Response to a question on current events
What we have is a system wide failure; Market, Corporate, Government, Consumer.. how ever you want to slice and dice the system it allowed a bubble to occur and it put itself(the system) in jeopardy.
We don't have the anything near pure capitalism certainly that's clear. But I think Greenspan is right to have been surprised by how badly the markets have overpriced certain things and how out of whack so many of the markets got. Why was risk management so bad at so many firms?
Why did firms and investors allow compensation packages that were so tied to short term performance when it was clear that many of these people were doubling down on bets that would eventually go bad and bankrupt the whole company, this is as true for the Government backed corps as it was for the private ones. One might argue that the bond investors (china et all) were rationally accounting for implicit government backing, but the same can not be said for those that held the stock of Friedy, Fanny, Bear etc.
But its not like the Government or its host or regulatory or legislative bodies identified the problem in 2003 and started trying to fix it. No suddenly after everything is obviously in collapse then they know how to fix it.. right I feel so much more confidence now that they are taking bold action.. sigh. Where was law enforcement when the fraud was happening, making examples of people and putting some fear into those that needed it. Now when its to late they can punish, but they did not protect.
And there is all of us regular folks, so many of which lost all control in buying and selling houses acting like we were making value and being so smart. Those of us who saw the bubble and stayed on the sidelines were obviously unable to persuade the others to calm down, we were ineffective at sharing our incite, so we failed as well.
Now the powerful use this as an opportunity greater than war to move the wealth of the present and the future around to their favor. Those who could not anticipate and prevent this, now broadcast their ever changing solutions for the problem of the day. Ultimately this will all smooth out, even the real depression was a blip almost unnoticed by history, except for lives of the people that had to suffer through it. So to will today pass, the knowledge and technology that is growing will dwarf the turmoil of the present. In the long run the power of politics is insignificant compared to the force of knowledge...the empire of Rome is long since ash...only the arches and poetry survive.
We don't have the anything near pure capitalism certainly that's clear. But I think Greenspan is right to have been surprised by how badly the markets have overpriced certain things and how out of whack so many of the markets got. Why was risk management so bad at so many firms?
Why did firms and investors allow compensation packages that were so tied to short term performance when it was clear that many of these people were doubling down on bets that would eventually go bad and bankrupt the whole company, this is as true for the Government backed corps as it was for the private ones. One might argue that the bond investors (china et all) were rationally accounting for implicit government backing, but the same can not be said for those that held the stock of Friedy, Fanny, Bear etc.
But its not like the Government or its host or regulatory or legislative bodies identified the problem in 2003 and started trying to fix it. No suddenly after everything is obviously in collapse then they know how to fix it.. right I feel so much more confidence now that they are taking bold action.. sigh. Where was law enforcement when the fraud was happening, making examples of people and putting some fear into those that needed it. Now when its to late they can punish, but they did not protect.
And there is all of us regular folks, so many of which lost all control in buying and selling houses acting like we were making value and being so smart. Those of us who saw the bubble and stayed on the sidelines were obviously unable to persuade the others to calm down, we were ineffective at sharing our incite, so we failed as well.
Now the powerful use this as an opportunity greater than war to move the wealth of the present and the future around to their favor. Those who could not anticipate and prevent this, now broadcast their ever changing solutions for the problem of the day. Ultimately this will all smooth out, even the real depression was a blip almost unnoticed by history, except for lives of the people that had to suffer through it. So to will today pass, the knowledge and technology that is growing will dwarf the turmoil of the present. In the long run the power of politics is insignificant compared to the force of knowledge...the empire of Rome is long since ash...only the arches and poetry survive.