Comments on: Government Bail-Out Of The Auto Industry – Part 2

By: Brian McMorris

Brian McMorris — Thu, 19 Feb 2009 06:44:33 +0000

Nirav, as you know, I am in with the idea of a gold spike. It has happened before and it is probably happening now and it can be really big (I don’t discount the idea of 1:1). But these things always end in tears. This is just the next in a series of investment bubbles, one moving to the next. And gold is one of the most dangerous games to play because of its narrow supply base and potentially huge demand. If you are nimble and get out in time, you can do well. But be careful. I am posting a story on gold on my blog tomorrow.

By: Living Off Dividends & Passive Income

Living Off Dividends & Passive Income — Thu, 19 Feb 2009 05:31:02 +0000

Brian,

thanks for the calculation about the $100 Billion.

I’m not worried about the economy. Eventually things will get better. They always do. But I’m really keen on profiting from these periods of inequilibrium.

Have you seen gold prices lately?

By: Brian McMorris

Brian McMorris — Thu, 19 Feb 2009 04:34:48 +0000

I am not disagreeing with Ben, James or Snerd. But for others who are ranting that “the American economic system is a joke” or “we are all going to hell in a hand basket” or “it is the end of America”, let me share my insights.

I am in the engineering profession for 30 years. One thing I have learned, there is no system made by nature or by man that is not subject to occassional “process upsets”. In nature, take a lightning storm or a volcano. It is the same with man: the more we try to fine tune a complex system (the economy in this case), the more any unobserved or underappreciated variable or aberration will build up pressure until the process erupts.

In the engineering world, we observe that process upsets will eventually stabilize under control, but that return to control is always subject to overshoots and undershoots while the process seeks equilibrium.

All this is a way to say: don’t worry, be happy. It will get better. If you don’t enjoy the spectacle (and I do in a morbid kind of way), take a long nap and when you wake up, it will be over.

By: Snerd

Snerd — Thu, 19 Feb 2009 02:33:04 +0000

Our system works if the government would butt out and let it work.

If GM and Chrysler are going under because of poor management (which includes giving away the store to the Unions), then so be it.

But artificially and temporarily propping them up (which, it is my opinion that this is a payoff to the Unions for their support of Democrats) only prolongs the agony. Market forces will eventually win, and if they don’t become lean and mean, GM and Chrysler will go under.

By: Ben Moreno

Ben Moreno — Thu, 19 Feb 2009 02:05:53 +0000

All this stuff just goes to show what I always thought anyway, “Hey, maybe our system doesn’t work…”