Wednesday, March 18th Cramer Vs. Cramer Vs. Stewart
I watched the Jim Cramer/Jon Stewart prize fight the other day in utter amazement.
Jon Stewart seemed to go beyond blaming Cramer for dishonest reporting (a bit of a stretch given his proof). He seemed to blame Cramer (and by extension financial reporting) for the entire economic downturn. People lost money and therefore people who are reporting on financial matters must be to blame. What?
Humanity, for all its complexities, are actually remarkably simple social creatures. Markets are social institutions and are driven by said simple social creatures and bring out two basic emotions. Fear and greed. I would add that financial networks play into these two emotions. In good times, they stress good news (greed). In bad times, they stress bad news (fear). Nobody will watch shows that stress bad news when the news is not bad. And no one will watch shows that stress good news when the news is not good. Blame the network's advertisers for wanting ratings. Or blame the people who watch the show who want what they want when they want it. To just blame the financial reporters (many of whom actually DID have reports about problems leading up to the downturn) is just dumb. Think I'm wrong? When was the first time you heard the term 'real estate bubble'. I heard it at least 5 years ago.
The system is so sick because the system was let to get sick. Its simple. If we want true capitalism, limit regulation the way we have done the past 10 years. But then live with the horrible results that would come while letting banks fail. There's no doubt that the free market blowhards are correct. The market would eventually correct itself. But it would be brutal for most Americans. The suffering during that correction would be monumental. I'd prefer we regulate better and have a government assisted transition out of these situations. If you want to call it socialism, fine by me. Unless you have seven digits spread across multiple FDIC insured banks, you should be fine with it too.
And we're not out of this yet. Get over AIG and the bonuses and let Obama announce his big bank bailout plan already. It's all this public outrage that is holding it up. And until it's fixed, we will continue to have economic uncertainty.
If we want the simple social creature to go back to feeling greed, it has to give up on fear. But more importantly, it has to give up on anger.
On Tuesday, March 31st, Adam said:
Whatever whitey!
We'll see.
On Sunday, March 29th, Mike said:
I don't understand, what does race have to do with the US's current economic policy?
While it easy to say that no one knows what will happen if we do X, history provides an abundance of information. It tells us that Obama increasing taxes and socializing programs will likely draw out current economic problems. Implementing a more fiscally conservative agenda would likely hasten economic recovery.
Another problem with the bailout of AIG and GM is that we are seeing preferential treatment given to large corporations.
On Thursday, March 26th, Adam said:
The outrage that was so fervent last week over the AIG recipients was white hot (granted it fizzled fast). Just think about how relatively benign an issue it was though.
The real answer is that no one knows. All i am saying is that it would be one hell of an experiment to put the world through. no one knows for sure, but if these laissez-faire white conservatives think that the bourgeoisie would remain silent and content while their social contracts are torn up and re-written, i wouldn't bet money on it. Populist outrage is many things. Rational and patient are not among them.
I for one don't want to live through that if i can avoid it. If Ron Paul does, he may want to move onto Kiawah Island or another gated island in order to escape the backlash. Its actually pretty nice there. They have 3 fire stations and armed guards at the bridge.
On Wednesday, March 25th, Mike said:
I would be happy to agree to mis-regulated. Another thing to note is that while Clinton signed the bill, many of the lawmakers passing it were contract-with-america Republicans.
As far as the state of nature goes, many of the people who understand the markets have been quick to say things like "If, instead, we'd let the market have its way with companies it didn't like, more than a year ago, without government bailouts or interference or attempts to restore an unsustainable status quo, I am skeptical that we'd be much worse off now." (http://www.wilmott.com/blogs/eman/index.cfm/General) It seems likely that the anarchy propaganda you mention is the rhetoric of ignorant politicians.
On Friday, March 20th, Adam said:
Best blog?! Thanks!
Clinton marked the beginning of the deregulation crap when he signed an 11th hour bill that allowed for credit default swaps to not be treated like insurance (yeah, why would you need capital to back those up? stupid). That is certainly one of the most damning pieces of deregulation. There were others too, but lets compromise and say mis-managed regulation.
A lot of this AIG garbage was caused by the corporations getting too far out ahead of the people whose job it was to regulate them. And there were tons of stories released before this mess where regulators were too buddy-buddy with those with whom they were supposed to be regulating.
As far as regulation going forward, there is a lot to do (after the public outrage followed by the big banking plan announcement). I think it is important that they follow through with the plan to regulate the size of these organizations. We can't have firms that are too big to fail.
The situation we have now has all the bad parts of monopolies AND socialism. We have to have government step in to bring back the environment for a capitalistic financial system. By having very large institutions, you limit competition (monopoly) and then when they fail, you leave the government holding the bag (communism). Capitalism should be based on competition AND lack of government interaction. What we have now is the opposite of that.
And btw, the reason why we don't let the free market just sort itself out is because there would be anarchy. And i'm not talking protests and riots. I'm talking the fundamental undoing of our society. So yeah, the free market fix would be wonderful. If only society wouldn't completely unravel and nullify the theory. Those are the stakes when we talk about going with a Ron Paul solution. These free market intellectuals apparently aren't familiar with the concept of the state of nature.
On Thursday, March 19th, Mike said:
Adam, this is one of your best blogs.
I'm not sure that we have really limited regulation over the past 10 years. In fact, the housing meltdown was caused by an increase in regulation. In the mid 90's the Community Reinvestment Act was changed to force banks to take on more risk. This risk could have been subsidized over time. Instead, we are paying that subsidy now through the bailout.
The AIG bonuses are a result of the government's bank bailout plan. Lawmakers have already failed to help the economy without exploiting taxpayers. Why should we believe that the next bailout plan will be any better?
WRT Stewart, it has always bugged me that shows like Stewart's blur the line between entertainment and reporting. When Stewart is cited for an opinion the response is often "he is just an entertainer." At the same time, his words are often taken as legitimate news commentary. As a result, Stewart is often irresponsible in his coverage but, because of his entertainer status, he is accountable to no one.
