Ok, back to the rant on Palin a bit later…
For the moment I’d like to take a detour to the subject of the economy.
I am not an economist, nor an accountant. I admit to having only a rudimentary grasp of the economic issues facing our country (and in turn the world) and there are some things that I just don’t understand about this whole mess.
I keep seeing Bush, Paulson, et al saying that we need to do X to restore confidence, give the economy more stability, etc. From my admittedly uneducated perspective, it appears that all their statements and all their interventions have done just the opposite. Especially in the days of trying to get the bailout passed, their sense of urgency that it had to be done NOW or risk imminent collapsse - didn’t that just serve to instill more panic?
The market appears to be very volatile at this point - reacting to every bit of news by fluctuating wildly. With each downturn, the Fed in turn pulls some grand, never before seen measure to once again “instill confidence”. Yet, doesn’t this sense of desperation on the part of the Fed just add fuel to the fire? So much of the market is based upon speculation and anticipation rather than facts and numbers. So, aren’t they just participating in a vicious cycle at this point of the market goes down, credit tightens further, the Fed reacts (overreacts?), the market goes down more because of the continued panic and on and on. Am I just looking at this too simplistically here?
Taking that simplistic approach and running with it a moment here, I kind of liken this to when your kid misbehaves, you give a timeout. If you don’t get the immediate result you’re looking for, instead of giving it time to have an effect, you jump to the next item in your discipline toolbox. Eventually, instead of fixing the problem, you’ve made it a whole lot worse because your kid picks up on your sense of desperation and frustration and acts out worse. To me, a big part of the equation is the impression you create psychologically. IMO, the govt is just perpetuating this climate of fear and panic and doing absolutely nothing to settle things down.
I also understand that the bailout has not actually been put into effect yet, so we have conceivably not seen any effect from that. However, when the market fell 777 points on the news of the failure of the original package, its proponents were very quick to point out how important it was to get the measure passed because the market was reacting to its failure. If the news of the lack of the bailout was so important to the confidence in the market, why is the fact that the bill passed not having a positive effect on the confidence? Is it not tempered by the fact that the Fed seems to be grasping at straws at this point and hoping to stumble upon the magic bullet that’s going to fix it?
Leave a Reply