On Sat, Aug 29, 2009 at 9:58 PM, Doug Pensinger<[email protected]> wrote:
> I think it's disingenuous to say that we had no idea what would have > happened. Many more banks would have failed, Yes, but that is not necessarily a cost. In many cases, I consider it a benefit. > and the stock market > would have crashed much harder than it did. Or not. Certainly you are not claiming to be able to predict the stock market reliably? > And we do have a precedent > for that kind of hard crash in the great depression. Actually, the stock markets after 1929 dropped rapidly, had a recovery, then dropped less rapidly for quite a while. The initial drop in 1929 and 2008-2009 reached similar lows from the peak. It is yet to be seen if there is another drop now like there was in the 1930's. http://dshort.com/charts/bears/road-to-recovery-large.gif But there are so many differences between the economy in the 1930's and today that it is not reasonable to think that we can predict today based on the past. And as long as we are looking at long-ago recessions, consider the 1920-21 recession. There was minimal government intervention, and yet the economy recovered smartly on its own. > I don't really > care if banks or even car companys fail if the damage was limited to > those institutions, but the people that are really going to suffer are > those that loose their 401K or other retirement savings, or their > house, or their job or all of it. As it is there was a huge amount of > damage done to these people's future. Had they allowed these > institutions to fail, I'm absolutely certain that the economic > situation would be far worse. Without a demonstrated record of accurate predictions, such a statement much be discounted. But even if true, then why not give money to those people you are concerned about? Why prop up badly run businesses? > The thing is, I think that at some point it becomes a crisis of > confidence more than a purely economic crisis and once you reach that > point I think you can count on a prolonged depression. I think people are a lot more resilient than you give them credit for. There are a lot of knowledgeable, innovative, industrious people that will find ways to accomplish those things that are important to them, if they are allowed to. It is a lot harder to do so when the government creates extreme uncertainty as to the rules under which everyone must operate now and in the future. > So while I'm not sure that the initial bailout and the follow up > stimulus package were the perfect solutions, I'm pretty confident that > had we waited for the Everyone Who Wishes To committee to come back > with their well crafted solution, it would have been far too late to > be effective. So now you implicitly claim not only to be able to predict what would happen if the government did not intervene immediately after the various investment bank problems, but also what would have happened many months after that under the influence of unknown intervention efforts. Since distinguished economists have repeatedly failed to predict much simpler things on shorter time scales, I find your claim highly dubious. _______________________________________________ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
