Monday, September 29, 2008

I reiterate, this is not a bailout...

I said this to a friend today, and I repeat myself here: Today, I felt like the man holding the "World is Ending" sign while the world ended around me, feeling vindicated but just as dead as everyone else.

Today's massive stock market sell off is the reason we need the liquidity injection: there is no other sane solution.

Complain all you will about "your money" or "tax payer" money, but when 50% of the population is invested in one way or another, when the market tanks 10%, you will definitely be hit.

And think, that was just one day without a bailout plan. Imagine days upon days.

The longer we go without a bailout, the longer the recession will be and the costlier the bailout will be.

Remember, when Wall Street fails, the first to get fired is Main Street. Don't believe me? Consider all the ibankers that were kept by Barclays. Now point out to me the Lehman Brothers janitor that kept his job?

Inject liquidity now or risk full economic collapse. To all the "Capitalism" screamers, remember what pure capitalism requires: a stable economic environment.

And to all of you screaming "The public doesn't want it", I have two things to say:

1) As I said already, Main Street and Wall Street are the same street, only that Main Street people have significantly less money. If Wall Street gets hit, Main Street gets fired first

2) Financial policy should never be left in the hands of people who don't know economics or finance. Just like you leave surgery to doctors, you should leave financial policy to financial professionals.


Les@SpillingBuckets said...

I agree - but I don't think a cash injection was necessarily the best or only answer. I think there are several other solutions that are feasible and more palatable to "main street".

Today the stock market is up almost 400 points!

FoodMerchant said...

Agreed that we need to stabilize the markets and the economy. We can disagree all the time as to whether it's a bailout or not but I agree action is needed. But...

2) Financial policy should never be left in the hands of people who don't know economics or finance. Just like you leave surgery to doctors, you should leave financial policy to financial professionals.

This point is moot isn't it? The same people who know finance and economics HAVE been in charge of the economy the last two years, and that did not necessarily stop the crisis and problems from happening, did it? In a democracy that derives it's power from the people, everyone has a right to express their opinions with the goal of safeguarding their intreasts. Just because we have experts does not insulate the economy from mistakes. Just because people are not experts does not invalidate their opinions.

Finance Guy said...

#1) I use my doctor analogy again: When the doctor makes their seldom mistake, do you say, "Leave doctor, we'd like the bum off the street to try now"?

No, you let the doctor continue, knowing he has the expertise.

Again, I say, insert finance professional for doctor.

#2) We live in a republic

#3) Non-experts opinions regarding matters requiring years of study is invalid. Try this one in court: "Yes, your honor, while I hold no degrees in criminal investigations, I once saw 10 episodes of CSI in one sitting and would like to tell you what I think happened."

Freedom of speech means you get to express your thoughts. But it doesn't mean you get to participate in every decision.

#4) What kind of financial analyst are you foodmerchant? So far, you are the only finance professional (according to your profile) that I have met that believes in no bailout.

#5) Les, you are seeing a small bounce back from the markets today. I hope your 401(k) did something similar.

FoodMerchant said...

You don't take critism very well do you? If you read my answer, I started by an agreement that a bailout was needed. So your comment that I'm the only financial proffesional that doesn't want a bailout leads me to believe you either don't read well or are simply tunnel visioned.

Just because you have an MBA does not make you an expert on this matters. Others have valid opinions just like you do. This is your blog and you can say whatever yu want but that does not mean you know everthing. And if you really want to know, I'm a Corporate Financial Analyst and a student at Chicago Graduate School of Business. Not a top 20 school. So don't go there dude. That's a non starter for you!. I figured being a business person you would be open to discussions and debates What a waste of time.

Finance Guy said...

I AM having a debate with you.

I guess what I didn't realize was that you were debating with me a minor aspect (who should implement/who should create plan) rather than my major point (it is necessary).

No where have I expressed my opinion is the only valid opinion. Nor do I care where your degree is from or what rank that school is from. I haven't stated it and I don't imply it.

If you are indeed qualified to discuss the issue, please discuss the issue. Telling me the experts got it wrong so go to the lay people for answers just doesn't make sense.

Experts and lay people are all human. They make mistakes. However, experts have the benefit of making those mistakes less often in their field of study. That's why we call them experts, and not perfect or God.

So now to address the ad hominem attack of my character/reading skills/vision, I refuse to engage in it. I asked what your profession was to gauge the level of distrust for the financial profession.

Finally, I raised valid questions and analogies to situations which you have not responded to.

I don't need to win this debate, but I will certainly defend the fact that I wish for a professional and well-educated debate.

NJ EMS said...

I predicted this crash in my post.Go and take a look.I reprinted it again.