Wednesday, 3 December 2008

Fred Thompson explains bailouts

23 comments:

rhhardin said...

Well, he's a little short on economics.

Everybody can't save at once. It's one of those fallacy of composition things they used to teach in logic. ``If everybody stands on their toes, everybody can see better.''

To the extent the panic is inducing everybody to save at once, there's a systemic problem, in that it's not possible.

richard said...

your comment about him being a bit short on economics...............brilliant. I bet you were able to find two or maybe even three things that kind of didn't make economic sense!!!!

of course, most of us didn't feel that way, because, unlike you, we recognized it as a brilliant spoof.

Howard said...

The sad part of this video is that I can't tell if Thompson is joking or serious...

jon said...

rhhardin: thank you for repeating one of the oldest economically-ignorant canards in the book.

i have now seen the dumbest thing i will see all week.

Mark J. Washenberger said...

You're right in a sense: assuming the supply of money is fixed, we can't all save in nominal terms because every dollar is already being saved in someone's pocket. One dollar saved is one not spent, and thus not saved by whoever would have gotten it in exchange.

However, everyone is saving at once in real terms if the purchasing power of a dollar increases. And in fact, this is what is happening. Firstly, people are "saving" by paying down debt, which decreases the money supply and thus ultimately increases purchasing power. Secondly, by deferring consumption, demand is reduced and prices fall in aggregate. This also increases purchasing power.

So yeah, everybody is saving at once, in real terms.

lola said...

This is Great! Loved it and oh how true it all really is. I think the Feds should watch it because this is the BS they expect us all to swallow! Maybe we should send it to congress as well because they don't have a clue what the heck is going on and maybe this will explain it to them in plain English . . . (that is still the language we speak here right??! lol)

sumbe said...

I like Fred.. a bit heavy with the sarcasm but he delivers it well.

pater tenebrarum said...

'everybody can't save at once' is a Keynesian fallacy.
unless everybody stuffs their money under the mattress, it remains circulating in the system - i.e. all the money that is saved remains available for investment. savings absolutely need to be rebuilt, so the more people save the better. one of the economy's problems is that too little was saved, and too much was spent for consumption on credit. unfortunately one can not get something for nothing - the boom has created an artificial reality in which this seemed to work for a time, but in reality capital has been consumed, respectively malinvested. the bust has merely revealed this recently - essentially we have passed the threshold at which the illusion of wealth engendered by the credit boom has been rent asunder.
Thomson has his economics perfectly correct.

obbop said...

Bad Americans!!!! You were not saving!!!!

Of course, no mention that the interest rate was less than the inflation rate thus your saving meant a LOSS of wealth.

Then, add in the taxes paid upon earned interest.

As has been proven, the stock market is a gamble that the typical low-paid American worker can not afford to take a risk with.

Don't worry, the elite class will always do well.

It's you mere commoners that pay the economic price.

Remember, the game is rigged. The elite class designed, owned and operated economic systems are not designed to funnel wealth to you.

It's all one BIG racket and the masses of citizens are pawns in the game.

You, the vast majority of citizens... you WORK for your money.

The elite class? Their money works for them.

Also, the tax system is designed to benefit certain folks.

Warren Buffet, a very wealthy fellow, told the truth about the corrupt systems forced upon us when he mentioned his lowly-paid secretary pays a higher taxt rate then he does.

http://obbop.wordpress.com/

KureKong said...

Saving doesn't necessarily mean saving 100% of your earnings or even 100% of your discretionary money. Saving can also mean saving SOMETHING, a forsaken act in the USA for the last few years.

Avl Guy said...

No he's not a lil short on economics. The nation of Japan, population 127 million, has enjoyed a net household savings rate for decades. Perhaps not every Japanese adult saved at the same time, but then, they did not have to in order to achieve that goal. I’ll take their ‘lost decade’ over the Damocles Sword of Unwinding Debt above us.

Consensus is that it’s a great video for poking a finger in the eyes of economists who support more spending atop household and corporate debt that's at historic highs. Admittedly, other economists are wise enough to also support the point that more spending is not going to counter deflation nor stop deleveraging in a nation that is import-dependent with nil savings and reserves; so I guess the entire lot of economists are not dismal.

Most folks know that there are alternatives to racking up $trillions in unfunded obligations as well as reckless money-printing to ensure reckless boomers (and their elders) get their promised golden retirements while bequeathing a weaker more debt-ridden USA to their adult kids and unborn babies. It’s not just a choice between 1. reckless abandon or 2. panic.

Nonetheless, we're as good at spinning as we are at communally-shared self-deception; the ‘clock’s hands’ have moved $8 Trillion closer to Zero Hour, when we execute an unacknowledged, unstated defacto sovereign default. Yes, yes, we'll spin a beautifully crafted moniker for it on par with "Quantitative Easing" and "Collateral Damage" as subterfuge for 'feeding dollars (t-bills) to banks, for free' and 'killing civilians', respectively.
And we will get away with our undeclared defacto sovereign default until our creditors find the temerity to protect themselves.

just some dude said...

