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Yeah, hopefully these companies all collapse without taking everything with them. Then we can get back to actual productive labor.
Unfortunately I don't think that it is possible. In addition to "hurt" that will be experienced due to the interwoven nature of these institutions we will be experiencing large numbers of highly paid workers dumped on an already growing number of unemployed people. This will further weaken the general economy.
Unfortunately I don't think that it is possible. In addition to "hurt" that will be experienced due to the interwoven nature of these institutions we will be experiencing large numbers of highly paid workers dumped on an already growing number of unemployed people. This will further weaken the general economy.
this is the sad part. The banks have been ripping off people for centuries, so for me, it's bitter sweet joy to see some of them crumble. But it's the workers I really feel sorry for. I hope they all find jobs soon and get back to this crazy thing we call life.
Unfortunately I don't think that it is possible. In addition to "hurt" that will be experienced due to the interwoven nature of these institutions we will be experiencing large numbers of highly paid workers dumped on an already growing number of unemployed people. This will further weaken the general economy.
Quote:
Originally Posted by Humanoid
Yeah, hopefully these companies all collapse without taking everything with them. Then we can get back to actual productive labor.
To be sure, the initial impact will appear to be negative.
The fact is, however, in these recent years the US has allocated too many resources to relatively inefficient housing and vehicles, among other things, while the global energy environment has been adversely changing.
Instead of allocating a significant proportion of the nation's resources to giving away inefficient housing to less than productive people, we should have allocated those resources to training people to be more productive in the global economy.
The feeling of being productive promotes a greater sense of social belonging than being given a house that, deep down, you know makes no economic sense, you know that you cannot afford, once you come down from being high on the money supply.
In terms of global competitiveness, then, the US has shot itself in the foot.
In reality, these highly paid bankers, mortgage brokers, real estate brokers and so on have been underemployed and a drain on the nation's economic resources.
Indeed, maybe we can now get back to productive labor. Maybe some of these newly unemployed and foreclosed drifters can be retrained to work in 21st century factories.
Maybe, but in the current political climate, the outlook appears bleak and we seem poised to shoot ourselves in the other foot with further policy blunders, namely more misdirected subsidies for the unproductive and inefficient, first through monetary policy, now possibly also through fiscal policy.
The economy is going to weaken, what I meant to say was that I hope these companies fail without causing a major collapse in the economy (i.e., 1929 style).
A lot of the workers in the financial industry were overpaid, much like the workers doing the dot-com bubble were overpaid. I imagine its going to work the same, a lot of unemployed and a slow decline in wages, essentially for positions that your average college graduate with an econ degree can preform.
True they were overpaid, but look at housing prices.. they are STILL grossly overinflated and the government is trying to stop them from falling... wages are NOT being stopped from falling... you can't have both going in opposite directions... the government is not that smart...
True they were overpaid, but look at housing prices.. they are STILL grossly overinflated and the government is trying to stop them from falling... wages are NOT being stopped from falling... you can't have both going in opposite directions... the government is not that smart...
This is what happens when you have government interference in the economy. Are people too afraid of uncertainty for a short while to allow the market to work its magic?
Here's an example that's a bit less in scale than the housing crisis, but still illustrates the point quite well. Where I live in NC, gas prices spiked by as much as $0.30-1.50 a gallon on Friday when there was a run on the stations because of hurricane fears. Immediately, the governor and attorney general announced that there would be price gouging investigations. By Sunday, however, the market had completely stabilized at +$0.30-0.40 per gallon - pretty appropriate if you ask me given the supply constraints. The market wouldn't support the gouger's prices and they had to be lowered. The market wouldn't support the lowest prices either, as those stations ran out of gas. All of this happened before the governor and his cronies even got out of bed to go to work this morning.
The whole point is that the government supporting irrationality in the economy only leads to long-term distress for everyone, rich and poor alike. Let housing crash and prices will eventually become rational again.
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It's Chapter 11 for Lehman
