30
Sep
08

Signs of the apocalypse…

No, not the collapse of the 700 billion dollar bailout, not the record single day drop in the stock market, the fact that I agree with something on lewrockwell.com! I don’t agree with him across the board here, but in essence I agree that the economy of the US needs to be allowed to collapse and recover on its own, and that the bailout was a hideously bad idea. I do think that plowing 700 billion into the economy at the bottom could be a good thing… but not at the top.

This is like engineering. The US has noticed that the economy is not stable, so they plan to start throwing support at the top of it. In engineering terms this is completely insane. Imagine, if you will, that you have noticed a building is showing signs of collapsing. You decide, in your infinite wisdom, to start adding bracing, extras supports, some new wall materials, but you are adding it all to the twentieth floor and above. The collapse of the building might be slowed slightly (the floors above twenty are taking the most wind…) but the collapse will still happen, and it will be way worse when it does (after all, all of that extra material needs to come down now…). In engineering you would make a decision… either fix the support of the building from the bottom up or bring the damn thing down, and that is the choice that is facing the US at the moment. To shore up the building they would need to start forgiving consumer debt left right and centre, buying people out of their mortgage or assuming the burden of it while allowing the owners to keep it, paying off credit cards for the average person, etc. That would re-introduce liquidity into the economy, put people into the position of paying off some of their debts (which would in turn shore up the financial industry) and leave the economy on sounder footing. It might not be enough (I don’t think it would be given the realities of peak oil) but it would be a hell of a lot better than what the US is trying. The other sane alternative is to simply say “This is bad paper, and there will be no bailout at all” and let the whole thing crash down… after which it can start to rebuild.

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2 Responses to “Signs of the apocalypse…”


  1. October 8, 2008 at 9:00 pm

    Agreed. Throw it at the bottom.

    There are all kinds of reasons why we won’t, though, most of which could be lumped together under the difficulty with which a camel can get through the eye of a needle.

  2. October 9, 2008 at 5:04 pm

    Yep… and the last few days have just proved that point. Of course, talk like that is socialist!!! giving money to people based on need? Never! Even if it turns out that is the best way to fix the economy.


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