Iceberg, re: economic effects
<...Personal bankruptcies are at an all time high. But what
does this have to to with a trillion-dollar U.S. economy?...
what we Americans do not contribute as a result of personal
debt, is perhaps only a small part of the total picture...>
Remember the 'money multiplier' effect from econ class. The
'$1' from my client turns into '$1' to my grocer (for soup),
which turns into '$1' to his landlord. Those '$3' depend on
my client being able to pay me the $1 (instead of declaring
bankruptcy because he bought extravagant soup with his Visa).
-OR- That extra dollar I must pay in interest to my good
'friends' at Citibank Visa is one more dollar that I 'could have'
used towards IOM shares - which KE 'could have' used for
his advertising budget, which 'could have' sold 1 more Jaz drive,
which 'could have' returned a profit to me so I could go to
my grocer and get a can of soup.
<...This seems (to me) to be a one-sided argument...>
Yes, but even in in '29, with the 'less-than-light' speed of
communications, all the world went into a serious depression,
due to the dependancy of global economy. And in '87, markets
all over the world suffered...and it didn't even start with us!
A bunch of Fidelity arbitragers saw the London market (8 hours
ahead) and panic ensued.
Furthermore, your previous statement about 'derivatives' being
a safeguard is the very thing that put Orange County, CA in a
financial tailspin. And the 'safeguards' to shutdown the market?
Fortunately, we have not had the type of meltdown that would
truly test the validity of these procedures. But what if,
tomorrow, you really wanted to get your money out of the market
at, say, 2:45pm?
As for my 'fascinating' comments - that may be overstating the
case. I'm just a kid that took some Econ courses too many years
ago, and since I don't apply these to my everyday business, I
may have forgotten quite a bit about how it all works. You would
certainly have a memory more fresh than mine. I think I'll go
have some soup now. And, BTW, "What is the ticker symbol
for Campbell's?"
-MrB |
