7 ms·

Ok, here's the thing: even if you disagree philosophically with the legislation that they put together, you still would be wise to be very worried about the ove

Ok, here's the thing: even if you disagree philosophically with the legislation that they put together, you still would be wise to be very worried about the overall state of the economy due to tight credit. Many businesses (good, solid, profitable businesses that employ hard-working people) fund their operations via credit markets that have seized up. Absent some kind of intervention (and I for one would like to see more ideas on the table), even your ideal "prudent" person will probably suffer. Just because you've done everything prudently on your own micro scale doesn't mean macro events can't hurt you.

davidw 18y ago
I can't pretend that I understand this whole thing, and am quite suspicious of anyone that says they do, who does not report on it more or less full time and have a good grasp of economics, but... one analogy that's come to mind is a car stopping. In one case, with the brakes, in another, by hitting a rock wall. The end result is still a stopped car, but there are some other differences that might be of interest to the occupants. In any case, most of the discussion that's worth anything is coming from economists, of which there are a wide variety to read. Most people on sites like this one don't seem to have the expertise to say much that's useful, either for or against (and that includes me, thanks). http://economistsview.typepad.com/ http://economistsview.typepad.com/ http://econlog.econlib.org/ http://econlog.econlib.org/ http://www.marginalrevolution.com/ http://www.marginalrevolution.com/ http://www.economist.com/blogs/freeexchange/ http://www.economist.com/blogs/freeexchange/ http://economix.blogs.nytimes.com/ http://economix.blogs.nytimes.com/ http://delong.typepad.com/ http://delong.typepad.com/ http://www.ft.com/cms/s/0/290ca9f6-8d8b-11dd-83d5-0000779fd18c.html http://www.ft.com/cms/s/0/290ca9f6-8d8b-11dd-83d5-0000779fd1... As you can see even those guys are peddling their own ideologies to various degrees, along with everyone else with vested interests - and that's a lot of people, because 700 billion combined with a potential collapse of the economy is pretty high stakes. This doesn't make it easier to understand.
- run4yourlives 18y ago
  That's a great analogy. There's a brick wall looming up ahead, and we just cut the line to the brakes.
  - davidw 18y ago
    Like I said, to be honest I do not know if it is in any way an accurate analogy, but it seems to capture the sentiment I hear from some economists saying "yeah, giving money to people who screwed up sucks, but the alternative is much worse".
    - davidw 18y ago
      Looks like I'm not the only one who plain doesn't know: http://www.marginalrevolution.com/marginalrevolution/2008/09/the-best-and-wo.html http://www.marginalrevolution.com/marginalrevolution/2008/09...
  - gscott 18y ago
    Maybe the banks and whomever else holds mortgages will start to seriously restructure mortgages to generate cashflow from those so far behind and feeling hopeless they have just stopped paying altogether. This way the following doesn't collapse: http://www.nomoneylimitsblog.com/blog/_archives/2008/1/10/3458664.html http://www.nomoneylimitsblog.com/blog/_archives/2008/1/10/34...
    - Xichekolas 18y ago
      I think one of the commonly held misconceptions about this whole 'bailout' thing is that fixing the mortgage market NOW will fix the problem. Fixing the mortgage market in 2006 might have helped, but it also might not have. We'll never know. While subprime mortgages got this whole ball rolling, the credit crisis extends way beyond that now, and has taken on a life of its own. This bailout plan was to try and fix the credit crunch by restoring confidence in the financial sector, taking toxic assets off their books, and giving them a more stable capital base. The housing crisis is now a separate issue, and if lawmakers want to address it, it should be in a separate bill. If the housing crisis continues, it hurts a lot of people that made bad borrowing decisions and it hurts a lot of banks that made bad lending decisions, but the turmoil is mostly in the financial/construction/materials sectors. If the credit crunch continues, just about anything could fail unexpectedly, including things as diverse as insurers and big manufacturers, which could leave a lot of people out of work, and turn this from a Wall St crisis into a Main St crisis.
michaelneale 18y ago
I remember reading: "A lack of capital kills you slowly, a lack of liquidity kills you like a slug to the head" - I think the credit crunch is more of the latter (or people claim it is). Who knows...
gills 18y ago
Part of freedom is being free to fail. Most of the people I have observed fighting this thing are doing so with eyes wide open, knowing full well the economic consequences of defeating it.

