[ a fully caused & embodied blog ] [ Good Sense Without God ]
It is in the prosecution of some single object, and in striving to reach its accomplishment by the combined application of his moral and physical energies, that the true happiness of man, in his full vigour and development, consists. Possession, it is true, crowns exertion with repose; but it is only in the illusions of fancy that it has power to charm our eyes. If we consider the position of man in the universe,—if we remember the constant tendency of his energies towards some definite activity, and recognize the influence of surrounding nature, which is ever provoking him to exertion, we shall be ready to acknowledge that repose and possession do not indeed exist but in imagination. - Wilhelm von Humboldt, The Sphere and Duties of Government (The Limits of State Action) (1854 ed.)
Wednesday, October 1, 2008
My understanding of the financial meltdown
In answer to my good friend, I believe this is being called a "credit" crisis because right now the biggest problem is that the "shadow banking system" is near collapse: Banks are afraid to lend to each other. If this happens, the US and global economy will pretty much halt: 60 - 0 in nanoseconds. That is definitely not good.
But this is just a symptom of the real cause: sub-prime mortgages ( again, as my good friend points out ).
I am no economist, but I certainly have my opinion. I am quite happy that the bailout was rejected in the House. But the probable effects on "average" people -- those outside Wall Street -- is real. So, my suggestion is a dollar-for-dollar bailout: For each dollar given to "write-off" a "toxic" mortgage/asset, a dollar goes to write-down the mortgage of a needy home owner; eg. one of those "toxic" mortgages. $350billion in funds for the "shadow banking system" and $350billion in mortgage write-downs.
Now I am not really happy with any sort of equal treatment between "Wall Street" and "Main Street" -- I would prefer the whole $700billion to write-off the mortgages -- but this seems reasonable: To me, not an economist.
Anyone with comments?