How We Can Fix a Crisis We Did Not Create
The discussion around this current crisis is really interesting to watch; both on the mainstream media and through more niche sites such as motley fool.
I sympathize with those saying there are many with vested interests with far more to gain from a bailout than you do from a market crash. But this is now a confidence issue, and I do believe the governments need to act - whether through this support in US, or the UK government's bailout of Northern Rock, and now Bradford & Bingley.
Far more knowledgeable people than me are working this through, and good luck to them.
But the moral hazard issue is strong here, and previous entries here and on many other websites have highlighted the asset bubble risks, and the greed we've seen on display.
I want our governments to help shore up the confidence because that is of benefit to everyone, and in particular those who are most economically vulnerable. But they also need make visible many of the business leaders who allowed risks to be hidden through complex and very 'clever' products developed, marketed and sold by their own firms.
We've been stretching our finances, through perceived lower risk for many years now. This is clearly not a solid economical base, if it cannot withstand asset prices which have gone back to those of a year or two ago. Current home prices in cities such as LA, Chicago, London and the stock indices themselves have hardly crashed in my view.
Could the worst result be government bail outs now, resulting in a holding or increasing of current asset prices in the next year? We'd all feel better, but would we be postponing further corrections?
The discussion around this current crisis is really interesting to watch; both on the mainstream media and through more niche sites such as motley fool.
I sympathize with those saying there are many with vested interests with far more to gain from a bailout than you do from a market crash. But this is now a confidence issue, and I do believe the governments need to act - whether through this support in US, or the UK government's bailout of Northern Rock, and now Bradford & Bingley.
Far more knowledgeable people than me are working this through, and good luck to them.
But the moral hazard issue is strong here, and previous entries here and on many other websites have highlighted the asset bubble risks, and the greed we've seen on display.
I want our governments to help shore up the confidence because that is of benefit to everyone, and in particular those who are most economically vulnerable. But they also need make visible many of the business leaders who allowed risks to be hidden through complex and very 'clever' products developed, marketed and sold by their own firms.
We've been stretching our finances, through perceived lower risk for many years now. This is clearly not a solid economical base, if it cannot withstand asset prices which have gone back to those of a year or two ago. Current home prices in cities such as LA, Chicago, London and the stock indices themselves have hardly crashed in my view.
Could the worst result be government bail outs now, resulting in a holding or increasing of current asset prices in the next year? We'd all feel better, but would we be postponing further corrections?
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