Monday, September 29, 2008

An Interesting Take On The Fiscal Rescue Plan

This is a very interesting take on the economy and the trouble we are in.

I'll Speak Very Slowly [UPDATE].
by RenaRF

Little known fact: I have a degree in economics. I went to one of the top three economics schools in the country, and graduated with honors. Caveat: The area I studied was WAY academic. Rather than adhere to market economics, my school focused on the inherent rationality and irrationality of actors in markets. In other words, it focused on the role of investors and their individual and collective emotions as market drivers in and of themselves, completely outside of principles of accountancy or market math.

So with that, over the fold and I'll give my dumbed-down impression of the state of the economy and markets.

I'll try to forget that I've just heard Boehner, Blunt, and Cantor blame Pelosi's SPEECH for the failure of the Rescue Bill. And make no mistake - this is a rescue bill. Stop thinking of its central premise as that of a "bailout". While some "bailing out" will, by necessity, occur, the rescue is the key focal point of this bill.

Imagine that that human body, in its entirety, is the economy. Different parts of the body represent different sectors of the economy. So maybe an arm is the pharmaceutical sector. And maybe a leg is the IT sector, and another leg the energy sector. But the central system to the human body is the heart. If it doesn't function, all other systems in the body shut down.

Blood that flows to and from the heart is comparable to money that flows through the market. The availability of money to leave the heart and travel to other areas of the body - market sectors - is what drives the overall economy. It touches EVERY area of the economy.

The financial services sector is the heart of the economy.

For more read here.

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