What?! Everybody can't save at once? Are you mental? Of course we can! If we all lived in a society where we could live solely off of what we produced than we would be consuming part of our own production and saving the excess. So the excess would be a measure of our true wealth. So everybody would be saving at once and everybody would be getting wealthy. Now obviously we don't live in an environment where we can all live off solely what we produce. But that doesn't change the notion that we all can't save our excess earnings at the same time and all get wealthy together. There is not a finite amount of goods and services in this world. For example, if I produced $5,000/month and spent $4,000/month on necessities and some entertainment and everybody else did the same then we would all be getting wealthy. The key to all of this is that we all need to produce something of value and live within our means which is entirely possible. Unfortunately, as a country we have been borrowing in excess to spend on unnecessary items. We could all be wealthy if we saved to produce instead of borrowed to spend. There are enough resources and to spare on earth for all of us to be wealthy. The other key to this is a monetary policy that isn't based upon debt. Currently the money that gets put into circulation is created when someone borrows with a promise to pay back with interest. That means that there will never be enough money ever to pay back all of the debt plus interest. So a change in monetary policy and a change in consumer sentiment is all that it would take for all of us to become wealthy.

Barbarous Relic said...

rhhardin:

Households are up to their eyeballs in debt and they don't want to take on any more. The government steps in and says "Don't want to borrow? We'll do the borrowing on your behalf." Instead of saving, we'll throw away our capital on bridges to nowhere. We need to save and the economy needs to adjust. When the government makes malinvestments to prevent any net savings, it only delays the necessary adjustments and prolongs the slump, just as the New Deal did.

thinkpeace said...

Interesting, but he (and most others) are ignoring the elephant in the room - we are exceeding limits of nature. Estimates are that as a species we are consuming 130% of the earths regenerative capacity. In other words, we are in overshoot. Nature allows systems to exceed capacity, but only temporarily. So the big question is, can capitalism address the issues of ecological overshoot? Until now, capitalism has operated as a way to convert resources into profit without regard to sustainability. Economists have always told us, "growth is good". Growth implies ever increasing consumption of resources and can not be sustained. Can we modify capitalism to address this shortcoming? Can we replace it with some other system? Or, are we doomed to ecological collapse?

RJMConsulting said...

Fred's a doofus. The encouragement to spend is intended only to counteract the paradox of thrift. This is a demand contracting recession, and it is happening globally. Throwing easy grenades at people who are admittedly "hoping" the future resembles the models (but know as well as Fred implies that no one can MAKE you confident and full of trust) is just stupid.

More of the same "fear the educated specialist" dogma that has informed the republican right. If only there was a magical "rapture" and all of these "right thinking" pinheads could leave. The struggle would be just as daunting (after they've gone), but at least we would be spared the tedium of folksy "common sense" that amounts to nothing.

சதுக்க பூதம் said...

It is easy. I am not sure why we are worrying for this problem.We can print the money. When things are going out of our control, we can destroy the current $ and can create new $++ and whatever money foreigners has, let it go to garbage.(As we stopped gold convertability in 70's)

Brian said...

I think it is hilarious! Do none of you get that this is a completely sarcastic bit? Re-listen to this and understand that it is all sarcasm on Thompson's part! He is making fun of every action that has been taken thus far.

The majority need to spend less and save more. It might not help the economy immediately, but it will sure help you sleep better at night.

J said...

wow. people have the observational skills of a door knob on here. fred is also an actor, and he is clearly acting here to make fun of washington annd to mock its dubious policies.

Stanislav said...

Hmmm. Interesting view. However it does not leave us with any suggestion on how to become responsible for our own lives and our own finances. Being wealthy does not lie in savings alone or in ceasing to live beyond our means.

As my mentor Leland told me some 30 years ago: The true financial independence --- Is the ability to make the decision on your highest priority without consideration for money.

And he continued, Stan -- Your economic security does not lie in your job; it lies in your own power to produce - to think, to learn, to create, to adapt. That’s true financial independence. It’s not having wealth; it’s power to produce wealth. It’s intrinsic.

It's been said that if we are not part of the solution then we must be the part of a problem.

To become part of the solution we must have an access to relevant information. Information is the connecting bridge between energy and all forms of consciousness. Money is energy. Consciousness causes awareness, which in turn will bring and/or attract relevant information. Beautiful cycle isn’t it?

Thanks to Leland and his understanding of RELEVANT information based on UNIVERSAL LAW and the TRUTH, I was able to become debt free and financially independent for the last 20 years.

She/he who is willing to face the reality and the truth, and lead his/her life according to the universal, not manmade law can do the same.

Anybody wishing to discuss their personal options, feel free to contact me at:
www.Health-Wealth-and-Happiness.net

You do not need to be a victim of this financial scam. The choice is yours of course as we and only we alone create our own reality.

Merry Christmas to all and Debt Free New Year 2009.

byrd17 said...

New here but feeling cosy already.

I'm convinced! I'm going to buy a house and take out a small mortage while my cash still has value.

All I want to know is, how much equity should I have so the debt forgivers help me out and some mean old bank doesn't come along and foreclose?

80%?
70%

Or are we just going straight to the "Grapes of Wrath" scenario (again)?

CBW2012 said...

Mr. Thompson is also mistaken in his thinking that Americans may be put back to work digging holes and that there is a no limit to the amount of holes that they will dig. This is not true! Because those digging the holes will eventually form a union which will then "bitch" about the amount of holes they have to dig, the conditions in which they dig them, and the compensation they receive for digging them. This will inevitably end up in the Hole diggers union pricing them out of jobs, the government will out source these jobs to India and the hole diggers will then complain about how their jobs were outsourced and won’t understand how it happened. Because shouldn't everyone be "entitled" to a six figure salary?

James said...

Spend, Baby Spend!!

A said...

"I'm not really an economist, I just play one on TV".