Stock Market Information

Let’s face it, not very many people are happy about the government bailout. The fat cats on Wall Street are not happy about being made to look completely incompetent and caught so horribly flat footed that many firms that withstood the Great Depression are now bankrupt. Washington isn’t happy that they have to shell out $700 billion to firms that obviously messed up so badly that they’re threatening to unhinge the economy. Taxpayers aren’t happy that their money is in all likelyhood going down the drain.

The question that remains though is whether we face the next Great Depression if the government doesn’t do anything. Everyone expects a government reaction of some kind, but what it will be exactly? No one really knows. Ron Paul recently weighed in with his own view, however:

You have to liquidate those mistakes. Those mistakes were made due to monetary policy. So you have to allow the market to adjust prices downward. And that’s what we’re not allowing to do.

If there are too many houses and the prices are too high, the sooner we get the prices down to the market level, as soon as we quit trying to encourage more housing — this is what we’re doing. They’re trying to stimulate houses and keep prices high. It’s exactly opposite of what we should do.

So, we should get out of the way and not buy up bad debt. There’s illiquid assets, but most of those are probably worthless. They’re mostly derivatives. And we’re sticking those with the taxpayer. So we have to recognize that the liquidation of debt is crucial. And if we did that, we would have tough times, there’s no doubt about it, for a year. But if we keep propping a system up that’s not viable, we’re going to have a problem for decades, just like we did in the Depression. That’s what we’re on the verge of doing.

Feel free to drop any thoughts or comments of your own, I’m always open to feed back!