Uncertainity

I, like everyone else, have wasted vast amounts of time over the last few days reading articles on the finical crisis. Why did it happen? What can be done to correct it? Should we correct it? When will we get our chance to make a run on the bank? All these questions and no clear answers.

My feeling on the crisis is that we will only know the right thing to do in about a decade or two. The economy is wicked complicated, filled with equal parts bullcrap and gold. The market's well being is based on the faith a large collective of people. Is the market bullish? Well all these people feel like it is, so it must be. The more collective good faith the market has, the better it is. Fuel and commodity prices are based on perceived future value. Companies that post record profits take a hit on their stock because they didn't excel expectations. Anyone who says they have it figured out is either Warren Buffet or they are lying.

Economists still haven't agreed on what was the exact cause of the Great Depression, even after fifty years of analysis. I have yet to see a theoretical set of steps that would have prevented the depression once it began. My feeling is that even with the benefit of hindsight the perfect solution will not be evident. There is the possibility that a bailout will instill confidence and the economy will rebound. There is also the possibility that a bailout will create massive inflation, causing even greater problems.

It could be that the problems are bigger than the will to solve it.

My favorite quote was from Warren Buffet. He had made comments a while back saying that you can't see who's swimming naked till the tide goes out. His comment today - "Wall Street looks like a nude beach.."