Friday, December 18, 2009

What Does That Mean?

This video is courtesy of CNBC, and it reports on Bernanke's confirmation in the Senate Banking Committee. While the video is just reporting the news, focus on Senator Chris Dodd's comments starting at the 50 second mark.

In explaining the past year, Dodd states that Bernanke's actions "prevented utter economic catastrophe". This may be true or not. Personally, I would argue that it is unlikely that one man could have such profound influence, and I am not here to argue the merits for or against Bernanke anyway. But what really gets my blood pressure boiling is when people describe the crisis of the past year with phrases such as "utter economic catastrophe", "economic collapse", or "we were staring into the abyss".














Can someone please explain to me what my world would have really looked like if there was "utter economic collapse"?

Can someone please explain to me what my world would have really looked like if the Fed actually did nothing?

Would the sun not come out the next day? Would I have not gone to work? Would I not try to do my very best like I do everyday? Would the power have been turned off in my home? Utter nonsense.

Honestly, please tell me what do those words mean, and why did we have to have a trillion dollar bailout? To "save" the economic system from "collapse"? Ughh. What does that mean?

The market was already off some 70% by the time the bailout arrived. The only thing different in my life was my 401K, and I was a lot better off than most.

And lastly, let me leave you with something else to think about: after a decade of easy money, bailouts and ultra low interest rates, the S&P500 is at a level seen over 10 years ago. A lot of up and down, but no real progress despite all the money thrown at the system to maintain the status quo and all in the name of "saving the economic system from utter catastrophe".

It is all nonsense!

8 comments:

Anonymous said...

It's thought like this that show the real Hubris of traders.

Someone invests in momentum for a while, and suddenly they start thinking they are a Genius at Macro.

The real problem, in the economy is the Lemon Socialist. Like you and Kudlow and Santelli. All For free markets, until it implodes; suddenly they call their mom to save them like the children they are. Wanting the fed to Ease or buy stocks or whatever.

I'm all for what you are talking about. But what I know; "You all Talk" big Mouth until the chips are down. Like how there are no atheists in a Fox hole. There are no Free-Marketiers in a Recession. They all turn to Lemon Socialists, Socialize the losses and Privatize the profits.

So here you are like a childish coward, after a 50% run in the market, you talk big.

you would be a real man if you had said this at spx 666.

Other than that, just like the rest of them, you are a lemon socialist.

AND THAT IS WHAT KILLS THE MARKET!! WITHOUT RISK THERE IS NO REWARD.

and remember...

I drink your milkshake!

Dave Narby said...

Anon, who exactly are you addressing? Otherwise I agree with you, just not if you're trying to finger Guy in with the CNBS crowd.

Guy, I completely agree. Economies are about actual goods and services (other than financial innovation).

Guy M. Lerner said...

Anon:

It is a little unclear who you are addressing; but once again, when I think back to that time, I believe I still felt that way....the bailouts were bad....felt too much of a rush to judgment --like the decision to invade Iraq...

do you think any of that money trickled down to me or that I ever thought I was going to benefit from it? Trust me, my tax bill is only go up.

Guy M. Lerner said...

one other thing: your comments still don't address my basic premise: would someone please define for me what economic failure would look like?

D-man said...

"would someone please define for me what economic failure would look like?"

It's all relative; I assume they mean if those bailouts and trillions would have not been pumped, things overall would have been worse than today (they don't say if the trillions to make today better will not make tomorrow worse - they just don't care I guess, we'll see that tomorrow).

Yes we would have sun, you were still posting; I don't know if I would have kept my job, but heck, that I don't know today either (if tomorrow I would have a job), etc. etc.

Whatever, we can't compare today with what the economic collapse would have been if the bailouts would have not exist because, well, we didn't see the other side.

Some say we would have experienced the 30s and the biggest mistake (which we apparently did learn and won't repeat) at that time was not enough bailouts and intervention. All say that today the FED done a great job because they were so creative and they stopped the recession and not like in the 30s when limited intervention actually didn't help. Very few actually talk about that like in the 30s, the root cause of the problems was credit in exces and intensive speculation and not limited intervention by government.

Well, we are for 10 years now in this boom/bust environment and like in 2003, when Greenspan saved us, Benanke did it today. I feel that every time they save us, the coming bust is even bigger. More they print, bigger the bubble and bigger the bust. This time is NO different; they printed like never before; the coming bust will be like never before. This time there seems to be no leader sector in the market, so let's inflate everything than crash again.

All in all, I read economists saying that stupid humans like me don't understand the "monetary policies" the FED is putting in place. These policies can be understood by those who are "in the known". So answering questions like "why" "what would have happen" etc. it's not whithin our powers...

Guy M. Lerner said...

D-man:

Nice comments....

This was a rush to judgment; I am not against gov't help or assistance,etc....I would just like people to define the problem...not say that we have averted "economic catastrophe" when we don't know what that means....things could be worse ahead because of the prior and recent actions

D-man said...

"This time there seems to be no leader sector in the market..."

"...things could be worse ahead"

Guy, make no mistake about it; there is no driver for economic growth today; when pig farmers speculate in nickel

(http://www.bloomberg.com/apps/news?pid=20601109&sid=a1B_ZBQfii8Q)

and the world builds empty cities to keep social unerest under control

(http://www.youtube.com/watch?v=0h7V3Twb-Qk)

that is a tell for this bull. I'm not saying the world won't invent new things and create wealth, but today's fundamentals are not there; and markets with no fundamentals usually end in tears. I'm a father myself and try to think further than my small circle...

D "the stupid retailer" Man

edwin said...

Guy,

The sun not rising would be a "catastrophic celestial event".

No bank bail out would have resulted in no bank profits, no stock market recovery, even more stock selling, no borrowing/lending, even more lay offs with the resulting impact to home sales and consumer buying habits.

I know my wife and I cut back on spending and have become very cautious about future spending. Many of our friends are still without jobs. The good news we hear people talk about is that their stock portfolios have come back. That's what the bail out did, bring back people's optimism about tomorrow. Without that you can read the history books for results.

Edwin