Originally Posted by Mike Dunbar
Scott,

I'm no economist either, but I agree with almost everything you said.

I only disagree with two points. One where I disagree is that the banks, lending institutions, and speculators most certainly made money. They made money by reselling the worthless paper. They sold that stuff all around the world. My mortgage has gone through five different companies since we bought our house. Along with my mortgage which is good paper (we can afford our house and have never once in 20 years been late with a payment), they sold many bad loans (people who couldn't afford the houses and are late on their payments). Then there were the short sellers, they've made a bundle on this. Of course now, the smart ones, the smart real estate flippers, builders, bankers, traders, and speculators, have cashed out. So who pays for it? The poor? How do they pay for it?...they're poor! No, it's the 401K.


You are right, of course, Mike. I remember sitting in a waiting room last summer reading an article about how these debts were being sold to foreign investors and how it was going to cause them serious problems. If I was such an investor (and I might be - I don't know every detail of my mutual funds) I would be really pissed. Initially, I'd be pissed at others - but finally I'd be pissed at myself for taking my eye off the ball. smile

"Let the buyer beware" is something I suspect we could also agree on smile

Given that attitude, I should be totally against any bailout. But if it can be done in such a way that we incur little risk (with a correspondingly small but non-zero rate of return) and open the credit lines a little, I would be for it.

A cash society seems appealing but I'm not sure we would be able to have as high a standard of living as one in which we had responsible credit. If a farmer had to hoe his field by hand for twenty years before he could save enough for a tractor, we lose out on all those years of productivity he could have had if he could have gotten a loan for it. Okay, maybe not a current example but an analogy... smile

Yeah, the stock example was undoubtedly too simple. Just meant it to be a snapshot in time. Yes, the stock will change value but then so will the money... smile

Scott

Last edited by Scott Campbell; 09/30/08 03:21 PM.
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