Here's an interesting take on the current recession and why we shouldn't be so afraid of it.
Excerpt:
Most people will profit from the current slow-down, and also from any recession that may follow.
How can this possible? It is possible because most of the pain felt in economic corrections happens at the margin, hurting some people badly, but making things better for most people, overall. Think about it . . .
Businesses will suffer lower profits, but most of them will re-think and re-engineer their operations, emerging better and stronger than they were before, while those businesses that fail will see their assets moved to more productive firms, paving the way for greater societal wealth in the future.
Those who are close to retirement, and stayed in the stock market too long, may have to delay their retirement for a year or two. But if they refuse to panic by selling out now, they too will likely emerge better than before.
The greatest pain will be felt by those who lose their jobs. This pain will only impact, even if we have a severe recession, about one out of ten Americans. This is too much pain suffered by too many people, but the fact remains that . . .
Roughly 70% to 90% of all Americans will suffer NO economic pain at all. Instead, they will actually BENEFIT from the correction, because the cost of living will drop, and new investment opportunities will be available at bargain prices.
Hmm, what to think?
Friday, October 17, 2008
I like this article
This website is pretty weird looking, but I really enjoyed this article about the current economic crisis. It blended a very easy-to-follow explanation of our ponzi-scheme economy with a meditation of what it means for our civilization and human relationships in general. Pretty cool. He's writing from a new-agey point of view, but I didn't find that incompatible with my Christian way of thinking, such as it is.
Here's the first part:
Suppose you give me a million dollars with the instructions, "Invest this profitably, and I'll pay you well." I'm a sharp dresser -- why not? So I go out onto the street and hand out stacks of bills to random passers-by. Ten thousand dollars each. In return, each scribbles out an IOU for $20,000, payable in five years. I come back to you and say, "Look at these IOUs! I have generated a 20% annual return on your investment." You are very pleased, and pay me an enormous commission.
Now I've got a big stack of IOUs, so I use these "assets" as collateral to borrow even more money, which I lend out to even more people, or sell them to others like myself who do the same. I also buy insurance to cover me in case the borrowers default -- and I pay for it with those self-same IOUs! Round and round it goes, each new loan becoming somebody's asset on which to borrow yet more money. We all rake in huge commissions and bonuses, as the total face value of all the assets we've created from that initial million dollars is now fifty times that.
Then one day, the first batch of IOUs comes due. But guess what? The person who scribbled his name on the IOU can't pay me back right now. In fact, lots of the borrowers can't. I try to hush this embarrassing fact up as long as possible, but pretty soon you get suspicious. You want your million dollars back -- in cash. I try to sell the IOUs and their derivatives that I hold, but everyone else is suspicious too, and no one buys them. The insurance company tries to cover my losses, but it can only do so by selling the IOUs I gave it!
So finally, the government steps in and buys the IOUs, bails out the insurance company and everyone else holding the IOUs and the derivatives stacked on them. Their total value is way more than a million dollars now. I and my fellow entrepreneurs retire with our lucre. Everyone else pays for it.
This is the first level of what has happened in the financial industry over the past decade. It is a huge transfer of wealth to the financial elite, to be funded by US taxpayers, foreign corporations and governments, and ultimately the foreign workers who subsidize US debt indirectly via the lower purchasing power of their wages. However, to see the current crisis as merely the result of a big con is to miss its true significance.
Here's the whole essay.
Here's the first part:
Suppose you give me a million dollars with the instructions, "Invest this profitably, and I'll pay you well." I'm a sharp dresser -- why not? So I go out onto the street and hand out stacks of bills to random passers-by. Ten thousand dollars each. In return, each scribbles out an IOU for $20,000, payable in five years. I come back to you and say, "Look at these IOUs! I have generated a 20% annual return on your investment." You are very pleased, and pay me an enormous commission.
