Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: mishedlo who wrote (83389)	8/18/2008 3:10:23 PM
From: koan	Read Replies (3) of 116555

I am always amused by people complaining about politics being discussed. You run a good thread, are a good guy and I will always follow your instructions; but the logic of keeping politics out of economic discussions makes no sense to me whatsoever. Our economic situation is a sympton CAUSED by specific political decisions. These economic problems did not arise in a vacuum. Not pin pointing those decisions is like treating the sympton and ignoring the cause. It is exactly like treating lung cancer and ignoring smoking as the cause. In a way we end up discussing economics ephemistically. It is hard enough (no impossible) to figure out economics without taking political policy into consideration. E.g. in the 30's as you well know, the bank runs were caused by banks not being regulated. All politics. Once they were regulated (politics again) and deposits insured (politics) we had no problems for over 50 years. Then "someone/s" started deregulating commercial banks and allowing investment banks and hedge funds to operate without any regulation, or even oversight, (most American hedge funds are registered in the Bahamas I believe), and they ran amok. Now the American tax payer is paying for all of those unregulated banks and hedge funds by the fed protecting them 100% and rescuing them no matter what they did or what it cost the tax payer. To make matters worse the directors of those failed banks and hedge funds got billions in pay and bonuses which will be paid for with tax payer money and no one goes to jail. The CEO of Fannie Mae, I think makes about 20 million a year. Bonuses on failed wall street companies like bear stearns run into the billions. As well, keeping the fed funds rate at 1% (specific political decision) for a long time allowed pure thievery and irresponsible behavior by the banking industry. As you point out every day. Wars were fought with borrowed money and run "off book" (politics again), and trillions of dollars in revenue was lost by huge taxes cuts (according to the non partison Congressional Budget office) (political once again) and our deficts soared. So those "decisions" by whomever" and the combination of these "poltical" decisions have now threatened the very fabric of this nation's economic and maybe social stability. The causes of all of these debacles was political and nothing else. So the most important variable (politics) in the economic debacles we are now witnessing is the one subject which is not to be discussed. Economics is very complicated to understand and when we cloud reality with euphemistic conversation it makes it that much harder to figure out cause and effect. Cheers,

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