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Check out the late breaking news tonight on Goldman Sachs and Morgan Stanley becoming "holding companies."
I have no idea what that means. But they announced it on a Sunday night, so it can't be good.
It means that there are no more strictly investment banks left in the United States, which means that the banking industry is going to be considerably more regulated. Given the whole system that exists as well as people's entitlement mentality, it will probably mean less pain and suffering in the short-medium term. It will definitely mean less growth over the longer term.
Be prepared for years and years of economic mediocrity in this country.
Yes it's happened. You can read about it here. Last major investment banks change status - Yahoo! News (http://news.yahoo.com/story//ap/bank_change - broken link)
They'll be able to take deposits now and be regulated by the Feds.
Be prepared for years and years of economic mediocrity in this country.
Can't give you any more rep, but, in an economy of words ...
... "economic mediocrity in this country" ...
is the medium/long-term upshot of what has occurred over the past several years and what will probably happen in the next several.
We are facing years of some combination of high inflation, higher interest rates, and high taxation, meaning slower growth at best.
The question we must decide politically is about what trade-off there may be between higher interest rates and high taxation.
Personally I would prefer higher interest rates because it would attract saving, it may offset some of the higher inflation, and it would provide incentives for more productive investment. On the negative side, more and more people may get left behind, unless we offset that with an effective retraining policy.
I think with higher taxation we will ALL be at a lower level of mediocrity than would otherwise be the case.
Personally I would prefer higher interest rates because it would attract saving, it may offset some of the higher inflation, and it would provide incentives for more productive investment. On the negative side, more and more people may get left behind, unless we offset that with an effective retraining policy.
I think with higher taxation we will ALL be at a lower level of mediocrity than would otherwise be the case.
People have always been left behind. That's one of the tenets of a capitalistic, Darwinian economy where not everyone can be rock stars. Unfortunately, a lot of people began to think we could all have it all, which is why people who could never before own homes suddenly owned homes and those who could heretofore only afford modest homes were trading up to McMansions with no corresponding increase in income or assets. Expanding the rising debt pool to those least qualified to pay it back started this snowball. Their toxic debt was packaged and sold as quality paper all the way up the money chain.
In a free market, we would just be reverting to the norm, but this is not a free market, so the norm will be lowered. People who could have traditionally afforded less will once again have less. The new wrinkle is that some people who traditionally had more will now have less, too. There will now be more of us at a lower level of mediocrity, since we are all socializing the losses.
I wouldn't be surprised if we have higher interest rates and higher taxes, to go with higher unemployment and lower productivity.
I wouldn't be surprised if we have higher interest rates and higher taxes, to go with higher unemployment and lower productivity.
I think it's fairly safe to say that this WILL be the long-term trend, even if it doesn't manifest itself for another generation.
This week America essentially made the choice to follow the French economic model. It's only a matter of time before we have nationalized health care, greater labor regulation and such.
My posts on this forum suggest a strong libertarian tendency, although I'm also a pragmatist, which means I'm still going to remain optimistic and make the best of the situation in this new reality. Our choice as a country might actually be a good thing, as the mentality has been shifting for so long in this country away from capitalism and individualism. Rich or poor, Americans have very little appetite for risk and failure. It doesn't matter if it's the poor ****** who bought the house he couldn't afford with the ARM or the Dick Fuld at Lehman. Most people in this country have become true socialists at heart, expecting the government to come to their rescue when things get hairy.
I've spent a number of years living in Russia, and I can say with complete confidence that socialism will work far better in America than it ever worked there.
CNBC already trying to cause a panic on WAMU with misleading information
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