Monday, July 25, 2011

Predicting fires

Well, the markets didn't crash today and the conservatives point to that as proof nothing bad will happen if they destroy the government. Of course the markets don't believe the Republicans will really allow it to happen or if they do the markets still believe that Obama will save the country by invoking the 14th amendment.

But just because the markets didn't crash today doesn't mean they won't. The markets are in a bubble, the economy is hollowed out too much to support the markets. Predicting a market crash is impossible, much like predicting a forest fire. You can expect fire when there is a drought but you don't know when or if it will rain first. You know the longer fire conditions exist the more likely that somebody stupid or malicious will start a fire. There are plenty of rightwingers who like to play with matches.


Anonymous said...

I agree Bruce. The options traders I have talked to say there is about a 5 delta (trader talk for 5 percent probability) for a default.The smart money is that a deal will happen or Obama will use the 14th amendment trump card if needed. Also, he has probably already reassured the banks that he will not allow a default to occur. Otherwise, we would be watching Treasury futures tanking all week.

Unknown said...

I am not an economist, but aside from the documented fact that social security-government employees=students with loans and children on foodstamps mothers on wic neither caused the problem nor do they get enough money that if you took it all away it would solve the problem, is it possible that the advisors are ignorant enough or so bought and paid for that they dont reealize cutting benefits will further tank the economy since the only ones who still have a job will be propping up the "losers in their family, sucking up ALL consumer $?

prairie2 said...

A basic fact about an economy is that it is a closed system (businessmen don't get this as business is an open system), if you cut spending it shrinks the economy. If you cut people off from benefits instead of moving them to a productive job FIRST, it destroys a piece of the economy.

Anonymous said...

"A basic fact about an economy is that it is a closed system (businessmen don't get this as business is an open system)"

Businessmen like to think that they live in an open system but they do not. Even after FDR proved that without someone to buy their products/services, business becomes stagnant. This underlying fact is the reason that the economy is still suffering. Business has lots of available money, banks and Wall Street are swimming in cash, yet still the economy is on life support. Economies need people to buy products and services to thrive. Economies need jobs so people will have the money to buy the products/services.