osewalrus (osewalrus) wrote,
osewalrus
osewalrus

Quick post re meltdown of financial markets.

About a year and a half ago, I posted this piece, http://osewalrus.livejournal.com/29563.html, on the possible meltdown of financial markets as increases in defaults triggered a tightening of money and a rise in rates.

What I always forget is how good the folks manipulating the money are at hiding this, delaying the inevitable, and generally making sure that all the suckers in the Ponsy scheme have ponied up before scooting off -- which, of course, makes the mess worse.

So now we are seeing a worse meltdown than I anticipated because I had not considered the impact of hedge funds and the drive over the past year and a half for private equity forms and M&A activity driven by cheap credit and easy money.

Libertarians who protest that regulation of lending practices and imposition of standards is paternalistic ignore these broader effects. (or, as Heinlien said of the Techno-elitists in "the Roads Must Roll" -- the complete interdependence of modern society appears to have eluded them.) The fact that I am going to end up living in a world created by irresponsible lending practices and the subequent crash of significant sectors of the economy because idiots wanted to wait for a "real problem" to emerge before acting (and refused to require the reports that would have spotted the problems in time for minor corrective action) irritates the heck out of me.

OTOH, I predict that economic uncertainty will continue to be the dominating theme in the 2008 and 2010 elections, as they were in 2006. We are reaching a point where too many people know others who have gone under economically, even if they themselves haven't, or who are riding damn close to the edge with an awareness that an unexpected fall down a flight of stairs can bankrupt you with medical expenses you can't hope to pay off on your current salary.
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