DenhamsDoesIt

Satellite Radio Is Not Immune to Big Three Troubles

This Big 3 debacle keeps getting worse. Not only are auto supply and accessory companies like Sirius and American Axle getting hit hard, it's having big international effects. newsy.com/videos/world.../ is a good video summary of Japanese, Chinese and Canadian involvement in the Big 3 fallout. This is angling to become a worldwide depression.

Is the Microsoft Empire Cracking?

I think Microsoft can still compete on scale and value delivery, when they get Windows 7 running. For the same price as a basic Apple computer, a Windows computer comes with several programs and a hardware superiority.

Apple is far more adaptable. They sell their laptops very cheaply at universities, hoping to build an inert customer base among people who will be making money. Microsoft is still a better deal, but they are going to need more agility than they're running now.

Have We Learned Anything Yet?

This article seems based on the premise of a correction taking place to the business cycle, with the business cycle as the cause. The very basic cause, as I understand it, to this economic crisis is the improper structuring of the market through lack of information, which the government is supposed to ensure.

Financial markets require accurate information to be distributed equally. The housing crisis was caused by banks buying mortgage bundles rated at an inaccurately rated level which then lost tremendous value. The banks relied on that information, which could have been prevented by reasonable government regulation.

Properly structured free markets are always the way to go, but if someone really wants leverage their neck into a noose, they should be allowed to do so.

Surviving the Financial Nuclear Winter

While the future can never be exactly predicted, there are some general trends and indicators. The CDS auctions for Lehman are on Thursday. How well those go will have a huge effect on the credit markets, since a good price will mean that a failure to pay will not be as damaging. Hopefully this will free up some money and start it circulating again.

Looking for Hope

Curbs-In, where do you draw the line on government? How much can people really be trusted with freedom? We are made to wear seatbelts, and we can run up a load of credit card debt based on nothing but how much the credit card companies trust us (credit rating), but investors aren't allowed to make risky loans on their own terms? Both parties knew what they were getting into, according to the dotted contract line, or can people be trusted to read contracts? Normally I would say sink or swim to those weighted down with bad loans they (supposedly) knowingly made, but unfortunately we happen to be tied together so tightly that we all drown.

Our standard of living of have now and pay later (most people DO pay off their mortgages) relies upon people having money to lend. Should the government step in to preserve our way of life by using public funds or even gradually nationalizing these areas, or should we be left to roil in our freedoms and it'll all work out in the end, for better or worse?

Looking for Hope

With all this talk about 'living beyond our means,' we forget that loans in and of themselves are not bad. A loan can make the stretch for a farmer that had a bad pomegranate crop until the next season. A mortgage allows the average person to buy a home incrementally instead of needing thousands of dollars on hand, giving the person a higher standard of living than they would be able to have in the short term. The problem comes when this leveraging of our assets tilts back toward us too far, when the aforementioned farmer's loan doesn't get repaid because no one wants to buy pomegranates anymore. The farmer loses his assets, and the person who loaned him money loses some of that money.

While leveraging can certainly make the bite that much harder when things don't work out, like the current situation, never forget that it also makes life easier, and that there isn't a predestined but delayed reckoning for our 'excesses.' As long as loans can be paid back, there is no problem.

The Lowdown on Citi / Wachovia

This is a wonderful situation for foreign investors looking to get some cheap assets while the dollar is still favorable to them. If this does happen, how quickly do you think the politics of the day will jump on it? I can picture the politics; railing against foreigners 'getting American homes wholesale unless we get this bailout passed.' 'Anyone who doesn't vote for the bailout is selling America out to the highest bidder.' Unfortunately, things like this will stick in people's minds and cause them to clamor for the bailout for all the wrong reasons. Do you think cooler heads can prevail in this mess, or are we all going to be swept away?

Treasury's Plan Is Breathtakingly Awful

To all those who are crying Communist at the government bailout, while it is a liberal leaning handout instead of the live or let die of free market capitalism, this move is ultimately the most democratic. In fact, it is too democratic.

The average person has never taken economics in their life and gets the whole or a great part of their understanding of the world from television sound bites. Television shows them impending doom, and the populace demands action, by the government, NOW.

My goodness, just listen to the President. It's not a very great oversimplification to paraphrase him as saying, "At first I was going to let the market be, but then some advisers said that its all interconnected and now I am going to take bold and decisive action to save the economy."

This bailout seems to be more than just bailing out banks. It seems to be about convincing people to keep their money in the markets and the banks, so there's liquidity for the economy. Unfortunately, bad business practices are partially vindicated when this is done. Expect a First-100-Days declaration by the presidential hopefuls on this issue, and please watch the debates.

What worries me far more than this temporary crisis is the following question: How do you convince people who don't think deeply about the world that "bold and decisive action," while sounding good in the short term, ultimately undermines the basis of our society?