The Next Bubble?

http://www.theonion.com/content/news/recession_plagued_nation_demands

Here's a solution.

How about the government staying out of the market, housing, and everything else they are meddling in and let the markets correct themselves.

Hi SF,

As it very often does, the Onion makes a great point.

I have a Master's Degree from a second-rate university in a non-economics field, and I knew 10 years ago that housing was going to collapse. I'm not saying that to toot my own horn but just the opposite, to show that it didn't take an economist or an expert to know that the housing market could not sustain itself as it was going.

I don't believe in the American dream (I think someone can work really hard and still die broke) but I also don't believe in "get rich quick" schemes, which real estate had become. People were buying houses "certain" that they could flip them. Even when I bought my own house last November, that late in the game (and for half of what I "should" have paid for it), my friends were telling me to flip it.

It seems to me that what this nation desperately needs is a repentence of both the spiritual and the practical. Leaving aside the former, we need to get back to the idea that money is earned through labor, often very unpleasant labor, and when it is not, it is earned off of the backs of other people laboring. We can't just expect money to fall from the sky and economic prosperity is not our birthright.

SheikBen wrote:Hi SF,

It seems to me that what this nation desperately needs is a repentence of both the spiritual and the practical. Leaving aside the former, we need to get back to the idea that money is earned through labor, often very unpleasant labor, and when it is not, it is earned off of the backs of other people laboring. We can't just expect money to fall from the sky and economic prosperity is not our birthright.

A-greed. But that's what fuels America....greed and risky schemes. Obama said, "After 9/11 Bush told us to go shopping". As much as I enjoy the rhetoric, the weird thing is Bush was right. Without us pissing away our money on trinkets the American economy would collapse.

Bring on the next ponzi scheme!

Perhaps, but shouldn't that be sending up a big red flag? If we have to survive by selling cheeseburgers and Bratz dolls to each other, doesn't that indicate that somewhere we went horribly, horribly wrong?

SheikBen wrote:Perhaps, but shouldn't that be sending up a big red flag? If we have to survive by selling cheeseburgers and Bratz dolls to each other, doesn't that indicate that somewhere we went horribly, horribly wrong?

Yes. It appears as though Capitalistic greed will eat itself.

I don't think the problem is capitalism, but rather capitalism devoid of any corporate and public morality. I don't think it can work unless the leaders of corporations and/or the consumers act in a willingly responsible way.

What I can say is that a defining characteristic of the command economy is shortages.

It's also capitalism devoid of government oversite. The entire housing problem could have been prevented simply by the restraining the types of loans banks made, specifically interest only loans and 107% loans. How many of the current foreclosed homes had those types of loans?

Sure, Aaron, and the irrepsonsible banks need to be the ones "taking it in the shin" rather than the government bailing out people who made risky investment decisions.

I agree Mike. The government shouldn't have bailed out Baer Sterns, Indymac and they certainly shouldn't be propping up Fanny Mae or Freddie Mac.

Here's the thing about housing. No matter how bad it gets, those homes that are now bank owned are not just going to disappear. Sooner or later, the market will reach a bottom and someone's going to make a killing. As Sam pointed out, it likely won't be an everyday joe but someone certainly is going to make a whale of a lot of money.

Aaron wrote:Here's a solution.

How about the government staying out of the market, housing, and everything else they are meddling in and let the markets correct themselves.

But then further down you say that a lack of oversight was the problem. Do you want the Government involved or not?

There's a difference in oversite and control and involvement, don't you agree!!!!!!!!!!

SheikBen wrote:I don't think the problem is capitalism, but rather capitalism devoid of any corporate and public morality.

But you repeat yourself.

No I don't, Zig. Capitalism is an economic system but it does not preclude moral and corporate responsibility among the players.

In fact, I dare say that capitalism can only work when people act responsibly (we see in the housing crisis what irresponsible activity leads to) but that communism has a perfectly awful track record everywhere beyond small, intentional communities (and indeed I am all about communism at that level).

Aaron wrote:There's a difference in oversite and control and involvement, don't you agree!!!!!!!!!!

But you say "Government should stay out and let the markets correct themselves"; apparently by the Government gaining oversight? Stay out or get in?