Ron Paul was right...
eekamouse
Posts: 267
Love is more important to me than faith.
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eekamouse
Posts: 267
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A friend of mine had just put one of his houses on the market for $525,000.
It was an old, run-down, all-around crappy looking 3 bedroom in a a typical middle-income neighborhood that he had paid a little more than $200,000 just two years earlier.
I said to him, "Man, I would never, ever pay a half million bucks for a crappy piece of shit house like this."
The thing of it was that people thought they were going to make big, big money selling off shitty homes with tons of inflated equity, which they did.
But, now it's all coming to a halt, and it's time this country gets used to that idea before it's too late.
http://forums.pearljam.com/showthread.php?t=272825
Honestly i'm not even sure why Fox would have him on like that.
It kinda blows the whole thing out of the water to let him go on about the truth like that.
One thing i will say though,
is i think old Ron is a little bit deluded himself with the size of this whole thing.
I mean, if he really thinks allowing a large portion of the largest banks and institutions to go under at the same time, flooding the market with distressed assets, is going to only cause a temporary one year "severe RECESSION", i have to say respectfully that he is off the mark.
The consequences of this bailout NOT passing WILL be ENORMOUS.
I'm not saying i'm for it, god knows i rant against the entire systems endlessly, and certainly i recognize that transfering the burden on to the dollar, and on to the tax payer, is simply delaying the problem (in SOME sense).
However in SOME other ways, this bailout DOES "work" to solve at least ONE of the big problems of the potential collapses, and that is that it pulls these assets off the market in an orderly fashion so that they don't all just hit the market and cause a massive price spiral and deflationary death drop.
Just my two sense.
I'd love to see the bill fail, just so we can finally see for once in history what a true deflationary collapse looks like, without intervention.
It would be fun to take notes on.
If I opened it now would you not understand?
There's no denying that.
for the least they could possibly do
Because what happens when you let the assets of the largest banks in this country (who are responsible for the great majority of credit issued in our country) drop like a rock in the open market, you are not only wiping out the value of ALL shareholders in those firms, you are also creating all sorts of counterparty concerns (which itself will be horribly deflationary), and on top of that you are going to shrink the available credit (CASH!) in the united states by some ridiculous sum of money, causing the the average business and man to be completely fucked.
And if all that wasn't bad enough, the effect these crashes will have on the stock market will drop it so low, and freak SO many large institutions out, that they will yank ALL their money from the equity markets so fast, and reallocate in to commodities so fast, that things like oil, wheat, corn, gold, and sugar will go through the freaking roof.
The amount of money at stake we are talking about here (well beyond 700billion) is enough to very likely bring the entire food production system (heavily dependend on OIL) to its knees.
This isn't some sort of fearmongering scenario, it is completely plausible.
When people from Jim Cramer, to Pat Buchanan, to half the members of the CNBC staff, and op ed writers across the country, are telling you that the failure to sign this bill WILL result in a GREAT DEPRESSION, they aren't trying to "place fear in the hearts of main street" just to get a bailout ... they're saying it because IT IS TRUE.
I LOVE Ron Paul, and his heart is CERTAINLY in the right place, but i think he fails to grasp the dollar value consequences we are talking about here ... just like he sort of fails to understand that a gold standard and a silver standard aren't the same thing, and that one would be a horrible disaster, and the other would still be slightly "inconvenient" at this stage in the game.
If I opened it now would you not understand?
I wish.
and i wasn't exactly wrong about much of this either,
if you've been following along.
Look, i think Ron Paul has his head screwed on straighter than most people in government, by several orders of magnitude, even ...
... but i think he is wishfully delusional if he thinks a catastrophic credit storm of this magnitude is just going to "blow over" with a "pretty serious recession for a year".
Something to remember would be that the very same Federal Reserve policy he is blaming for the Great Depression is the exact same thing he would be getting if this bailout did not pass: DO NOTHING DEFLATION.
The Fed DID NOT DO SHIT during the Great Depression.
The ONLY thing they did was to actually RAISE RATES.
This SEVERELY reduced the amount of money available to the average joe.
Reduced it by around 25-30 PERCENT.
I bet if you asked Ron Paul what he would have the Fed do, he'd say, "raise the interest rate to save the dollar. it's too low."
Like i said, i think he is wishfully delusional, and i think he forgets sometimes that when he says the Fed fixes the PRICE of money, that they ALSO fix the QUANTITY of money.
(i know he knows this inherently, but i don't it clicks in his head sometimes)
If we fail to bailout these banks we will see inherent deflation,
and then when the Fed fails to drop rates again (the other part of what someone like Ron Paul would want, and honestly the dollar probably can't afford much more on the rate cut side anyhow) we will have the EXACT SAME POLICY that we went through the Great Depression with.
And most economists now BLAME THAT POLICY FOR CREATING THE DEPRESSION.
Milton Friedman said, ALL RECESSIONS\DEPRESSIONS CORRELATE DIRECTLY TO MONETARY DEFLATION,
so unless you can come up with some OTHER inflationary plan (besides a bailout) to save the economy from having its money supply sucked dry, i'd say we unfortunately better go with something approximating a bailout.
:(
oh, and i totally forgot to mention the untold billions the government would have to spend to pay out on all those partially wiped out (anything over $100,000 GONE) FDIC accounts.
Folks, it will RUIN us if this bailout fails.
This was my argument to JLew over a year ago!
There MUST be a bailout, its not an option.
Thats why i laughed when he tried to say "the government can't afford it, so it won't happen."
THE GOVERNMENT CAN NOT AFFORD NOT TO DO THIS.
It is inevitable. A foregone conclusion.
If I opened it now would you not understand?