dougnhi

Wildfires, Financial Crises, and Type Conversions in Markets

The analogy is fine enough, but I hope the implication isn't that we should continue to unnaturally suppress the healthy fire/clearing process. In fact, it would be easy to extend the analogy and contend that the federal government has had a "no burn" policy in the markets for way too long, fostering rampant moral hazard that has only brought us to the natural conclusion that a big fire is coming. If you doubt this, find the youtube video on the vice president of the Federal reserve claiming that the fed "is in the business of creating moral hazard"...as if this is a good thing! All the meddling and preventing of small fires has only brought us to the Yellowstone moment in the markets..... Folks might not immediately recognize how good the burn will be when it's happening, but rest assured that the sun will come up again, the market will renew, and savers and responsible people will be able to afford assets at much more reasonable prices. Those who lived by debt and moral hazard will learn the life lesson they need, and let's all hope that more than a few fraudsters will be discovered and put in jail for the messes they created. The sooner the better...let's get on with it.