Long Straight Highway (redux)

Let me rephrase that. I think they do know what is going on, but they don't know how it well end. They don't know how much further housing will drop, unemployment will start the snowball on consumer debt, how long the Chinese will have an appetite for Treasuries, etc. And that is why they don't know exactly the right medicine. I liken this to some sort of extremely rare form of cancer that may be diagnosed, but there are few or no clinical studies on treatment. You will never hear any major or minor economists just shrug and confess they don't know what is happening. I never have either, although Laufenberg came pretty damn close a month ago. They sort of can't. Confidence is the crises of the day, you can't have key figures in charge of our economy expressing doubt. Me, I sorta think they changed the offense so much it was like they had all the wrong starters in. I guess I'm happy that they can think on the fly, but it is a little staggering when just a month ago we were being sold on what a great investment these toxic debts will be for the govt to snatch up, and suddenly the govt decides they are, well, truely toxic. So I'm convinced they know what is going on, but they aren't sure at all how to treat it, or rather what amount of money it will take to treat it. I am convinced, however, they they will get it fixed.

I thought you you moreso referring to the inability to predict and treat this.

Maybe it's not a revelation to you, but I sure haven't seen any prominent
economics dude say: "You know, we just don't know what the fuck is going on.
It's too complicated." I'm not just talking about prediction; I'm talking
about the diagnoses being made right now. 'Switching gears' is not the same
as being completely flummoxed. Switching gears is what you do when your
basketball offense isn't working; being completely fucking baffled is
another thing. So are they switching gears, or are they baffled?
Everything I hear leads me to believe they believe the former, but, as I
say, I'm doubting. Maybe I've not been listening in the right places,
though.

This isn't a revelation, Shane. Its no secret that economists are notoriously bad at predicting recessions. I think there is some stat that over the past 20 years, economists predicted recession some 9 times when there have been 5. Not great. Sure, people did predict this. But, there are always screaming bears, so it isn't surprising when somebody is eventually right. People did accurately short, or at least get the fuck out, but many of these people may have been short or out long before the crises actually hit. Just check out the Prudent Bear Fund. Looks great, unless you've owned it for awhile. And even people, like myself, who thought housing was going to get hit and subprimes would melt down, they didn't guess the entire thing would unravel like this.

We are definitely at that point. Just look how Paulson and Bernanke have switched gears entirely. They are writing the script as they go. I"m not sure this will be clear in retrospect either. Like most things, there will be blamed thrown around and very little strong evidence that one single thing caused this, besides just people being fuckers. But that isn't useful.

THis is why the advice tends to be buy long, and be patient. And especially double down when this shit happens.

It occurred to me today that maybe we're at the point where nobody knows what the fuck is going on, and it's beyond the possibilities of human intellect to fix. That sounds like sarcasm but it's not, and before you go pointing out to me that all kinds of people know what's going on, and all kinds of people were predicting this collapse for years, answer me this: where is their zillion dollars? Because if you were so smart, all you had to do was short the fuck out of the financial sector, the automotive sector, etc. etc.

My opinion is that, as usual, everything is very clear in retrospect, and suggestions on how to fix it are like assholes. But are we really being honest about what we know, and don't know? I have my doubts. The system is so large, so complex, with so many actors, that maybe it's achieved a metasystems transition, and the lower levels can no longer understand the higher levels which they comprise.

Yes, I agree with all this. Although, I'm not sure people want to buy from a company that is on the verge of bankruptcy either. Tough spot for GM.

I've read that there's all sorts of marketing research showing that people will not buy cars from a car company in bankruptcy. Unlike airlines that can go into bankruptcy and keep flying while they restructure, supposedly car buying will go to zero and there will be nothing to restructure - bye, bye industry employing 3m+ people.

That was a fine link, but really, its hard to argue with $7t+ for the financials and $0 for the big 3. I'd think they could spare 2-3% of the financial bailout funds if the big 3 and the AWU agree to some concessions.

Maybe this helps.
http://money.cnn.com/2008/11/24/markets/thebuzz/index.htm?postversion=2008112413

What if? We've let a lot of banks fail We've let a number of larger financials fail. They are trying to avoid the major players going under like AIG, Citi. I'm not sure exactly how you compare cars to financials...I know financials have made poor decisions too, but nobody feels like they can't survive post-crash and if they crash now we have economic chaos, allegedly.

Fallout would suck too if GM goes under, but most analysts don't think they can exist post-crash in current form. They have been losing money for years, they have products apparently we have no appetite for, and they have major financial commitments that competitors just don't have. And way way way too much capacity for shrinking market share. I get the sense that you just don't want to point any fingers at the Unions. To me, they'd ought to be willing to slash the shit out of benefits right now to get their members working. They will have no bargaining if bankruptcy occurs.

And now with them so questionable, who's buying GM products? Things will snowball from here. I hope they don't go under, and I hope the govt can figure out a way to make this work. But the Big 3 is a completely different situation than Citi, and AIG. Look what happened when Lehmen was let go. You basically had someting closest to a complete economic collapse when money funds began to bleed and break the buck. I don't think GM would have that impact.

And what's to say the financials won't need more help as the recession plugs along?

Funnitz, accurate title change.

Or the one's who's business models haven't been sustainable and may need govt bail out money in perpetuity if they don't reorganize. I sincerely don't think anybody is picking on blue collars.

Sorry, I didn't recognize your sarcasm. You can be so tricksy.

Did you see the fed has promised $7t+ to bail out the financials?

Oh, and obviously it was a sarcastic Houlzooka shot. But it does seem striking to me that the only companies the Bushies are hesitant to bail out are ones with massive amounts of blue collar workers and whose failure would have dramatic and immediate social repurcussions.

Dude. You are showing your ignorance. Might want to put on a sweater or something.