antiquary

Wall Street Breakfast: Must-Know News

Doubleguns, contracts have been breakable for centuries, contrary to your statement, and many economists argue that they should be if that's the economically sensible thing to do. Our bankruptcy laws have reflected that for centuries, too. It's neither anyone's business nor their duty to validate or even respect anyone else's unilateral expectations, in or out of business. You pays your money and you takes your chances. The old fishing adage comes to mind-- "that's why it's called fishing, not catching."

Could the Dow Sink Another 50% by 2012?

"As Harry Dent...pointed out"?

One cannot "point out" an opinion. Pointing out something is reserved for facts, and facts only. Fifty years ago it may be possible to say that Mr. Dent pointed out these things, assuming they come true, but certainly not today. You have two strikes against you in my mind when you can't use language correctly.

Mr. Dent's conclusion is suspect, as well, and smacks of the Rush Limbaugh effect-- of taking extreme positions for the sake of getting attention. (The fact that his books have sold many copies says very little in his favor; should we give Danielle Steele the Pulitzer prize for literature on that basis?) This kind of book comes out every so often, and tends to smack of the predictions of the arrival of the Rapture in A.D. 1000, A.D. 2000 and in many other years. "Surviving the Great Depression of 1990", anyone? The fact that Mr. Dent's previous books have come out more or less as these things were occurring, not several years before like Daniel Arnold's "The Great Bust Ahead" (2002), makes Dent rather like someone offering to sell you the winning lottery ticket number the day after it has been drawn.

The truth is, even if someone's worldview successfully encompasses the astounding complexity of the economy, it is an example of the best use of the metaphor inherent in the Heisenberg Uncertainty Principle. The position of electrons cannot be discovered by shining light at them because the photons affect the electrons and skew the results. Similarly, the market can't be well predicted in an era of keyword-triggered automatic trading because commentary itself skews what it is describing.

For myself, I plan to ignore the rending of garments and gnashing of teeth, and simply get on with the business of life.

Let's Just Say It: Print More Money

It's true that one of the causes of the minirecession from 1937 to 1938 was that they allowed the money supply to contract, but this doesn't mean that the reverse is necessarily true today.

On the other hand, if you could know that printing more money would allow banks and individuals and so on to get out of their preexisting contracts by paying them off (at a discount, of course, in dollars that are worth less, but that has to be better than defaulting would be), so that they then could move on to loans and other contracts entered into based on today's economic reality, not yesterday's, then much of the stress on the system would evaporate. It would be like removing a single domino from the middle of a chain. Essentially, it would be like an evenly spread tax on all holders of dollars, to restore flexibility and fluidity. But how you could know that that move would have that effect, I don't know.

Predictably, the Dow Crashed Again

This kind of thing always reminds me of the Y2K scare, mocked in The Simpsons by showing quarts of milk springing leaks. It's astounding to me how you can possibly not see that talk like this is a self-encouraging prophecy. We can, literally, talk a recession into a depression which is not necessary. The world is not coming to an end, and I'm disgusted at people who act as though it is.

U.S. Debt Default, Dollar Collapse Altogether Likely

Articles like this are obnoxious. A half-baked analysis isn't any prettier for being confidently and plausibly expressed. For all your erudition, you don't show any signs of encompassing in your mind the widely disparate components of the economy, or of human psychology, one bit better than anyone else. This bandwagon of pessimism you've jumped on isn't any more reflective of reality, or useful in predicting what's possible, than its opposite number was during flush times.

Finally, to the extent that articles like yours are a self-fulfilling prophecy, by encouraging the unfounded degrees of pessimism that they have to take as granted to go through this kind of analysis in the first place, they're reprehensible, because they make the situation worse than it needs to be.