't know if it's accurate to say "... the economy is in the pits ...". There are lots of problems in the financial sector but that doesn't equate to the economy. Other sectors (commodities, import/export, manufacture, services, retail, etc.) may be doing fine. There will be some flow-on effects but I'd be careful claiming anything about "the economy". The lame stream media likes to go on about how terrible the economy is but frankly they wouldn't know a recession if it bit them in the ass.

Hah. GL wasted an actual post in a comment.

Any-hoo, like many others, my retirement account is down by a large amount. And at this point, there's not a damned thing I can do about it, other than to hope that whatever catharsis we're about to experience as a country is, in fact, cathartic.

That's true with or without a bailout. And, to Nicholas' point about addressing the cause, and not just the symptoms, he's absolutely right. The bailout doesn't purport to do so, only to unstick the credit markets.

Addressing the cause, in this case, will be painful - the cause is unchecked expansion of credit, brought on by a combination of too-easy monetary policy and ill-advised regulatory mandates, such as the mandate that there be a chicken in every pot and that even people who could demonstrably not afford homes be provided credit to buy them nonetheless.

It's a classic bubble, and I'm afraid that the deflation of the bubble is just beginning. Anything extraordinary that's done to protect inflated home values will be unhelpful. The bubble won't be gone until home values return to reality, and by some estimates, for the egregiously overvalued markets, that'll be another 20% down from here.

Luckily, that deflation doesn't affect everyone; it is geographically concentrated in certain areas, and for folks who've not participated either in the game of randomly trading up into a home they finally couldn't afford or the "my house is an ATM" lottery, the equity hit shouldn't be too bad.

A salutary effect of the descent of asset prices back to reality will be that consumer credit will be radically reduced, and along with it, the incentive of people to spend beyond their means.

Five years from now, this will probably all seem only like a bad dream. My hope is that within the next two years, it will seem like a livable reality, and that the adjustments people will have made in order to cope will also provide them the ability to rebuild what the current crisis will have cost them.

Furthermore, I happen to like black olives. Because I'm not an olivist.

Yes, Kalamata are awesome. The tasteless little black eraser-like chunks one sometimes gets in salads should not be allowed to associate themselves with olives. I also quite like the green ones with the pimentos.

My worry at this point is whether Congress is going to dig the hole any deeper.

Here's what really confuses me, though. I get paid in USD but don't live in the USA so if the USA is having big problems you'd think that would mean the USD would be weaker and hence I would end up being paid less. However for some reason the AUD is getting weaker faster than the USD, despite the fact we're not *really* affected by this crisis - nowhere near as much as you are, anyway. So why is this happening? I shouldn't complain... it's definitely time for me to send in an invoice and take advantage of the situation.

I agree with the guy in the linked article that government, thru the FM's and CRA bears most of the responsibility for the mess. I don't like his solution which amounts to "sorry we wrecked your companies, enjoy your poverty."

Do the bailout, then after they pay us back, privatize the FM's and regulate them as banks.