davidw 18y ago

I can't pretend that I understand this whole thing, and am quite suspicious of anyone that says they do, who does not report on it more or less full time and have a good grasp of economics, but... one analogy that's come to mind is a car stopping. In one case, with the brakes, in another, by hitting a rock wall. The end result is still a stopped car, but there are some other differences that might be of interest to the occupants. In any case, most of the discussion that's worth anything is coming from economists, of which there are a wide variety to read. Most people on sites like this one don't seem to have the expertise to say much that's useful, either for or against (and that includes me, thanks). http://economistsview.typepad.com/ http://economistsview.typepad.com/ http://econlog.econlib.org/ http://econlog.econlib.org/ http://www.marginalrevolution.com/ http://www.marginalrevolution.com/ http://www.economist.com/blogs/freeexchange/ http://www.economist.com/blogs/freeexchange/ http://economix.blogs.nytimes.com/ http://economix.blogs.nytimes.com/ http://delong.typepad.com/ http://delong.typepad.com/ http://www.ft.com/cms/s/0/290ca9f6-8d8b-11dd-83d5-0000779fd18c.html http://www.ft.com/cms/s/0/290ca9f6-8d8b-11dd-83d5-0000779fd1... As you can see even those guys are peddling their own ideologies to various degrees, along with everyone else with vested interests - and that's a lot of people, because 700 billion combined with a potential collapse of the economy is pretty high stakes. This doesn't make it easier to understand.

run4yourlives 18y ago
That's a great analogy. There's a brick wall looming up ahead, and we just cut the line to the brakes.
- davidw 18y ago
  Like I said, to be honest I do not know if it is in any way an accurate analogy, but it seems to capture the sentiment I hear from some economists saying "yeah, giving money to people who screwed up sucks, but the alternative is much worse".
  - davidw 18y ago
    Looks like I'm not the only one who plain doesn't know: http://www.marginalrevolution.com/marginalrevolution/2008/09/the-best-and-wo.html http://www.marginalrevolution.com/marginalrevolution/2008/09...
- gscott 18y ago
  Maybe the banks and whomever else holds mortgages will start to seriously restructure mortgages to generate cashflow from those so far behind and feeling hopeless they have just stopped paying altogether. This way the following doesn't collapse: http://www.nomoneylimitsblog.com/blog/_archives/2008/1/10/3458664.html http://www.nomoneylimitsblog.com/blog/_archives/2008/1/10/34...
  - Xichekolas 18y ago
    I think one of the commonly held misconceptions about this whole 'bailout' thing is that fixing the mortgage market NOW will fix the problem. Fixing the mortgage market in 2006 might have helped, but it also might not have. We'll never know. While subprime mortgages got this whole ball rolling, the credit crisis extends way beyond that now, and has taken on a life of its own. This bailout plan was to try and fix the credit crunch by restoring confidence in the financial sector, taking toxic assets off their books, and giving them a more stable capital base. The housing crisis is now a separate issue, and if lawmakers want to address it, it should be in a separate bill. If the housing crisis continues, it hurts a lot of people that made bad borrowing decisions and it hurts a lot of banks that made bad lending decisions, but the turmoil is mostly in the financial/construction/materials sectors. If the credit crunch continues, just about anything could fail unexpectedly, including things as diverse as insurers and big manufacturers, which could leave a lot of people out of work, and turn this from a Wall St crisis into a Main St crisis.

michaelneale 18y ago

I remember reading: "A lack of capital kills you slowly, a lack of liquidity kills you like a slug to the head" - I think the credit crunch is more of the latter (or people claim it is). Who knows...

gills 18y ago

Part of freedom is being free to fail. Most of the people I have observed fighting this thing are doing so with eyes wide open, knowing full well the economic consequences of defeating it.