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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: skinowski who wrote (114633)12/5/2008 12:25:43 PM
From: ChanceIs4 Recommendations  Read Replies (4) of 206347
 
>>>one of the two things will happen - either we'll have socialism, or the public will learn that the government cannot be allowed to mess with the economy.<<<

I understand and respect your POV. I think that we will oscillate ad infinitum between the two poles.

Why???

I love to go talk to the "man in the street about the economy." Sometimes I like to set them up to make a point.

For example, in the past when discussing options with someone I will ask them if they have ever bought a put. They will invariably say no. Then I will ask if they have car insurance. They will invariably say yes. Then I will say that they have bought a put - and the little light goes on. If they have been bad mouthing derivatives, thy the light goes on a little brighter.

Yesterday's episode went like this. I was chatting up a medical doctor about our (a*&hole) SEC chair, Chris Cox. This person didn't like the concept of shorting. So I said....what happens when the FED wants to raise interest rates. Blank stare back. I said....you know...open market operations. Blank stare back. I said...the FED sells Treasuries into the market thereby increasing the supply of Treasuries, dropping their price and requiring a higher yield/interest rate to compensate. Oh. The light goes on. I then said, what is the difference between the FED shorting Treasuries to manipulate interest rates and a hedge fund shorting Lehman to take away the car keys from the teenager who comes in late on Saturday night after a reckless drinking binge. Light goes on a little more. Finally I said...Please be frank with me. I want to know if you really understand central banking because I think that most of the public doesn't, and it is important for me to get a sense of the layperson's frame of mind. The Doc graciously admitted that he was rather clueless.

The point is that a lot of very smart, well educated people don't know squat about basic economics.

Hillary is running around saying that we have tried competitive markets and they just don't work. Jimmy Rogers would say that if the government wasn't constantly interfering with the markets then they would work. He especially like to attack the LTCM bailout - saying that Bear and the like would have failed back then and they wouldn't have been around to cause today's crisis.

So we had a totally managed and stagnant economy under FDR. We started getting some loosening under Reagan. Of course we did get the S&L crisis then. Now we are headed back to Soviet style central planning. Back and forth. Back and forth.

Query for Messrs. Roubini and Obama, who both favor a car Czar. Where are you going to find this Czar??? Surely not in Washington. Who in Washington has ever seen a lathe, drill press, or steel furnace. Are you going to get him from Detroit??? Perhaps Honda or Nissan?? All of those folks are in a heap of hurt. The Germans/Mercedes couldn't fix Chrysler when they had it. They lost their fannies and really knew what they were doing. They had their own skin in the game as opposed to the car Czar who will only have the taxpayers' money with which to play.

When Detroit is finished imploding then just maybe we will be rid of centrally managed industry. But not until the Docs understand central banks and the wonders of shorting.
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