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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (89044)	10/24/2008 12:29:30 PM
From: Elroy Jetson	3 Recommendations Read Replies (3) \| Respond to of 116555

As I told you already, panic is an emotion you can choose to feel or not in any range of circumstances. If you choose not to panic while falling to you death, it changes nothing. A childhood lived under a dictatorship may teach you to believe otherwise, but facts are facts. Losses can be real or imagined. A.) Losses are real. In this case we have six years of losses which are painfully real. Since the collateral for much of the leverage is nearly non-existant, this causes a liquidation of leverage. This in turn forces others to sell their assets and pay back their leverage. There is no quick snap-back from this situation as the losses must be slowly earned back. B.) Losses are imagined. Circumstances often described as a "financial panic" are based on imagined losses which do not in fact exist. These situations are short-term in duration, something like 1987. One person's "losses" are offset by the gains of another - nothing was lost. As the system and assets are still intact, asset prices recover quickly. You imagine we're in a panic, and you're simply wrong. The losses accumulated over the past six years are real and will take years to earn back. The losses are simply losses. Attempts to hide the losses with a TARP, or a $15 trillion socialization of the mortgage market in the style of McCain, doesn't change the reality of the situation. .