Blue Collar Muse

Obviously, the reference is to Chicken Little. Just as obviously, there is no way to predict with absolute certainty exactly what will or will not happen with something as potentially volatile as a Market driven economy. Even a casual comment or a designed leak can destroy a financial institution overnight as Chuck Schumer (D-NY) so aptly demonstrated for us not long ago when he personally caused the largest bank failure in decades at IndyMac.

That having been said, it is possible to feel confident with a high degree of certainty how the Market will behave given proven historical and Economic models. For instance, raising taxes lowers tax revenue while lowering them raises revenue. This is consistently true across time and governments. It’s the reality behind Republican efforts to lower taxes. This cannot be disputed from an Economic standpoint so Democrats and others use the “Republicans just want to give more money back to their rich donor friends!” argument instead. This Democratic sleight of hand has the interesting dual nature of being totally true - the rich will get their taxes lowered - and totally false - those same rich will spend and invest more and so will end up paying more taxes on their increased consumption! Thus Democratic posturing and blustering in opposition to tax cuts and how to pay for them are, both on their face and at their base, without merit.

The same can be said of the current Market instability. Certainly the Market is currently volatile. But to claim the Economy is tanking or that the “biggest one day drop in points ever” means we’re all doomed is premature, to say the least. You would be a bit shaky, too, if you had planned on a $700 billion cash infusion with which to operate on Monday morning and found out Monday afternoon the loan man wasn’t going to cometh. The same thing happens on a personal level when someone’s home financing falls through at the last minute (although there obviously hasn’t been enough of that going on of late). As those with leveler heads have assured, the Market is cautiously coming back a bit this morning. No doubt it will continue to do so although there may be more dips and fits and starts along the way.

Kat C at Just Another Pretty Farce has a more casual, lackadaisical approach to the matter. Hennessy brings some experience, scorn and a touch of adult language to the discussion. Both of these folks should be listened to, particularly Hennessy as he puts the discussion in verifiable terms. The bottom line is, not because this or that Congressman would like it to be so to provide cover for political allies but based on objective Market principles, the sky is not falling. There will be rough times ahead for individuals and individual companies caught up in the Housing Market. But unless we do something really stupid, like put taxpayers on the hook for $700 billion dollars in bailouts, we will weather this storm.

Blue

Popularity: 37% [?]