Startling article on Wall Street's Chaos

Article


Those of us who have been prudent, lived within our means, and didn't overborrow are paying a huge price for this. Income on our Treasury bills, money market funds, and CDs has dropped sharply, thanks to the Fed's rate cuts, and our wealth has eroded relative to foreign currencies and commodities


Sloan's article (or commentary, take your pick) is clear, concise, and scary as hell. My intiuition tells me there's another Bear Stearns out there, and that the Fed can't bail out everyone--trillions upon trillions of dollars of "bad money". Hoo boy.

As a personal aside, count me as one of those who wish some people would feel the mess they got themselves into. These proverbial Grasshoppers annoy me. People making $50k with $500k houses and $100k in CC debt are about to be bailed-out, and now we see the macroeconomic counterpart. As Sloan says, it's "Private profits, socialized losses." Your tax dollars at work.

Granted, if you have another crash like in 1929, it develops into massive socialized loss anyway. Millions destitute. People hungry. I don't think the average American is prepared to absorb a 50% reduction in standard-of-living quite like we were in 1929.

At the end of it, it's a tiger-by-the-tail scenario. Certain entities in America--Finance, General Motors, Boeing--cannot be allowed to fail. Even if they do fail, and often. When the invisible hand is chained like that, it tends to slap you some other way.

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