Djcnor’s Weblog

Crash Postponed or Crash Averted?

Posted on: December 12, 2008

When I went to bed last night, the top news was that the Senate had turned down the auto industry. Dire predictions abounded. GM would go down before the end of the month. Others would surely follow. And the turn down coupled with the predictions would cause the stock market to plumet. The crash, the real crash, the big one, would happen today.

This all sounded a bit familiar. Somehow it took me back to my childhood. What was it| Ah yes.

Do parent’s still  tell their kids the story of Chicken Little? Henny Penny? Turkey Lurkey? Goosey Loosey? Remember? The sky is falling! The sky is falling! Remember what happened to them?

I couldn’t remember that part, so I looked it up. Good old Wiki.

http://en.wikipedia.org/wiki/The_Sky_Is_Falling_(fable)

Why of course! They all headed off to see the King, and along the way, they ran into Foxy Loxy.

Wiki was very interesting. Apparently, there are various endings with various morals. Sometimes Foxy Loxy eats all or most of then. Sometimes Chicken Little gets away. Sometimes they make it to the King. And sometimes, even, the sky does fall, and it kills Foxy Loxy.

The US seems to be working its way through the story over and over again, trying out different endings.

This time, it seems. The whole panicky crowd made it to the King after being rejected by the King’s men. And the King saved them. This time.

But who plays Foxy Loxy? You almost wish it were FOX News, don’t you, and maybe it is? What is the reportage of all this scary news doing for Fox stock?

Who among us will get eaten?

I’m no economist. I would not have approved the first bailout, or using any of it for auto companies either. If i were to bail out anyone, it would be the victims of the predators, the Foxy Loxy’s, not the predators themselves.

I picture the economic market as rather like a forest. When a really big tree falls, yes, it takes a number of smaller ones with it. But it also opens the sky and makes possible  a bigger number of small successes. Those starter businesses who take over the opened markets are likely to offer better values and be market driven, rather than driving the market, making products more suitable for present conditions.

If you assume they’ll be less efficient at first, then they’ll need more employees than the companies they replace.

I say, let the big trees fall, keep an eye out for the local excellers who rise above the undergrowth, and invest in them. In the meanwhile, minimize the suffering by bailing out the folks poor enough to spend every cent you give them in the  greater market. Specify, even, that none of the money given out is to go to credit cards or loans with excessive percentage rates.

Some economist please tell me what’s wrong with my model, please.

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1 Response to "Crash Postponed or Crash Averted?"

I’m no economist, but the folks who presided over the bailout debacle were. That tell you anything? I agree with what you say. We need to do something. http://www.SandySays1.wordpress.com

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