Sure, but my point in even mentioning the Japanese recession in the first place was that a strong work ethic and relatively free markets do not guarantee a strong economy. The same would apply to the US, though our work ethic isn't quite what the Japanese's seems to be.
true. but every free market economy, nay, EVERY economy has its ups and downs. The free market system can correct itself. It does not need a government agency to correct it.
I don't think you'll find many histories of the Great Depression, written by professional economists, that agree with that statement. The problem presented by the GD was precisely what was previously thought to not be possible in a market economy: a persistent equilibrium at high unemployment.
kuzi16:
and just by the way goods/services work nobody nor any government can correct an economy. only the people can do that. If people dont wanna buy stuff then they dont wanna buy stuff. An outside entity holding up a company is just tossing money into the money hole. it creates artificial supply, demand, or an artificially high or low price. All of these things can do more harm than good.
I'm not sure what that first sentence says. The rest I generally agree with. That doesn't always mean there aren't other valid reasons for holding up a company, at least temporarily, from time to time.
and just by the way goods/services work nobody nor any government can correct an economy.
I'm not sure what that first sentence says.
the manner that goods are traded; how the markets are; the existence of goods and services have a nature. that nature is to find a price that people are willing to pay for them. the government cant set a price on gold because that will great a false high price or false low price. a government is an ineffective way to control the economy.
the manner that goods are traded; how the markets are; the existence of goods and services have a nature. that nature is to find a price that people are willing to pay for them. the government cant set a price on gold because that will great a false high price or false low price. a government is an ineffective way to control the economy.
Sure. But sometimes markets overshoot the bottom or top. We're seeing a case of the latter right now with the housing bubble. These events create unpleasant externalities that are appropriate for governments to address. One way to address them is try to put rules in place that make overshooting less likely. These overshoots can also create huge transaction costs (inefficiencies) that are bad for the economy in the long-term. Governments have a legitimate interest in trying to prevent these, as well.
the manner that goods are traded; how the markets are; the existence of goods and services have a nature. that nature is to find a price that people are willing to pay for them. the government cant set a price on gold because that will great a false high price or false low price. a government is an ineffective way to control the economy.
Sure. But sometimes markets overshoot the bottom or top. We're seeing a case of the latter right now with the housing bubble. These events create unpleasant externalities that are appropriate for governments to address. One way to address them is try to put rules in place that make overshooting less likely. These overshoots can also create huge transaction costs (inefficiencies) that are bad for the economy in the long-term. Governments have a legitimate interest in trying to prevent these, as well.
the other way to address this problem is by letting the market fix itself. when houses got too high there was a correction in the market. It was drastic. housing lost value because it was too bullish for too long. the market is correcting it even as we type. home sales in California are now up 60% from this time last year. why? because all the foreclosed houses are on the market now ad a drasticly lower price. this is the correction. I never said it would be pretty, and in fact may hurt people. those people should never have entered those deals and those banks never should have made the loan. its their own fault.
i wouldnt go so far to say "willy-nilly" but the pure system is designed to teach people a lesson when they make poor decisions. those people (in a purer system) should and would be punished by losing everything.
Do people need to lose everything, even if it means we have to let all the inefficiencies and externalities happen? Is there not a way to balance the need to have negative consequences for bad decisions with the need to limit the inefficiencies and externalities? Get some of both, but not all of either?
kuzi16:
the high-ups of those companies should be brought to trial very enron style.
You won't get any argument from me. That can be done without letting the economy crash, though.
kuzi16:
(but they wont be because they are all friends of the now president elect ... but thats another argument)
That's a bit of a cheap shot. These guys have got all kinds of well-placed friends on both sides of the aisle. They wouldn't have faced trial ever, no matter who was in the White House (except maybe Jefferson or TR).
kuzi16:
the money should go to the people (if we were to do a bail out) so they can pay off their loans or at least part of them.
I was arguing for that on this board, like, weeks ago. That's still what my gut says. OTOH, I saw a guy testifying to congress the other day. He said they looked at that option, but didn't think it would have as great an effect on the overall economy, or as quickly, as what they've ended up sort of half-way doing after stumbling around for a while. Don't know if that's valid, but I don't know enough about this stuff to say it's not. It's credible, at least.
kuzi16:
as far as being economically inefficient... is what we are doing now any better? no.
Clearly, nobody knows the answer to that question, yet. That's the problem with this kind of macroeconomic stuff. You don't really know what's going to work until you've tried it.
kuzi16:
Morally unjustifiable? how about punishing those who caused the problems? would that help?
Again, I don't think we should look at it as 2 mutually exclusive options. It's not either/or. It's a balancing act. Try to do enough to soften the externalities and inefficiencies, while also letting the people who screwed up feel the pinch of having screwed up. Will they fully get what they deserve? No. Is that better than letting their screw-up damage millions of other peoples' lives? Probably. There isn't a clean option available.
Yeah well all you kids need some adult supervision, don't want things to get out of hand. BTW anyone following the auto industry vs Govt? anyone find it odd that paulson and company (bush admin too) will fork over billions to banks and Iraqi economics but doesn't seem very interested in "loaning" money to an industry that is on the verge of Bankruptsy and where thousands if not millions (considering all the effects of what this will do to people not working in the plants) of jobs?
Comments