Ivory Tower Ignorance

You have to hand it to the news media. When they 'go to an expert' they try and pick a good one. This CNN article is correct, but it misses the point. Check out the link:

http://www.cnn.com/2008/POLITICS/10/09/eichengreen.depression/index.html?iref=mpstoryview

Here's my comment, don't know if CNN will post it:

More 'Ivory Tower' ignorance. Sure, all of his statements about government action/inaction are correct. The problem is that when people aren't working, they aren't paying taxes. The 'New Deal' had to create jobs before this country started to pull out of the Great Depression. You can 'create' all the credit, etc. you want, without work, you don't have product. People have to eat, have a roof over their heads and contribute to the country through their job before any of the banks, etc.really matter. All markets are based on product, not credit or paper!

Further thoughts on the situation;

It all comes back to tangible assets.

You don't acquire 'tangible assets' without work of some kind or being able to pay for them. Every market is based on either goods, property or a commodity. Goods (cars, boats, appliances, clothes, etc.), property (houses, buildings, real estate, etc.) and commodities (grain, livestock, minerals, etc.) have value dependent on demand. When demand is down, the value goes down.

Credit is based on the repayment ability of the person, company or government. It's determined by a risk factor. Good risk, then good credit. Bad risk, bad credit rating and then your 'perceived' value drops.

The current economic crisis is being solved by giving to the banks money that's going to be hard to produce, unless it's printed by the government. This will cause inflation, as it will take more money to buy any product, regardless of it's value. The government should be spending money on job creation, which produces taxes and spending on goods, commodities and housing.

This economic crisis isn't over by a long shot, it's just the beginning of the end game for many institutions.

Hang on! The roller coaster ride is about to get rough!