Robin van Spaandonk wrote:
I heard on TV last night that the level of private debt in the US is
$41 trillion. Imagine what is going to happen if the banks start calling in
*all* their loans.
Precisely. That's what people like Warren Buffett are worried about.
They are not concerned about the fate of highroller Wall Street
investors. Buffett has expressed contempt for such people many times.
I have no idea if that $41 trillion figure is accurate or not. I have
heard various estimates. I think a large part of the problem is that
no one has any idea what the true number is, or who owes what to whom
for what property. As OrionWorks says, more transparency is essential.
I read the other day a proposal that publicly traded corporations
should be compelled to keep all of their financial books on the
Internet. I wonder if something like that could be done with banks as
well. That is, with any bank that is federally insured. The ones that
are not should be allowed to collapse as far as I am concerned . . .
although I suppose they are the ones who hold $41 trillion in debt --
I wouldn't know.
Although I know next to nothing about this, along with everyone else
I am getting a quick education from the newspapers. I get the
distinct impression that the so-called experts at banks and insurance
companies and the Federal Reserve are a bunch of blundering amateurs.
They know much less than they thought they did, or that I assumed
they did. The mistakes they have made -- such as not checking
collateral -- seem elementary to me. A pair of British comedians
summarized the situation better than most financial experts I have
read, "Bird and Fortune - Subprime Crisis." See:
http://www.youtube.com/watch?v=mzJmTCYmo9g
Sometimes experts turn out to be real experts -- people you can rely
on. This is usually the case with engineering and other well-defined
disciplines. Sometimes we find they are expert at all. We have seen
this in cold fusion and other narrow scientific disciplines,
multidisciplinary studies, and situations in which few people are
aware of the facts, and few people have done their homework.
It would be very surprising if experts in plasma fusion were wrong,
because that subject has been widely studied and many textbooks and
papers have been written about it. It is less surprising that people
like Huizenga who appointed themselves experts in cold fusion a week
after March 23, 1989 turned out to be wrong.
- Jed
