The crisis on Wall Street - Is all in your head?

Reaganomics started it back in the 1980s with Phil Gramm and John McCain leading the pack - end government regulation to encourage a free market, reduce taxes to the movers and shakers, and wealth would trickle down to all of us.  We've had Republican control of the Whitehouse or Congress or both for 26 of the past 28 years and these policies have held.

Now we have news of a major financial disaster that Alan Greenspan called the worst he's seen. 

Phill Gramm said that the current crisis is all in our heads - we are a nation of whiners  http://www.youtube.com/watch?v=1mHsuL6FfY4

McCain temporarily distanced himself, but now Gramm is back full force as McCain's economic advisor.  Can we expect more of the same failed economic policies that got us into this mess?  where does McCain really stand on the economy?  Do his recent statements like this one at Townhall.com point to him abandoning the policies he's adhered to for decades and advocating regulation? 

"Our economy, I believe, still, the fundamentals of our economy are strong, but these are very, very difficult times, so I promise you: We will never put America in this position again. We will clean up Wall Street," McCain said."

What do you think?  How's this all working out for you so far?  Do you believe the economy is strong?

The economy is far from strong. Especially in northern Ohio. Industry is fleeing.

While I don't want over-regulation to the point where businesses are stifled, there needs to be basic protections against fraud and deceit.

I can't watch youtube from here, so I'm not sure I can really address the Phill Gramm comments.

How is this all working out for me so far?  Well, I work in the real estate/finance industry in Florida.  Anyone want to hazard a guess on how well we are doing right now?  I've actually been very lucky in that I still have a job.  So, it's working out okay for me.  Ask me again in a few months.

Do I believe the economy is strong?  Yes and no.  I think that more than being a nation of whiners (which we certainly are), we are a nation of debtors.  That makes me really nervous for the overall economy.  As long as there is easy money to be borrowed and we can keep up with our payments, we'll be okay.  Oh, but wait, we are in a "credit crunch" and possibly heading for recession.  Yeah.  We might be screwed.

Here's what he said for those who can't view YouTube

In an interview with the Washington Times, McCain's top economic adviser Phil Gramm tells America to suck it up and stop complaining about the economy:

"You've heard of mental depression; this is a mental recession," he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. "We may have a recession; we haven't had one yet."

"We have sort of become a nation of whiners," he said. "You just hear this constant whining, complaining about a loss of competitiveness, America in decline" despite a major export boom that is the primary reason that growth continues in the economy, he said.

i don't think you're a nation of whiners; if anything, i think too many of you are wearing the proverbial rose-coloured glasses.  it's that persistent optimism in the face of reality that has led to so much debt.

if people are scared right now, that's probably a good thing.

edit: who was hoping the candidates wouldn't engage in finger-pointing?  is anyone else watching sarah palin on CNN right now? 

When giant, long-established multi-billion dollar corporations that were generally stable just a few years ago are going under, its not in anyone's head.  Its for real.

Unfortunately the housing market is at the heart of this, as much as I'm tired of hearing about it.  Its amazing how much these firms have in real estate holdings that have gone bad.  Billions and billions - and to think RE used to be a sound investment!!

I really don't think any president is going to 'clean up Wall Street' or even fix the economy, for that matter.  Economies are cyclical.  There are ups and downs, all the time - small fluctuations and then the extremes, which we are experiencing now.

When we were way on the upside people get crazy and greedy, I think.  And then it comes back to bite us in the ass.

I've heard some blame Greenspan's policies when he was in the hot seat for today's collapses.  I'm not sure.  You can't put it all one one person or even on one branch of our government - not even all the way at the top.

I only hope that people don't freak out and start running.  I think the media makes it a bit worse, and speculation can really do some damage.  If people start taking their money out of the market, out of the banks, and stuffing their mattresses, its not going to help anything.  If we keep our confidence up, we can ride this out.

I think. haha.

Original Post by pgeorgian:

iedit: who was hoping the candidates wouldn't engage in finger-pointing?  is anyone else watching sarah palin on CNN right now? 

 Sarah who? 

Original Post by clairelaine:

"Our economy, I believe, still, the fundamentals of our economy are strong, but these are very, very difficult times, so I promise you: We will never put America in this position again. We will clean up Wall Street," McCain said."

