Reply #45: This is wrong in many ways (detail inside)

[anigbrowl]

Of course the writer of the original article makes many valid points. This is a dreadful situation. But bear in mind that just as a bull market sees a lot of people selling bullshit, so does a bear market see people selling bear grease.

Rude awakening #1: yes, current economic models have proved unreliable because they assumed Gaussian probability curves and severely underestimated volatility. That does not mean that Obama or his economic team are floating along in a bubble of ignorance, believing it's just a statistical anomaly. The administration's economic policy represents a radically different approach.

Rude Awakening #2: yes, it's worse than expected. but it makes no sense to say the administration is hiding from this fact, while quoting Paul Volvker on how bad it is. If Paul Volcker is saying that the economy sucks (as he is), then it's reasonable to assume Obama is paying attention to this as well - after all, this is why he recruited Volcker to begin with.

Rude Awakening #3: Oh noes, stimulating and repairing the economy is going to be very expensive. Well yeah, of course it is. The authors solution is to go ahead and let the payments system collapse and basically allow the economy to implode so we can construct a new one out of the ashes of the old...wait, what? This is kind of like suggesting that the crew and passengers of the Titanic should have tried colonizing the iceberg instead of trying to contain the leak and/or deploy the lifeboats.

Rude Awakening #4: 'Um, we got it wrong repeatedly and it's worse than even we expected. So now, we'll predict it's going to get worse again - the only wise thing to do is trust us with your money because we can't possibly be wrong this time.'

Personally, I think the market is going to go lower than even they predict. Last summer/fall, I guessed 6500 as a market bottom (somewhere on DU if you can be bothered to look it up). Now I'm thinking that 4800 is more like it, which is, of course, bad. However, I don't take this to mean we're going to turn into 1990s Russia or some Mad Max scenario. I do envision some kinds of worst-case scenarios, but none of them involve the collapse of modern society. I only think these worst-case scenarios will come to pass if obstructionist doomers like the writers at Money and Markets have their way and seek to accelerate rather than brake the downward economic slide.