Charlie Rose

REMant  01/13/2010 01:47 AM Report

The economy is NOT getting better. And for the nth time, Lehman, Shlehman: it would have happened anyway, and still may, because I do not think we have faced all of the consequences of this yet. Just because a leveraged house of cards can collapse, is no reason to suppose that it cannot be allowed to, because it is too big or involves too many people. Why? Because it cannot be prevented from collapsing. It will collapse no matter what you do, and indeed the only thing you can do is to make the collapse worse in the attempt to spread the loss more widely, which is the only thing that can possibly be effected. Derivatives did not cause this crisis, the easy money that allowed and fueled it, did, just as it did in the mid-90's, then again with the tech bubble. In the 20's ppl began talking about a new economy, just as Summers, Rubin and Greenspan did in the Clinton admin, because they believed, just as the Keynesians and monetarists, that such leveraging doesn't have to collapse. But there is no way to avoid deflation unless you increase your productivity, not simply your employment, and certainly not your equity. David Hume knew that 250 yrs ago; why we still don't, is beyond me. Probably Paulson knew that, and Buffett, too, despite his comments about patients on the table, etc, (which, BTW, leads me to question his integrity). Nevertheless many ppl confuse the price of things with wealth. But, if anything, the stock and other mkts move in opposition to real economic growth as any M & A man really should realize. Shareholders bleed the investment we need. They are not capitalists, but leeches. That's what moral hazard really entails, and why we cannot continue in this vein. It seems we are still engaged in the attempt to save the old system, and you can see this in the pension and hedgefund gambling going on in the stcok mkt since March. In the end Wall Streeters are going to force us either back to a strict mkt economy, or to a command economy. As it is we are trying to exist half-slave and half-free, while arbitrageurs fatten themselves and it can't continue.