Also, whether you like it or not, this current situation is a result of under-regulated free markets that were allowed to leverage themselves to such a degree that they almost caused the collapse of the global financial system.

Sort of. It was a result of far too lengthy a period of easy credit, which led to too much capital chasing returns. Now, who is it that leads on interest rates? Why, the US government. Was investor sentiment one big key to how the government managed interest rates? You betcha. No quarrel from me. But riddle me this, During the past decade, who precisely was warning about too much easy credit and counseling that interest rates ought to go up?

No one, That’s who. As Pogo said, we have seen the enemy, and he is us. All of us.

And that extends beyond the mere self interest fo all of us in loving low interest rates. It extends to our increased tolerance for rational ignorance. People took loans that they didn’t understand. Credit rating firms gave AAA ratings to investments that they didn’t understand. Times were good, and we all got lazy. Now that the bus has crashed because we were all asleep at the wheel, everyone is pointing fingers.

It would be my opinion that you don’t know what the root cause is: greed. You can try to dismiss that as mindless populism, but I’d be curious to see what you think the cause is?

Greed is another word for self-interest. It’s the cause of the vast majority of both good and evil developments in this world, depending on how much enlightenment you can toss into the stew.

To speak briefly to other critics, I am not a republican or a free market true believer. “The free market” is a theoretical construct, and whenever it’s talked about in the present tense, it always refers to “whatever is currently passing for a free market.” An utterly free market is about as unachievable as an utterly regulated one, which is what makes so much of the ranting against it so silly. My votes? All democratic until Ross Perot. Then Clinton2 despite my dislike for the scoundrel. Then I wrote in McCain twice instead of voting for GW or the pathetic dem alternative. This year, Obama. I have liked him quite a bit since that old convention speech.

I am skeptical of just how much good regulation can do. It’s quite silly in principle to be either pro or anti regulation. It has to be appropriate and right-sized, and that’s hard to figure. Insufficient regulation leads to an overheated engine that blows, and too much leads to an engine that works inefficiently and at low power.

Do I think that a more zealous, more vigilant federal government could have prevented the disgraces we have seen in the wake of things like the poorly understood and extremely harmful collateralized debt obligations that collapsed last full? Absolutely. Without a doubt this is possible. The question is “at what cost?” Certainly at a much higher cost that whatever we paid the folks at the SEC who ignored years of complaints about Bernie Maddoff and then had the temerity to say “we’re sorry you feel that way” when they were called incompetent.

Just remember, if we really wanted to, we could design and build jet planes that, if they crashed, would protect all the passengers so that no one would die. As long as we were willing to pay $20,000 for a round-trip flight to Cleveland.

That’s worth thinking about. We live in a world governed by variables that act in counterbalance to one another. The conundrum is that nothing is gained but that something else is lost. It always frustrates me to see how often other folks see black and white good and evil where I see conundrums that proscribe simple solutions. If you can’t find the hidden dynamic of the underlying conundrum, you’re just not looking.

…I must say that they seem to be veering ever more closely to complete populist know-nothing-ism.

Other parts of his post seem fairly reasonable but then he criticizes Justin for his criticisms of some people who have definitely contributed big time to our current mess. If you think that most of this mess doesn’t lay with the big players in the financial industry and those who helped them avoid regulation and oversight you just haven’t been paying attention. And yes, I do blame Clinton for part of this. He bought into a pro-business, de-regulate everything agenda way too much as did some others who thought that was part of being a centrist.

Forget a global market which will never be free because just about every country but out ours watches out for its industry and workers. Even in a smaller eco-system it does not work. A free market requires multiple players competing on even ground. Consumers benefit from a free market (and the government should be concerned with improving things for consumers, not corporate interests).

Without government regulation, a powerful few control the market and balance the scales in their favor. Consumers lose.

That is the scenario we find ourselves in. That is the inevitable result of 30 years of largely Republican control. I know it’s hard to believe, but I was once far more conservative than I am now because I once believed in the ideal of the free market.

Today, I am a realist. To improve the lot of the nation, you need government regulation and government action. A nation that benefits only the few is a nation in decline. History is replete with examples. But a nation that benefits all still allows for winners and losers, just not to the degree some (greedy) would like.

The point of this post was surfacing the idea that the media reported that the market plummeted on Geithner’s announcement, but it was already going south even before he spoke. And I think it’s really quite pointless and lazy to have that be the judge of whether or not this is a good plan.

Also, whether you like it or not, this current situation is a result of under-regulated free markets that were allowed to leverage themselves to such a degree that they almost caused the collapse of the global financial system. If you don’t agree with that, there’s probably nothing we’re going to agree on about this economic crisis because it would be my opinion that you don’t know what the root cause is: greed. You can try to dismiss that as mindless populism, but I’d be curious to see what you think the cause is?

As far as bitching and insulting, perhaps you’re seeing my frustration as something beyond what it is, but to the best of my knowledge I haven’t insulted ANYBODY on this blog. I’ve definitely expressed bewilderment that many of you didn’t understand how absolutely dire the situation was last fall. Because honestly kranky, many of you seem to be saying, “Meh, let it fail. Let the market take care of it.” and I think that’s pretty irresponsible. So when I say those things, I’m not talking to YOU if you don’t hold that view. Still, if you feel slighted or offended, or if you think I’ve offended somebody else by expressing my frustrations, I apologize to them and you.

