Comments on: Sturm und Drang http://newcontrarian.com/2008/09/25/sturm-und-drang/ Just another Newcontrarian.com weblog Wed, 08 Sep 2010 23:33:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Daniel Kennelly http://newcontrarian.com/2008/09/25/sturm-und-drang/comment-page-1/#comment-120 Daniel Kennelly Fri, 26 Sep 2008 01:05:30 +0000 http://americasfuture.org/conventionalfolly/?p=1299#comment-120 <p>Don't know if it's true, but I once heard that a heroin addict is either on methadone or he's using, for the rest of his life. I hope that doesn't apply to this situation.</p> Don’t know if it’s true, but I once heard that a heroin addict is either on methadone or he’s using, for the rest of his life. I hope that doesn’t apply to this situation.

]]> By: David Donadio http://newcontrarian.com/2008/09/25/sturm-und-drang/comment-page-1/#comment-121 David Donadio Thu, 25 Sep 2008 21:08:21 +0000 http://americasfuture.org/conventionalfolly/?p=1299#comment-121 <p>Thanks man. I oughtta add that I’m not sure a meltdown would be trivial, only that it would be exacerbated by a bailout that rewards people who made unsound investments and punishes everyone who didn’t. If the government keeps encouraging people to invest in excessively risky or underperforming assets, they will, and that’ll cause even bigger problems than we have now. The garbage has to go, and it’s up to investors to figure out what’s worth what, and what to sell off and what to buy up.</p> <p>If, as some economists allege, there’s a lack of liquidity, and banks really can’t get the short-term loans they need to operate, then maybe the government can serve as a lender of last resort. That would keep it more neutral and leave investors reasonably free to figure things out for themselves, right? But the government shouldn’t throw $700 billion at bad debts whose true value no one can know, or take control of private institutions. If that happens, it’ll make the corruption at Fannie Mae look tiny by comparison.</p> <p>Right now, the economy is like an addict in a low after the heroin wears off. He wants more heroin, but he’d live longer if he quit.</p> Thanks man. I oughtta add that I’m not sure a meltdown would be trivial, only that it would be exacerbated by a bailout that rewards people who made unsound investments and punishes everyone who didn’t. If the government keeps encouraging people to invest in excessively risky or underperforming assets, they will, and that’ll cause even bigger problems than we have now. The garbage has to go, and it’s up to investors to figure out what’s worth what, and what to sell off and what to buy up.

If, as some economists allege, there’s a lack of liquidity, and banks really can’t get the short-term loans they need to operate, then maybe the government can serve as a lender of last resort. That would keep it more neutral and leave investors reasonably free to figure things out for themselves, right? But the government shouldn’t throw $700 billion at bad debts whose true value no one can know, or take control of private institutions. If that happens, it’ll make the corruption at Fannie Mae look tiny by comparison.

Right now, the economy is like an addict in a low after the heroin wears off. He wants more heroin, but he’d live longer if he quit.

]]>