Poor Salesmanship is one of the reasons given for the bailout failure, and at this stage I’ll stick with the term bailout over rescue. But the whole area of economics and the markets suffers from poor explanations and language use. I was made aware of that today from the uniformed comments, the non-specific fear being generated over the issues.
I was interested to see, following the 7% +/- hit on the North American exchanges how we would fare. The initial hit was around 4% but that halved by afternoon trading. What really stirred up the locals were comments like “a $60 billion loss”.
My reaction was to advise that we see the day out and that it was, in reality, a paper loss not real money. Sure, anyone who opted to sell down made a money loss, but presumably buyers are looking to make money gains. To that extent, the market figures are illusory. [Ok, I know some of you are far more acquainted with market mechanics than I am, but the claim is broadly correct.]
But then I was asked; if it wasn’t real money why were the banks collapsing? Hang on! Surely that is another issue again, a different market issue. But the punters can only see this vaguely understood thing which bandies around sums like billion and trillion. At the top end the numbers are going cosmic, at the bottom they haven’t really moved for over a decade.
This is the issue I have the growing confusion between economies and markets, made worse by the
When McCain and others bleat about the ‘sound fundamentals’ what the hell are they talking about? Do they know? In the model the Bush administration has developed they only see the markets as the economy and the markets certainly aren’t sound.
Aussie and Canadian fundamentals are sound, but then we’ve stuck with a mixed economy model, despite attempts to follow the