I’m not one to take a one day sampling of the stock market and make a “see-I-told-you-so” snap reaction. Â It’s pretty unreasonable to think what happened in Congress on Friday would have much of an impact today–the assumption of the passage of the bailout was already priced into the market. Â But the reaction to today’s drop is fast and furious, so I thought I’d join in with some snark.
Dow dips below 10,000—Maybe the market realized over the weekend that its new business partner is the US Federal Government?
Should the Fed cut interest rates?–That sounds like a good idea…let’s rig the system so that we canÂ borrow our way out of this. Â Why didn’t someone think of that before?
Global markets affected by the credit crisis–Duh. Â Easy fix–just set up some sort of central banking system. Â Better yet, let’s set up several.
The biggest irony of all–we continue to look to the people who cause problems to solve them and wonder why things don’t get better. Â My favorite phrase is being thrown around by fear mongers is “uncertain economic times”. Â When have we ever lived in certain economic times?
From Fast Company:
“The idea that the market is always right is a crazy idea. Laissez-faire is over.”
Well, until the shit hits the fan, maybe. But it can’t be stopped forever.
Here are a few observations I’ve made in my few years…
1) Unregulated markets are illogical, emotional, impulsive, abusive, and reactionary…in the short term. But in the long term they are rational and efficient.
2) Government is smart, able, and well-meaning…in the short term. But in the long term it is idiotic, inefficient, and oppressive.
3) People who act based on fear, emotion, and good intentions and only think in the short-term tend to pay for it heavily in the long term. Almost always.
Short term thinking got Barry Bonds the home run record. It probably shriveled up his nuts and took a few years off his life in the long term.
Short term thinking got people to buy houses they could afford to pay for while their adjustable rate was low. It caused them to get foreclosed on in the long term.
Short term thinking will give institutions that made bad
loans investments the ability to make more loans investments. In the long term, well, I guess we’ll see, won’t we?
Maria Bartiromo was my big crush at the turn of the century.Â My daily schedule was to get up really early to work out, take a nap, and then get up to watch her for the opening bell at the NYSE on Squawk Box.Â She’s super smart, and not too tough to look at either, so I didn’t have much trouble staying awake to hear what she had to say.Â A couple of naps later and I could check her out again in the afternoons on Street Signs.
Then the .com bubble burst and I had to get a real job.Â Oh well.
Last night Maria Bartiromo hosted a special on CNBC on America’s Oil Crisis.Â There were a few really interesting points and ideas on why we are in the situation we’re in right now and what’s going to happen in the future with oil and other energy sources.Â For instance,Â I was surprised to learn that George Bush doesn’t get up early every morning to set the prices at the pump of each and every gas station in the United States.
So who is to blame?
Speculators, for one, are getting a big part of the blame for creating something of an oil bubble.Â I didn’t realize that you only have to come up with 5% of the purchase price on oil, and a lot of folks are saying that margin should be raised.Â I’m good with letting some speculators get stuck when the bubble (if there really is one) bursts myself, just so long as they aren’t going to get bailed out for borrowing money to purchase over priced oil.
Where does the government’s share of the blame come in?Â No real energy policy, disallowing drilling in the US, continuing to devalue the currency and weaken the dollar.Â I guess those could have some effect, huh?Â Â Now there are pending threats of taxes on windfall profits on oil companies to boot.Â Talk about some incentive to increase production–just tell the producer that you’ll charge them more to allow them to do the work.Â Makes total sense.
It was interesting that 15% of the viewers polled put the blame on the consumer for not changing consumption habits.Â It makes me wonder–what is the price per gallon of gasoline that would make you carpool?Â Downsize in car?Â For me that was the $2 mark in 2002.
Bartiromo, the naughty capitalist that she is, slants a lot of her questions in favor of letting markets work these things out, but there were plenty of people interviewed on the show who are in favor of heavy government intervention, hinting at times that gas should be subsidized.Â I guess we have a right to state provided gas now too?