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Politics : Formerly About Advanced Micro Devices
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To: tejek who wrote (366335)1/10/2008 4:58:06 PM
From: Road Walker  Read Replies (2) of 1586427
 
Finally, I don't understand why we have to go into a recession. Booms and busts are not "natural"; they are man made. There isn't a sin we need to pay for by experiencing a recession. A small group of dishonest people created the subprime problem. I think we are smart enough to find a creative way to get out of it without going through the horrific pain of a recession. Recessions do not have to be like the rain; they don't have to occur on a regular basis. The Clinton era proved that thesis wrong.

The economy is the sum of the psyche of all the participants. Risk and reward is always there, but with varying degrees of confidence on either side. If not for recessions, the risk side dims so much that we get illogical use of debt, as has been demonstrated recently. When you try to cure that by loosening debt even more, you are throwing gasoline on the fire. Eventually the bad actors have to be punished... otherwise there is no risk and everyone becomes a bad actor.

Bad mortgage debt is just the beginning. Bad credit card debt is following close behind... and if things break really bad then the governments twin deficits come into play. All that debt needs to be repaid, it never goes away. And the only way to pay back years and years of bad decisions is with years and years of extreme austerity and lower standard of living.

If we put it off... when we finally pay the piper it will be even worse.

The Clinton years were a fluke. You had the triple build out of cell phones, PCs and the Internet. Huge natural stimulus. Happens once or twice in a lifetime if you are lucky.

Why do recessions have to happen? Human nature.
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