tag:blogger.com,1999:blog-7820485130017459619.post3349514841950531498..comments2023-10-24T01:46:47.151-07:00Comments on CynicusEconomicus: The Bailout - Foolishness TriumphsUnknownnoreply@blogger.comBlogger2125tag:blogger.com,1999:blog-7820485130017459619.post-90964796888034720712008-10-05T00:34:00.000-07:002008-10-05T00:34:00.000-07:001. The disease might kill the patient but the cur...1. The disease might kill the patient but the cure is guaranteed to kill the patient. When the economy goes wrong people cry "Something must be done!" - and politicians scramble to answer them. The best thing to do is rarely the popular choice.<BR/><BR/>2. The problem with the debt that we have burdened ourselves with is that it wasn't to purchase assets, it was wasted on liabilities like new cars and overpriced houses.<BR/><BR/>3. I believe in free markets and when government starts to interfere in the markets, this is where we see problems develop. If interest rates hadn't been held artificially low for so long then people wouldn't have borrowed so recklessly, bank bonus structures would be directed towards quality rather than volume and we probably wouldn't be in this mess. This latest interference is driven by politics as always and is not the right way to solve the problem, but to tell the electorate that we need to cut back massively on public spending is not popular so we'll burden ourselves with more debt until there is no other option but to cut back or the currency fails.<BR/><BR/>4. At least china can produce things and although demand is obviously going to drop after they stop lending people the money to buy them, there will still be demand from other parts of the world for their products. The US can adapt too but if this bailout (and the series of bailouts that will no doubt follow) destroy their currency through inflation then that becomes an awful lot harder to deal with than a deflationary depression.Jeremy Ormehttps://www.blogger.com/profile/02562312858264349902noreply@blogger.comtag:blogger.com,1999:blog-7820485130017459619.post-26813086250583217802008-10-04T21:49:00.001-07:002008-10-04T21:49:00.001-07:00Overall I am pleased and inspired to read such a d...Overall I am pleased and inspired to read such a deeply thought and maverick piece by the blogger.<BR/><BR/>Like the blogger, I too am unschooled in economics. However, I would differ with him in his pessimism of the West and his deferrence of China to such a high degree.<BR/><BR/>Firstly, I believe the bailout is a necessity simply because the patient, whose heart is what the US economy constitutes, is in real need of resuscitation. Whether the patient had prior to this gone on an irresponsible binge resulting in a heart attack is beside the point.<BR/><BR/>Secondly, I have qualms about the blogger's assertion that the service economy is illusory because it is debt-fuelled. Are not the underpinnings of a capitalist economy both consumption and capital? Is not the boom of the industrial economy also underpinned by consumption and capital i.e. faciliated with debt from a functioning financial system?<BR/><BR/>Thirdly, I am a believer of market regulation. Like nature, like human society and with many other situations, it is simply too dangerous to let forces reign in disorder. Market forces alone without an impartial regulator would eventually be dominated by greed, excesses and malevolent intent.<BR/><BR/>Finally, China is indeed booming and it is indeed catching up. But its rigid, export-dependent, top-down controlled economy may not be resilient enough in the face of shifting markets, waning demands and an increasingly aware citizenry. In fact, it is West and the US in particular that has shown deftness in the ability to retool and adapt to such shifting sands.Anonymousnoreply@blogger.com