  "Again"?  "We will never put American in this position again."?!?!? (emphasis mine)

Oh sure - Yeah, we've kind of screwed things up for most of you, but give us another chance - we won't screw it up this time!!!

What is it that Einstein said about doing the same thing over and over again and expecting different results?

How is it working out for me so far - well, despite the investment we managed to scrape together last year, virtually all gains we saw from that investment are now gone.   The accounts haven't gone below our original investment, but I'll be surprised if it doesn't.  We're trying very hard to listen to the "don't panic" advice of our investment advisor.  I keep reminding myself that it's supposed to be a long term thing, but I'm still nervous.

I'm wondering what "fundamentals" McCain is thinking of when he makes statements like that.  I'm sure if he's looking at the "fundamental" increase of oil company profits and the amount corporations increase their CEO bonuses by closing plants and shipping jobs overseas, that's "strong",  I guess. 

the housing market is a symptom, not a cause.

Original Post by pgeorgian:

edit: who was hoping the candidates wouldn't engage in finger-pointing?  is anyone else watching sarah palin on CNN right now? 

 Don't have access to CNN right now.  I take it some fingers are a' wagglin'?

No.  The "prosperity" of recent years was in our heads.  Built on nothing but debt and speculation.

Sure, enough group positive thinking might keep the house of cards standing a LITTLE longer, but it's still a house of cards.

yep.  palin talked about the economy (blamed "Washington" - whatever that's supposed to mean) for about three minutes, then went on to talk about the same crap she's been talking about for two weeks (yes, she's still taking credit for turning down the bridge to nowhere).

now joe biden is speaking.  he's kicking ass (mind you, i fell in love with joe biden over the weekend, when i watched the CNN profile on him and saw him cry).

I don't think it's as bad as they would have us think--I think corporate america is using it as an excuse to some extent to justify rising prices.  I think prices are so high because nobody wants to tighten their belts and accept less profit, so instead prices going up, trying to squeeze blood from a turnip, and consumers are the turnip. 

Nevertheless, I've seen more small businesses go out of business in the past year than I can remember.

udo - exactly!  it's just like hitler's Big Lie: if you tell it often enough and loud enough, people will believe it.

(the big lie, for those of you who don't know it yet, is "The United States of America is the strongest, biggest, best economy in the world.")

Original Post by pgeorgian:

the housing market is a symptom, not a cause.

 Of what?  I think its a little of both.  The housing market is a primary cause of the downfall of Lehman Bros., among others.  Its also a symptom of the last, I don't know, 8 or so years of a lot of foolish policies and decisions and investments and ideas.

it's a symptom of mass delusion, among other things.  the idea is that as long as you have all the big shiny stuff, everything is okay (and this doesn't just apply to individuals and families; if applies to the western world in general).

Original Post by udokier:

No.  The "prosperity" of recent years was in our heads.  Built on nothing but debt and speculation.

Yes!

I think raising prices are started way up on top - the power, oil and steel companies, for example.  Record profits for power companies and yet their rates keep rising.  That trickles down to EVERYONE.  That's why bananas are like a dollar a pound - it costs too damn much to get them to us!  Grocery stores can't sell bananas for .29/lb anymore if they have to pay .69/lb from their supplier.

Original Post by pgeorgian:

yep.  palin talked about the economy (blamed "Washington" - whatever that's supposed to mean) 

Blaming "Washington" typically means pointing the finger at the oppposing party, regardless of who throws out the label.  Republican says it, it's all Dems fault, Dem says it, it's all Republican's fault.

Neither are correct, of course, but somewhat effective in playing to the crowd and convincing supporters that the other side is certain destruction.

What Greenspan said

New York Daily News

"More financial giants are likely to fall in what is a "once in a lifetime" financial crisis that may still spark a U.S. recession, former Federal Reserve chief Alan Greenspan grimly warned Sunday.

"There's no question that this is in the process of outstripping anything I've seen, and it still is not resolved and it still has a way to go," Greenspan said on ABC's "This Week."

"And, indeed, it will continue to be a corrosive force until the price of homes in the United States stabilizes."

RELATED: EXPLAINING THE FALL OF LEHMAN BROTHERS