Now I've got a big stack of IOUs, so I use these "assets" as collateral to borrow even more money, which I lend out to even more people, or sell them to others like myself who do the same. I also buy insurance to cover me in case the borrowers default -- and I pay for it with those self-same IOUs! Round and round it goes, each new loan becoming somebody's asset on which to borrow yet more money. We all rake in huge commissions and bonuses, as the total face value of all the assets we've created from that initial million dollars is now fifty times that.
Then one day, the first batch of IOUs comes due. But guess what? The person who scribbled his name on the IOU can't pay me back right now. In fact, lots of the borrowers can't. I try to hush this embarrassing fact up as long as possible, but pretty soon you get suspicious. You want your million dollars back -- in cash. I try to sell the IOUs and their derivatives that I hold, but everyone else is suspicious too, and no one buys them. The insurance company tries to cover my losses, but it can only do so by selling the IOUs I gave it!
So finally, the government steps in and buys the IOUs, bails out the insurance company and everyone else holding the IOUs and the derivatives stacked on them. Their total value is way more than a million dollars now. I and my fellow entrepreneurs retire with our lucre. Everyone else pays for it.
This is the first level of what has happened in the financial industry over the past decade. It is a huge transfer of wealth to the financial elite, to be funded by US taxpayers, foreign corporations and governments, and ultimately the foreign workers who subsidize US debt indirectly via the lower purchasing power of their wages. However, to see the current crisis as merely the result of a big con is to miss its true significance.
Here's the whole essay.
Thursday, October 9, 2008
Thank goodness Congress is protecting the children
from DownsizeDC:
On September 17, the House passed the "School Safety Enhancements Act of 2008."
My first thought was, "The DC Upsizers are at it again!"
My second thought was that the Constitution gives Congress no authority over public safety, except on federal property. This power is left to the states.
But even aside from this, the bill implies something distressing -- that state and local governments are incapable of preserving public safety without Congressional help. But if the states really lack the will and competence to keep schoolchildren safe then they must also be incapable of governing at all. This would imply that, but for Congress, our country would be a nation of 50 Somalias.
This just isn't true.
But when you read the bill, you realize it isn't about school "safety" at all.
The bill expands an already-existing (and unnecessary) grant program for local governments to install metal detectors on school grounds. The bill increases the funding from $30 million to $50 million per year. Worse, it specifically expands the program to include funding for "surveillance equipment."
This, on top of Real ID, Animal ID, TWIC, warrantless spying . . . Perhaps if the younger generation are always being watched at school, they'll get used to it and won't mind the same on the streets, at their jobs, or in their homes.
Do you want to know how your Represenatitive voted for this atrocity? Too bad. Congress couldn't be bothered with a roll call vote; it passed under "suspension of the rules" by voice vote. (Somehow, though, they did find time for a roll call vote on whether to name a post office building after Theodore Roosevelt.)
On September 17, the House passed the "School Safety Enhancements Act of 2008."
My first thought was, "The DC Upsizers are at it again!"
My second thought was that the Constitution gives Congress no authority over public safety, except on federal property. This power is left to the states.
But even aside from this, the bill implies something distressing -- that state and local governments are incapable of preserving public safety without Congressional help. But if the states really lack the will and competence to keep schoolchildren safe then they must also be incapable of governing at all. This would imply that, but for Congress, our country would be a nation of 50 Somalias.
This just isn't true.
But when you read the bill, you realize it isn't about school "safety" at all.
The bill expands an already-existing (and unnecessary) grant program for local governments to install metal detectors on school grounds. The bill increases the funding from $30 million to $50 million per year. Worse, it specifically expands the program to include funding for "surveillance equipment."
This, on top of Real ID, Animal ID, TWIC, warrantless spying . . . Perhaps if the younger generation are always being watched at school, they'll get used to it and won't mind the same on the streets, at their jobs, or in their homes.
Do you want to know how your Represenatitive voted for this atrocity? Too bad. Congress couldn't be bothered with a roll call vote; it passed under "suspension of the rules" by voice vote. (Somehow, though, they did find time for a roll call vote on whether to name a post office building after Theodore Roosevelt.)
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