Spotted this article on Reuters.com this morning called "October consumer prices and home starts plummet" and found it really fascinating.  If you read it, it talks about things like housing prices dropping and deflation as bad things.  Think about that for a moment.

Houses dropping in price means more people can afford houses and fewer new loans will be defaulted on.

Isn't that good for the economy?

It's certainly good for people who want to buy homes.

But the Reuters article insists that the economy is weakening even further than it has.

The article also mentions deflation as another example of an ever-sinking economy.  The thing is, what do we mostly bitch about when it comes to money? 

Inflation.

So, shouldn't deflation be a good thing to us?

I say yes.

While the article also reports on consumer prices dropping and a few other things that generally the economy is weakening, I say prices dropping are part of the system working.  Yep, that's right–this is ThePete saying capitalism and free market economics both work just fine when not abused.  Leaving them be, letting losses and crashes occur means that things were getting to big for the system to support.  Now we can rebuild on more stable footing. 

Prices dropping is a natural function of the law of supply and demand.  We American consumers have stopped spending as much as we used to–THIS IS A GOOD THING.

This fills my heart with hope for humanity that we're not just a bunch of dumb sheep doing what we're told.  This is proof we can react to what is really happening and do the right, logical thing.

So, we stop spending, prices drop to entice us to buy, to a certain degree we do, and slowly but surely, the economy builds back up again.

Color me malfunctioning, but my memory circuits tell me this is how things are supposed to work.

Bailouts now would just delay our economy's recovery.

Tell me I'm wrong–please–and tell me how so I can learn.  Thanks.

One last thing about this article.  Since it puts everything in terms of its level of badness for the economy, despite those things being good for consumers and really the stability of the whole system, doesn't this article end up coming off like an advertisement for the corporate greed mindset?  That we all need to be buying and borrowing at all times to keep the economy moving and growing and dominating (despite it's complete crashing and bleeding out recently)?  It reminds me of how the media isn't liberally biased, it's biased toward money–and the furthering of the belief that "greed is good."

Gordon Gecco is dead.  Let's leave him buried, shall we?

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A few days ago, Twitter user SRivera posted a link to an article at Telegraph.co.uk:

IMF may need to “print money” as crisis spreads
The International Monetary Fund may soon lack the money to bail out an ever growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money.

Yeah, that’s right, the IMF might have to print its own money. Here’s a bit from that article:

The IMF, led by Dominique Strauss-Kahn, has the power to raise money on the capital markets by issuing `AAA’ bonds under its own name. It has never resorted to this option, preferring to tap members states for deposits.

The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world’s central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis.

“The IMF can in theory create liquidity like a central bank,” said an informed source. “There are a lot of ideas kicking around.”

Yeah–and conspiracy folks thought we’d be seeing the “Amero” before the NWO fully kicked in, but if suddenly the IMF becomes the “Federal Reserve” of planet Earth, that’d kinda remove economic sovereignty (at a basic level, at least) away from each nation.

First Globalism, now… Galactism?

I wonder if aliens believe in the free market…

Over the weekend I had a good discussion with my step-dad about the bailout and decided I should revisit the topic despite the USG passing the bailout bill into law.

One thing I didn’t let fully play out in my mind was exactly how far a credit freeze would go. If the banks stopped lending every day American businesses would grind to a halt. My step-dad sells marble counter-top installation services and his job would stop cold–if people stop getting home loans, homes stop getting built and that means no kitchens are built in homes and that means no marble counter-tops would be sold.

And this is just one thread of the giant sweater that is the American economy.

The thing is, I’m OK with all American business stopping for a little bit. I think our system is royally screwed up if it so heavily relies on CONSTANT lending EVERY DAY. But what can you do? Come up with a better plan? Sure! But you can’t just walk up to Henry Paulson and say "Yo, this system, it sucks."

You need the support of millions in order to make a change that the system itself would never want. See, Paulson used to run one of the banks he’s going to be bailing out. Yeah, conflict of interest much?

Paulson wants his old pals to get bailed out and he likes the system the way it is. Everyone rich can stay that way and risk is passed onto the USG and, indirectly, the American people. This is the ultimate crime of the mega-corporations. They make themselves so "valuable" by being HUGE. But they are so huge they crumble under their own weight. So, they are bailed out by the system that allowed them to get so big in the first place.

So, something big has to happen that turns everyone against that system.

Make no mistake, if it weren’t for the USG and Wall Street’s breaking the rules of the free market, the free market would have failed.

The ONLY thing keeping our economy alive is this new money.

Doesn’t that scare anyone else?

Think about that: the only way to save the system is to break the rules of the system. Our leaders (who allowed this to happen in the first place) are just propping this mess up with a stick, hoping the stick won’t break.

The reality sure seems to be that if we don’t suffer now for this, we’ll suffer later.

Seems simple enough. But wait–if it’s that simple, why did the Federal Reserve pull $630 billion from other central banks to help with our crisis only to have the USG pass its $700 billion bailout package? (Read about the Fed’s move: http://thepete.com/…government )

Why would the bailout package be needed at this point? And why are some banks considering the possibility of not accepting money from the bailout at all? (Read more about that: http://www.guardian.co.uk/…et.bailout )

In America we are not adequately prepared as kids to deal with the absurd "complexities" of the economy. Every time I try to learn more about stocks, futures, derivatives, etc, my brain starts to hurt. My basic sense of logic is forced out of shape just to follow what these people are telling me.

It all seems like a big shell game and frankly, I think the market should be shut down. It’s all just a scam–a game of slight-of-hand where the magicians move money from the many to the few. It’s like Vegas times a million–or should I say 700 billion?

We need to get back to simple, honest business-doing. No more unregulated free market. Let’s mix in some socialism and water this crap back so we don’t get in over our heads.

So many times we in the "Blame America First" crowd (aka the "Lack of Blind Faith in the American System" crowd) are told that all we do is whine and that we have no solutions.

Well, I’ve mentioned mine. Shut down the stock market, introduce certain basic aspects of socialism that cover basic needs for people and serve as a parachute for certain huge businesses that get too big to support themselves. We have people dying because they can’t afford health care. Yet we’re letting criminals get away with it on Wall Street and we pay them to do it. I say we let everyone go to the doctor’s including the banks and the corporations that fail. We’ll look at them, fire who screwed up, get them back on their feet and moving.

They fail again? We break them up into their component parts.

No more corporate behemoths that bring down the entire economy when they fail.

Who ever thought up the current plan should be fired and forced to live with poor people for a while.

Of course, as long as we put up with this system, it’s We The People who are giving the government and the banks and the corporations a blank check.
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Happy Saturday! Bush and TreasSec Paulson want Congess to agree to spend nearly three-quarters of a TRILLION dollars to save our economy.

Where the hell do we have that kind of money laying around? You can’t even say "Oh, we’ll be paying for this for decades in taxes!"

You can’t borrow money from the future. We WILL be paying it back for that long but where is that money coming from and what were we going to use it for?

I’m pretty sure we will be just conjuring the cash from nothing but I’d like to hear that from someone official for once.

Do you have any idea how injecting 700 billion new dollars will change the value of the US dollar? The value will drop even lower.

What worries me even more is that Bush made the comment today that “The risk of doing nothing far outweighs the risk of the package.”

Doing nothing would be a much greater risk than spending $700 billion.

He just admitted that our economy is totally screwed.

And I mean TOTALLY.

What’s worse than needing to spend nearly one-tenth the national debt to "save" our economy?

I’m betting that the media and even most people won’t get the severity of this.

The US economy is FUBAR and the only thing that will save it is 700 BILLION.

One helluva thing to wake to.
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