No. of Recommendations: 5
Sorry, Chi. I liked it, and felt it was appropriate, since, at this point, the government IS macroeconomics. What the government does or doesn't do at this point dictates how the stock market and all other financial entities will behave, and whether they do or die. The sad truth is that the government is becoming the economy. And the government is at a turning point regarding economic rescue, and has a mutually exclusive decision to make regarding bailouts--yes or no. Your rant was non-partisan. And Kent's reply emphasizes an important issue; that of government intervention's effects on investments and the health of the country.

As I mentioned yesterday, the government bailouts are having unforeseen consequences. The bailouts create a wider GINI coefficient (disparity between the haves and have nots) and foster further criminality and amassing of power and influence within the financial sector. With bailouts, the wealth that might be useful in the future for rebuilding a relocalized economy based on alternative energy is instead redirected into propping defunct, monopolistic large scale corporations that are unsustainable. With increasingly massive government interventions, the small investor becomes a leaf blowing the squalls of a growing hurricane. If you're lucky, you can pick up the leavings from the big guys' table, or if you're connected, you can get insider information on the next policy move. But Taleb is right; there is no way to win. The only way to win is not to play. (I think that's what he said; the post is gone.)

From here on out, there will be increasingly poor unintended consequences to seemingly innocuous moves such as the Cash for Clunkers programs. Not only does it redirect the now-limited consumer discretionary funds, and put the consumer further in debt, but it also props up businesses that should be allowed to fail if they cannot compete in a rebuilt, low growth economy. These Hail Mary government bailouts create certain future collapse, and each step down the bailout path creates more certainty that when the collapse comes, it will be less recoverable. To me this is the essence of Macroeconomics, and we should be examining this crucial turning point with great discernment. The idea that we should ignore policy-making issues of our government on this board unless the issues can be directly spun into investment decisions is short term thinking that emphasizes a me-first approach to citizenship. We're going down hard, and the issue of Macroeconomic Risk is central to the problem. Although its natural to do so, let's not react to a stressful time with increasing control and rigidity that limits creative thought.
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