I find it comical how people are talking about the market "losing $1.2 trillion" because the bailout failed. There are even some who are suggesting that we lost more money than the $700 billion we would have spent on the bailout. (Note: There was a specific comment on Yglesias' blog that I intended to link to, but I can't find it anymore).
Newsflash: $1.2 trillion of assets was not destroyed in any meaningful sense. No houses blew up, no food suddenly went "poof!" Nothing was destroyed. What happened is that some people suddenly found that the nominal value of their houses, investments, etc. went down.
In other words, the loss was on paper - and it probably consisted of a loss of value that wasn't real anyway, that is to say that the assets were overpriced.
What is happening here is simply a realignment of the relative value of goods and of who the wealth belongs to - an overdue re-alignment, in my opinion.
That is all.
No comments:
Post a Comment