The GreatRecession

Some of you were "provoked" by the Peter SchiffArticle we sent out.

Here is a thoughtful response by NancyKay.

The current situation makes me so anxious that I hate to even think about it. I keep imagining if I close my eyes and ignore it, in a couple of years it will go away, and I won't have to spend my twilight years on the county poor farm.

There are things Schiff believes -- things he's said previously -- that I agree with, for example he thinks the low savings rates of the United States one of its worst maladies and cites the US transformation from being the world's largest creditor nation in the '70s to the largest debtor nation at the turn of 2000.

But regarding Schiff's October 17, 2008 Not Your Grandfather's Depression, here is the basic problem it: A free market assumes pure and perfect competition. It cannot correct itself without pure and perfect competition. And for competition to be pure and perfect, there MUST be clarity about what's going on. This crash is predicated on a market functioning with trillions of dollars of undisclosed leverage, both corporate and private. A huge quantity of the financial instruments being bought, sold, traded, etc are/ were undefined, impossible to value. There are places the gov't could have regulated -- without much intrusion -- to protect us. If the gov't had done nothing more that insist on full disclosure we would be better off. At the heart of the whole mess were those sub-prime mortgages -- mortgages which should never have been granted in the first place -- which were bundled and sold and resold. The whole business got so baroque that nobody, not even the people "trafficking" in these "investments" -- much less the SEC -- knew what that were dealing with. The people peddling these instruments made huge fortunes. HUGE. I'm a good American: I don't care if people get rich. But I don't want to have to pay for it when their gambles fail.

I don't know if the federal bailouts will do what they say i.e. save ordinary people from getting washed away, but I trust they will do just that. And I trust, too, that the gov't will now institute regulations necessary to prevent these particular disasters from repeating themselves. I consider it the gov't's role to protect me from the financial boondoggles which are not of my making.

For some perspective on Peter Schiff's (I've heard him referred to as "Dr. Doom") here is a link to an interview US News & World Report did with him last May: http://www.usnews.com/articles/business/your-money/2008/05/30/permabear-peter-schiffs-worst-case-scenario.html

I don't have a perfect counter-balance essay, here's an article called This Is NOT Your Grandfather’s Depression written by AP National Writer Adam Geller. http://www.etruth.com/Know/News/Story.aspx?id=463524

The best unbiased information sources I've come across are two podcasts Susan has on CD. Email or call her and get them. Or I can send you a link. Hmmm...wonder if I could email them to you as mp3 files?

You are right about one thing for sure: if people are thinking -- really thinking, not spouting slogans -- it IS a good thing.

And no I hadn't heard the one about Descartes*, but I love it.

*You've heard, no doubt, the one aboutwhen Descartes went into a bar and the bartender asked if he wanted adrink. Descartes said, "I think" not," anddisappeared.