One last note. I’m a Democrat and I’ve always been very open about that on this blog. This is a place where all sides are welcome to talk. So I’m glad to have your voice on the blog, but please stop characterizing me like I’m a know nothing, especially when you know that’s now the case.

Dang, the Stimulus Bill is working already–look at all the jobs that have been created by just this thread alone….

BTW – didn’t KK vote for Obama?

As far as the above the line responsibilities – my read:

Justin is as DONK as it gets, and pretty much thinks they are always correct.

It is Alan’s job to be the PHANT (even if he voted for Obama).

Doug’s job is point out that there is no real difference between the DONK and PHANT.

My job is to point out that the if you keep the power balanced between the DONK and the PHANT neither one can do too much damage.

There are some others posting regularly here, that I mostly missed during my blogging hiatus, and I don’t know what their job is yet.

I don’t know whose job it is to be the “LE”.

Moreso than simply showing incomplete understanding of economic mechanisms, they seem to suggest a willful desire not to understand them, and deny any inconvenient truths in the opinions expressed by folks with a pretty well-informed point of view.

Markets usually respond to delay and uncertainty by selling. Markets behave exactly like the humans who comprise these markets, in other words. Hands up, who likes uncertainty? Volatility? Anyone? Bueller?

Our economy and the stock market will continue to show quite bit of volatility for some time for the simple reason that everyone is having trouble figuring out what things are worth and where we are headed. In the meantime, the government keeps floating new idea to fix things by borrowing astonishingly large sums of money and feeding them back into our economy. There is virtually zero agreement as to what the short, intermediate and long-tewrm effect of such unprecedented actions will be. In other words, these actions add to the general uncertainy which feeds volatility.

Most people, whether they live on Wall, Main, or Maple street, don’t really know what’s going to come of what Geitner is trying to do. That’s just the simple truth. But everyone knows that if possible, they’d like to limit their downside exposure to the possible effects of what Geitner is trying to do. How do you do that? By staying out of it, or by selling if you are in it.

To say that the market went down because some imaginary entity called “Wall St” was disappointed that they weren’t handed a pile of cash is just pure rant. 100% populist anger at the current state of things. Understandable perhaps, but not useful. Nor insightful.

I REALLY wish you would spend less time (1) bitching about the folks on your laundry list of boogeymen (bankers, brokers, and republicans about covers it) and (2) insulting and chastising those with the temerity to disagree.

In other words, dude, you’re all DONKLE and no PHANT.

The negative Wall Street reaction was based on exactly one thing. The Geithner Plan is not a plan. Even he called it a “framework”. Wall Street was looking for details.

No they weren’t! They were looking for truckloads of money and even you admit it when you say, “Wall Street only wants this thing in the rear view mirror. Geithner didn’t do that.”

What if Geithner’s “framework” was much more detailed and still didn’t mean Wall Street would be off the hook? Do you think they would have reacted favorably? Of course not.

And I’m sorry mw, but if you don’t think that this pouting by the market isn’t caused by a climate brought about by fewer regulations that then led to this ridiculous “we own the economy unless it fails” mentality, then I don’t know what to tell you. Certainly not baseless OR uninformed. It’s merely an opinion about our current climate based on the thousands of posts I’ve read about this in the past 6 months. You may not agree with it, but to characterize it as either of those things is, well, provably false.

But hey, what’s your plan?

But I agree that Street responses by the day should not drive policy. Still, it’s foolish to ignore the fact that this was a negative for Geithner and Obama. After all, had the market shot up 5%, a lot of folks would be taking credit on their behalf for it.

Finally, given the nature of this crisis, it may be time to semi-retire the populist shots at “Wall Street.” How can anyone complain about average people losing big in their 401-ks, pension funds losing half their market value, insitututions losing their endowments, etc. and still think of the stock markets as a bunch of shadowy rich guys called “Wall Street.”

The rest of this post and the linked post is complete nonsense.

The negative Wall Street reaction was based on exactly one thing. The Geithner Plan is not a plan. Even he called it a “framework”. Wall Street was looking for details. This speech had enormous build-up over the last few weeks. Portion of the “plan” were leaked to Wall Street. Expectations were set by the President and administration that this speech would be the public debut of the long awaited Obama plan to fix the financial system. Everyone understands that the devil is in the details. I have no doubt, if a detailed comprehensive plan was announced, even if it screwed the big troubled banks and brokerages, there would have been a big relief rally. Instead, Geithner punted. No details, just a framework, same ‘ol same ‘ol.

Wall Street only wants this thing in the rear view mirror. Geithner didn’t do that.

The perception is that fixing the existing system means finding a way to remove and quarantine the toxic assets. That is what Paulson told Congress the TARP would do, and then he changed his mind after he got the money. That was the expectation that the administration said this “plan” would address then didn’t. It is a tough problem, because you can’t set a price for the toxic assets without someone getting screwed – either the stockholders or the taxpayers. I don’t think Wall Street (in general – not the bankers/brorkers specifically) cares at this point who gets screwed, if there is decisive action to deal with it. Whether it is nationalizing the banks, or putting the taxpayer on the hook to bring these zombies back to life, or letting them fail, if the market thinks the problem is being addressed, they’ll be happy.

Geithner’s speech was a swing and a miss in that regard, hence the market reaction.

When the Geithner “plan” becomes an actual plan, it’ll probably precipitate a positive reaction. But on the only thing that matters to Wall Street, how to deal with the toxic assets, there were no details.

But, on a positive note, it was a good excuse for some more baseless, uniformed market bashing by the left.