And you may ask yourself
What is that beautiful house?
And you may ask yourself
Where does that highway go?
And you may ask yourself
Am I right? …am I wrong?
And you may tell yourself
My god!…what have I done?
-Talking Heads
The Dow ended its day at its lowest point in eleven years.
So, how did we get here? There is no one simple answer. But part of it lies with not taking the basics of economic theory seriously when they clash with your wishful preconceptions.
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Wow…..just wow.
I bet it was fun to shout him down at the time and laugh at his “wacky ideas”, but I wonder how people like Ben Stien feel about that clip now.
Ecxcellent post
This is the same Peter Schiff who recently declared: “In 1980, when the U.S. economy was last in serious trouble, Ronald Reagan offered the correct diagnoses that government was the problem and not the solution. His message resonated with voters, propelling him into the White House to implement an agenda of lowering marginal tax rates, reducing government spending and business regulations, restoring sound money, abolishing entire government departments, and basically allowing free market vibrancy to unshackle an economy burdened by big government. Though in practice much of the Reagan revolution never materialized, at least in theory his basic premise was sound.
In contrast, the country has now hitched its wagon to the views of Barack Obama. We don’t know much about what he truly believes about economics, but the little that we do know is not encouraging. Obama has repeatedly heaped the blame for the current crisis on the excesses of unregulated capitalism and the greed of the wealthy. For him, the free market is the problem and government is the solution.
Despite the absence of Reagan’s promised spending cuts, the economy generally did well during his presidency (The growth would have been more genuine if the cuts had been delivered). However, Obama’s policies will immediately make the current situation worse and the nation will suffer severely as a result. Rather than a sharp recession at the beginning of his term followed by a significant expansion (as occurred under Reagan), the recession that Obama inherits will be far worse when his first term ends.”
This market crash is presenting trading and investing opportunities of a lifetime for the sagacious, brave person. This de-leveraging is nothing compared to the 1873 crash when everything was wiped clean. Perhaps that is what is needed now.
Jeff
Gavin,
I beg to disagree. My models indicate that the economy will be in better shape when Obama leaves office than it is right now despite higher taxes and whatever. 93% of the de-leveraging should be done within the next 5 quarters, and we might feel some residual pain for a couple of quarters after that.
Jeff
I wonder, Gavin, if in a few years we’ll have another post highlighting all of the doomsayers opinions that can’t find a positive thing to say about Obama’s economic plans (see your post for an example) and have fun contrasting it with the then current prosperity and stability?
Now, I have no idea whether the economy will recover fully within the next 4-8 years, but your absolute certainty that the economy will completely disintegrate in the near future is very similar to the Fox pundants’ blind optimism about the health of the financial sector in the clip above.
Well, Schiff does have a reputation for doomsaying. A broken clock does tell the right time twice a day.
Still, the clip that begins ~2:30 is indicative of just how blind the pundits were. Laughing at the concept of supply and demand…
Don’t know if I wasn’t clear. The entire quote is Schiff. I merely present it to indicate that correlation (of an opinion, in this case) with a set of events does not indicate that the overall pattern of thinking that shaped it is meaningful.