Economics lesson

To say something drastic is going on in the economy is an understatement. I don't have much time to follow the news on this as closely as I'd like and my lack of educated posts here probably makes that obvious. I've had a few people ask me for my explanation of what's going on and my opinion as an "economist." (I put that in quotes because my current job has taken me away from pure economics- another reason it is harder for me to follow what is going on).

Thanks to a blog post by SWIND, I don't have to take the time to create my own analysis! I will re-iterate a few of his points here:

- The President does not have as much control over the economy as they claim to, or as people believe they do. Their policies do matter but they can't control the inevitable swings in the economy.

- Tax cuts and the bailouts will not just help the "fat cats" - the bailout is critical to keep the economy going regularly. The companies aren't being saved to go on as usual. If the the bailouts don't happen everyone will be worse off.

- Regulation is probably needed but it depends what the regulation is. Usually in times of financial crisis, ie. The Great Depression, the government responds hastily with regulation and programs to solve that particular problem, ie. The New Deal, but that ends up creating problems in the future that could have been avoided. They need to take a more holistic approach. From a pure economic theory basis, I am opposed to regulation since free markets should regulate themselves. However, that is in the case of assumed"perfect markets" which is only a theoretical idea. (Our catch phrase in grad school was "Just assume it!") The global economy is not perfect so the theoretical idea that markets can regulate themselves perfectly won't hold up either. So, some government regulation is inevitable but needs to be as minimal as possible, very well thought out and analyzed.

There. Now I can go back to commenting about more trivial matters like music, movies, football, and my trip to the Grand Canyon.