Two snake oil salesman . . . least, that’s how it looks. One of whom at least knows that about them both, the other of whom has been made braindead by fucked economic theory.
Watch the unedited interview here:
Jon Stewart and Jim Cramer: The Extended Daily Show Interview.
And ask yourself why people so eagerly buy predictions from anyone, with so little apparent thought about it.
Take home message from the whole thing: the future is inherently uncertain, and it’s even more so when your only guide is bad economics and a talking head on the tube. So learn a little something for yourself about where your money’s going and why before you decide to put it there. Get your head around some decent economic theory yourself. And take advice, but in the end make your own decisions based on your own independent judgement, so you can’t blame anyone else for your errors.
And always keep in mind those two words we hear so little about these days, but should be hearing much more: Caveat emptor.
UPDATE 1: Stuart Wood at the Austrian Scholars’ Conference makes more explicit what it means to think independently in this context, which is to say, to think entrepreneurially:
“The future is unknowable but not unimaginable” - Ludwig Lachmann
The future is created by the actions that we take now. The future is changed by our actions. Entrepreneurs create a new world through their actions…
The market for goods is essentially known. We value a good with respect to our own personalities… The asset market is different. The values are constantly changing and very hard to predict… The stock market function quite differently from the good market. Risk perception is subjective… Risk is the opinion a person has regarding his own ability to forecast the future accurately.
UPDATE 2: Also speaking today at the Austrian Scholars’ Conference is Peter Schiff, who (not incidentally) backed by Austrian scholarship reckons “The Meltdown Should have Surprised No One.” Indeed, that’s the title of his talk. Best lines from his presentation:
- “I don't see why anyone should have been surprised by the meltdown. It seemed obvious that is was coming. . . “
- “The government still looks at … prices falling as a bad thing. It's a solution!”
- “So, the free market was getting the blame for a problem created by the govt, and the govt is using this econ crisis to get even bigger!”
- “The govt doesn't want to stimulate the economy, they want to stimulate spending.”
- “America became the world’s richest economy because we borrowed and produced; recently we've just borrowed and spent.”
- “The only way we'll rebuild is with a smaller govt, not a big govt! We need sound money, and high interest rates!”
- “This crisis will end up being a currency crisis! There's no contraction of the money-supply, it's expanding! It's like a giant explosion and everyone's running towards the blast!”
Here’s the notes from his talk, via Twitter] “
I don't see why anyone should have been surprised by the meltdown. It seemed obvious that is was coming. . .
Mark Hanes [the man who started Etoys] told me "you expect me to believe we could have TWO bubbles in ten years!!!???"
But both bubbles were related, they were basically the same. We just replaced one bubble with a bigger bubble.
We had a stock market bubble because the fed reserve pushed interest rates too low. Eventually, Greenspan began to raise interest rates. He burst the bubble. And when it burst, the bad investments were exposed.
But instead of letting the recession run it's course, the fed stimulated the economy, and behold, another bubble appeared. We had record car sales, record home sales, and people got the money for this by going into debt.
This time 'round everyone bought real-estate with someone else's money.
In 2005 the average homeowner believed his house was going to appreciate by 25% for the next ten years. People didn't care what the mortgage payment was, all that mattered was that they thought they were going to be rich. For a few years, this worked. The people who bought houses were getting rich. . .
I knew that problems were coming because the banks had all these IOU's, but those are no good if people can't pay them! Everybody had this idea that housing prices couldn't go down. But I knew that it wasn't so. Everybody wants to go back to prudent lending, but nobody wants to go back to prudent pricing.
The government still looks at home prices falling as a bad thing. It's a solution!
Unfortunately, people keep placing the blame on the market. "Not enough regulation! Too much greed!" they cry. They don't understand that there's a reason that people acted that way. "Whenever there's a problem, don't worry, the government's gonna rescue you!", that was the mentality.
The only things that needed regulation were the ones created by the government/ We didn't make the losses go away, we just postponed them. Once you've got securitization, you've got the moral hazard.
For normal lenders we don't need govt regulation. The rating agencies want jobs, and they get jobs by coming out with good ratings. In the old days when banks lent their own capital, they wanted a fair appraisal. [Now they lend ‘money’ created by the Fed.]
Nobody in this countries cares at all what the banks do with our money, because it's insured by the govt! The govt has created a moral hazard by guaranteeing the accounts.
… So, the free market was getting the blame for a problem created by the govt, and the govt is using this econ crisis to get even bigger! To save us from capitalism with socialism! … Obama wants to replace the invisible hand with the hand of the state.
It's not government that's going to restore the economy, it will be the free market.
They wanted to bailout companies that should go under. Companies that are not making a profit. We don't want work just so we can have a job, we want work so we can produce something. We work because we want stuff, not because we want to work. I can understand why the executives want to preserve their jobs, but society shouldn't want to preserve them. If we let [companies] go bankrupt, is that an end to [say] the auto industry? Of course not! An entrepreneur would step up and buy the assets and and once again start making cars profitability. . .
We don't need all these investment banks! And there's a lot of small firms out there that are expanding and will expand more if the govt gets out of the way. How can these guys make multi-million salaries when their business's are going out of business?
The govt doesn't want to stimulate the economy, they want to stimulate spending.
The only reason is sort of worked before is because we were able to borrow from the rest of the world, so as we spent money, we counted that as our GDP. But we weren’t growing at all, we were simply spending . . .
We have a lot of Americans working in jobs that they shouldn't be in; we need more Americans making stuff, producing things. Back then, we borrowed money to make investments, to build infrastructure, to build farms, we didn't just spend it. When you invest you have a real asset, and then you can generate revenue.
America became the world’s richest economy because we borrowed and produced; recently we've just borrowed and spent. The only way we'll ever rebuild the econ is by stopping the stimulus and bailouts.
Obama talks about how's he's different from Bush. Everything's the same! (only worse):Obama's fiscal policy is worse than Bush's. The things [Fed chief] Ben Bernanke is doing now will dwarf what Greenspan was doing. The combination of Obama-Bernanke is worse than Bush-Greenspan. Only the rhetoric is different, the policy is the same!
The fact that credit is being denied to Americans is a good thing.
We need to eliminate the deficit and go with surplus. We need a recession! We need one badly. This is the price we pay for years of indulgence and reckless spending.
The only way we'll rebuild is with a smaller govt, not a big govt! We need sound money, and high interest rates!
The results instead will be no different this time 'round. We are right now suffering the consequences of the stimulus and bailouts of 01-02 . . .
This crisis will end up being a currency crisis! There's no contraction of the money-supply, it's expanding! It's like a giant explosion and everyone's running towards the blast!
. . . We're exactly repeating the 1930's. Everything Roosevelt did only made the great depression worse -- that situation is very similar to what's happening now. Bush = Hoover, Obama = Roosevelt.
Look at the problems we had in the 70's, but we at least had a sound economy at that time. People say we can't repeat Japan's mistake, but we're doing just that. Japan kept their interest rates too low, exactly like we've done -- real-estate prices are still falling in Japan; the govt in Japan refused to allow the market to function, so they kept intervening.
When the world stops financing this, it's going to come to an end, and we'll have to make these hard choices, but people still think that when America stops consuming, the world will collapse. America isn't the engine of the world, it's the caboose!
. . . Because the world lends us too much money, there's a capital shortage. They're better off not lending to us.
Since many of you were asking Peter Schiff’s presentation, here it is: Why the Meltdown Should Have Surprised No One .
And yes, you can still follow the conference on Twitter.