Disastrous consequences

“Disastrous consequences”
“Martial law in America”

This is what we were told would happen if the government did not step in to bail out the lending markets. But all we’ve seen so far is a crisis of confidence, and a few banks that over leveraged themselves have either gone bankrupt or have been swallowed up by bigger banks. Am I naive to think that these aren’t necessarily bad things to have happened? Where’s the disaster? (I think Fanny/Freddie was a special case due to the legal framework they were built under; the government did the right thing by nationalizing them).

Yea, I’ve lost a lot of money these last couple of weeks. My retirement accounts have plummeted.. but they’ll come back. And hopefully on the up swing I’ll make it back plus some. Optimism? 🙂

I don’t consider myself to be a “free market fundamentalist”–I do believe that certain types of regulation are essential to keeping a free market a fair market. But everyone now seems to be calling for more regulation. Isn’t the market performing on itself right now the ultimate self regulation? Organizations that made bad investments are being punished by their shareholders pulling out their shares. Unfortunately, organizations that didn’t make bad investments need to operate in the same market as organizations that did, so they’re being dragged down with them… But that’s not necessarily a bad thing, it means for investors there are some real deals to be had right now on the stock market!

At this point my belief is the only thing the government needs to do is encourage more transparency in the markets. Companies that created these complicated mortgage-backed securities, leveraged instruments, etc., need to expose to their investors what they’re doing. You could argue that they didn’t even know what they were doing, but after this crisis people are gonna be on the look-out for these types of convoluted instruments and will be a lot more skeptical of them.

There have been comments coming from across the globe by various world leaders admonishing the US for “creating” the current financial crisis. Excuse me? A huge portion of this country’s stocks are owned by foreign organizations! If you don’t like our markets you don’t have to invest in them! I actually think the rest of the world’s markets crashing has more to do with the US trade deficit with these nations than it does with anything we did within the US. A lot of nations put their exports all in one basket..

Leave a Reply