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| Mon Mar 31 23:00:00 2008 Carpe Seize! |
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| Mon Mar 31 23:00:00 2008 Carpe Seize! More talk of markets seizing up. |
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| See my below. Basically, I'm seeing more references to markets "seizing up." I don't think most people know what this phrase means, particularly the people using it. For instance, this article says "everyone is affected when the financial markets seize up." He refers to the Savings and Loan bailouts and Long Term Capital Management, both collapses that, while painful, were not catastrophic to the nation's economy and cleaned out industries that had been poorly managed for a long time. In other words, they had it coming. The same article also mentions the Great Depression and Panic of 1907, but those aren't relevant since, again, they were before the FDIC. (Did you listen to FDR's speech on that page? Still relevant today.) Then this article gives a more accurate definition of a seize-up: "loans [are] costlier and harder to come by." That's right: once a bank realizes it has screwed up and made a bunch of bad loans, it has to start being more careful. I recently got another mortgage: it was harder than it was 3-5 years ago. No surprise. And this doesn't qualify as a meltdown, nor are Great Depression analogies appropriate. The bottom line? The big market seize up is apparently just the realization that it is harder to get loans. The Federal Reserve's action to reduce rates is a fine way to tackle this for now. I still think bailing out the investment firms that made bad mistakes is not justified. Comments |
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