Monday, January 19, 2009

The Great Depression of 2009

There, let’s say it. Let’s get the “D-word” out there. Now we can go on.

Critiquing my recent prediction success factor for the previous year means anything I predict will not happen, or it will happen, but not the way I predicted. Just so you know.

I kicking off a “Depression09” tagged series beginning with a post from last October about why we shouldn’t be so concerned about our recent economic unpleasantness. I’ll try not to chew my cabbage twice.

I keep hearing dire predictions of a sluggish economy stretching out over years. But it is by the same people that have to have something to report as news even when they have no news to report.

Just like I had to learn all about alligators, Sunnis, and Shia after we got ourselves up to our ass in Iraq, so too I’ve had to learn about how the current economic situation came about. While it has been proven tha a free market is the goose that lays the golden egg, we fear regulation may kill both.

However, our current bond rating system is like the fox hound is working for the fox. The rating system should be working for the buyer not the seller – which if I follow the news correctly, and there a good possibility I’m not, but anyway, we are doing just the opposite.

If the sub-prime mortgage-backed bonds had been rated accordingly, a lot of value would not have been put at so much risk. If the incentive for rating companies was to profit more from satisfying buyers than sellers then a concept with a self-defeating aspect could be remedied.

Keep the markets free and change the incentive for the rating companies. That seems doable.

The lion that ate Communism could continue to roam the savanna.


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