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Saturday, 26 January 2008 |
There have been market failures, mostly in overvaluing assets, but the problem is that the government won't let us feel the "consequence" of that in the free-market way, where the individually involved actors pay the price for their bad decisions.
Instead, profits are private and major losses are public. Is that capitalism or communism? Its too corrupt to be embraced and claimed by fans of either...
The logical solution for Americans is to get out of cash and into the
stock market. Wages are stagnant but the dollar is dropping, and the
only sure thing is that the government will bail out Wall St at the
expense of the currency. International investors should stay away,
because even though the Dow shows nominal gains, the loss in currency
would outpace the equity growth. Ideally, Americans would invest
abroad and leverage the falling dollar into greater returns. Its a great system with one fatal flaw: At some point, the
international investors realize they can't win by betting money on
America. When they pull that investment, the government has no
mechanism left to prevent a recession and it will end up being one of
the most radical and sudden economic shifts in generations.
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Last Updated ( Wednesday, 09 April 2008 )
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