4 ms·

> Oh really? How did forcing "loans" on Wells Fargo and other banks that didn't need money save us from anything? Part of the force in economics is psychology.

by jeromec 17y ago

> Oh really? How did forcing "loans" on Wells Fargo and other banks that didn't need money save us from anything? Part of the force in economics is psychology. If enough people think the dollar will crash then it will become a self-fulfilling prophecy. I don't know if you were paying attention when, after Congress first rejected TARP, the stock market shot down severely again. There are many people out there that believe the dollar will crash - something Ron Paul has warned for a long time, long before our current economic crisis (a big reason for his sudden popularity). Many people still believe it's not a question of if but when. The scary thing is just how much everything flipped upside down, and Dr. Paul went from "kook" to genius, while at the same time Warren Buffet tells us he also noticed the shift, while attending a birthday party of well-to-do friends, where many started asking if their money-market investments were safe: "When people who drive Rolls-Royces are worrying about their piggy banks, you know you've got a problem" - Warren Buffet (http://online.wsj.com/article/SB126056572135687829.html http://online.wsj.com/article/SB126056572135687829.html)

jeromec 17y ago
The WSJ link above now has a paywall up. Try Google cache :) http://74.125.155.132/search?q=cache:oPdlnnlrFTkJ:online.wsj.com/article/SB126056572135687829.html+warren+buffet+when+start+piggy+banks+abyss&cd=1&hl=en&ct=clnk&gl=us http://74.125.155.132/search?q=cache:oPdlnnlrFTkJ:online.wsj...
anamax 17y ago
> I don't know if you were paying attention when, after Congress first rejected TARP, the stock market shot down severely again. The stock market isn't the economy. Its moves now are somewhat independent of "life on the street". (That was even more true during the great depression.) > There are many people out there that believe the dollar will crash The dollar has weak for almost 10 years. It didn't and hasn't moved much.
- jeromec 17y ago
  I didn't suggest the stock market is the economy, but it is an important cog within our connected financial system. The key to my argument is in my first sentence about psychology. Did you read the WSJ article I linked to? Another quote from Buffet in the article: "I felt that this is something like I've never seen before, and the American public and Congress don't fully understand the gravity of the problem" General Motors needed to be rescued, and there are millions out of work, yet these items have little association with Bear Sterns, AIG, Wall St. etc., the financial institutions where the damage shook the pillars of our economy which rests upon the financial system and the dollar. The point being things are connected; significant trouble in one area knocks into the other, and you get a domino effect. The dollar is no longer backed by anything but promises, and people accept it because of our superior position as an economic and world power - even with all our escalating debt. However, we are not invincible (as Rome was not) and can experience a dollar crash if, as I said, enough people begin to think the dollar based system will not survive due to stress load (debt for bailouts/stimulus, future medicare). It's true the dollar has been fairly consistent for about a decade, and that's because our standing in the world has remained so - people still die to get in. However, a truer measure of faith in the dollar is the price of gold 10 years ago vs. today - $280 vs. $1080 respectively.
  - anamax 17y ago
    > Buffet in the article: "I felt that this is something like I've never seen before, and the American public and Congress don't fully understand the gravity of the problem" Do you really think that Buffet has a "sense of the people"? > General Motors needed to be rescued No. General Motors needed to go into bankruptcy and have all of its contracts broken. > and there are millions out of work, yet these items have little association with Bear Sterns, AIG, Wall St. etc., the financial institutions where the damage shook the pillars of our economy which rests upon the financial system and the dollar. You're babbling. > The point being things are connected Yes, but that doesn't tell us that TARP was a good idea. > The dollar is no longer backed by anything but promises That's nothing new and TARP did nothing to change it. > It's true the dollar has been fairly consistent for about a decade, and that's because our standing in the world has remained so - people still die to get in. However, a truer measure of faith in the dollar is the price of gold 10 years ago vs. today - $280 vs. $1080 respectively. The price of the dollar relative to other currencies tells us the relationship between the US and other countries. The price of gold is a combination of absolute value and general skepticism. Note that TARP didn't address any of that. You do remember TARP. You're trying to argue that it was necessary. Yet, you've only mentioned generalities that are independent of TARP.

by jeromec 17y ago

jeromec 17y ago

The WSJ link above now has a paywall up. Try Google cache :) http://74.125.155.132/search?q=cache:oPdlnnlrFTkJ:online.wsj.com/article/SB126056572135687829.html+warren+buffet+when+start+piggy+banks+abyss&cd=1&hl=en&ct=clnk&gl=us http://74.125.155.132/search?q=cache:oPdlnnlrFTkJ:online.wsj...

anamax 17y ago

> I don't know if you were paying attention when, after Congress first rejected TARP, the stock market shot down severely again. The stock market isn't the economy. Its moves now are somewhat independent of "life on the street". (That was even more true during the great depression.) > There are many people out there that believe the dollar will crash The dollar has weak for almost 10 years. It didn't and hasn't moved much.

jeromec 17y ago
I didn't suggest the stock market is the economy, but it is an important cog within our connected financial system. The key to my argument is in my first sentence about psychology. Did you read the WSJ article I linked to? Another quote from Buffet in the article: "I felt that this is something like I've never seen before, and the American public and Congress don't fully understand the gravity of the problem" General Motors needed to be rescued, and there are millions out of work, yet these items have little association with Bear Sterns, AIG, Wall St. etc., the financial institutions where the damage shook the pillars of our economy which rests upon the financial system and the dollar. The point being things are connected; significant trouble in one area knocks into the other, and you get a domino effect. The dollar is no longer backed by anything but promises, and people accept it because of our superior position as an economic and world power - even with all our escalating debt. However, we are not invincible (as Rome was not) and can experience a dollar crash if, as I said, enough people begin to think the dollar based system will not survive due to stress load (debt for bailouts/stimulus, future medicare). It's true the dollar has been fairly consistent for about a decade, and that's because our standing in the world has remained so - people still die to get in. However, a truer measure of faith in the dollar is the price of gold 10 years ago vs. today - $280 vs. $1080 respectively.
- anamax 17y ago
  > Buffet in the article: "I felt that this is something like I've never seen before, and the American public and Congress don't fully understand the gravity of the problem" Do you really think that Buffet has a "sense of the people"? > General Motors needed to be rescued No. General Motors needed to go into bankruptcy and have all of its contracts broken. > and there are millions out of work, yet these items have little association with Bear Sterns, AIG, Wall St. etc., the financial institutions where the damage shook the pillars of our economy which rests upon the financial system and the dollar. You're babbling. > The point being things are connected Yes, but that doesn't tell us that TARP was a good idea. > The dollar is no longer backed by anything but promises That's nothing new and TARP did nothing to change it. > It's true the dollar has been fairly consistent for about a decade, and that's because our standing in the world has remained so - people still die to get in. However, a truer measure of faith in the dollar is the price of gold 10 years ago vs. today - $280 vs. $1080 respectively. The price of the dollar relative to other currencies tells us the relationship between the US and other countries. The price of gold is a combination of absolute value and general skepticism. Note that TARP didn't address any of that. You do remember TARP. You're trying to argue that it was necessary. Yet, you've only mentioned generalities that are independent of TARP.