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I like the oracle of Omaha as much as the next ripe-from-college-finance-student, but I can't side with the faithful teacher on this one. Too many of us are ca

I like the oracle of Omaha as much as the next ripe-from-college-finance-student, but I can't side with the faithful teacher on this one. Too many of us are calling this a depression where we should be calling it a correction. That's not to say corrections aren't messy -- they are -- but it's absolutely necessary if you're to return equilibrium to the markets. Til now prices have been artificially inflated by interventionist government policy. That's inefficient (it undermines the price mechanism) and it's unsustainable. Government intervention isn't the answer. It might stave off a correction in the near-term, but it can't stop a correction in the long-run. Better for Washington to do nothing, which is to say, better to let the price mechanism do its work and restore natural equilibrium to the markets. And please be fair: The "Bankruptcy is the answer" argument is hardly retardation (as you've put it). The article you're referring to captured the opinions of 166 economists of the Harvard/Yale/Princeton/UChicago ilk. You may not agree with it's conclusions but for God's sake man, don't call it retardation.

deleted 18y ago
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run4yourlives 18y ago
You can call it whatever you like, that doesn't mean a thing to the people in the bread lines. What people seem to be failing to understand is that the "near term correction" is going to be huge, regardless of whether or not there's an even bigger one in the future. We need to get through the first one to reap the benefits of missing the next one. Or, we can try to avoid the current concerns as much as we can, and use the time we've bought ourselves to reform our system and negate the need for that larger one down the road.
stupiduser 18y ago
Sorry, your post is just completely wrong because this is not a market situation. The government regulates banks through the FDIC, and implicitly underwrites the insurance that is granted to savings accounts. Therefore people have absolutely no incentive to pick "safe" savings accounts, where there savings are loaned out to "sure bets". Instead, if the bank has been covered by the FDIC, the only thing that matters to a consumer is the interest rate--he/she doesn't have to consider risk.
wheels 18y ago
This is one of the problems of being fresh out of college. You not only know all of these models for things -- you actually believe in them -- like they're some sort of independent thing that has worth beyond its use as a glorified guesstimation metric. I don't mean that in a patronizing way -- I was exactly the same. Buffet's kind of a champion of what you might call really-existing markets. I don't think he sees the US economy as a grand experiment where "health" exists independent of the people that are its constituents. A market is better where, as he says in the interview, 3 million extra people don't lose their jobs.

deleted 18y ago

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run4yourlives 18y ago

You can call it whatever you like, that doesn't mean a thing to the people in the bread lines. What people seem to be failing to understand is that the "near term correction" is going to be huge, regardless of whether or not there's an even bigger one in the future. We need to get through the first one to reap the benefits of missing the next one. Or, we can try to avoid the current concerns as much as we can, and use the time we've bought ourselves to reform our system and negate the need for that larger one down the road.

stupiduser 18y ago

Sorry, your post is just completely wrong because this is not a market situation. The government regulates banks through the FDIC, and implicitly underwrites the insurance that is granted to savings accounts. Therefore people have absolutely no incentive to pick "safe" savings accounts, where there savings are loaned out to "sure bets". Instead, if the bank has been covered by the FDIC, the only thing that matters to a consumer is the interest rate--he/she doesn't have to consider risk.

wheels 18y ago

This is one of the problems of being fresh out of college. You not only know all of these models for things -- you actually believe in them -- like they're some sort of independent thing that has worth beyond its use as a glorified guesstimation metric. I don't mean that in a patronizing way -- I was exactly the same. Buffet's kind of a champion of what you might call really-existing markets. I don't think he sees the US economy as a grand experiment where "health" exists independent of the people that are its constituents. A market is better where, as he says in the interview, 3 million extra people don't lose their jobs.