Why I Need to Know

I've been doing some research into economics to try to figure out this mess for myself. I mean, I've got everyone blaming their pet scapegoat, no one can really agree as to whether this horribly expensive bailout is really a good thing or not (It's welfare for the rich! It's a way for the poor to keep their homes!). 'Cause it may be more broad than we suspected. For example, everyone has been pointing at the sub-prime loans - allowing people who don't have the credit to back it up to have houses. I have been advocating a broader brush - examining the raising of the minimum payments on credit cards, the advent of the credit score being used to raise rates on insurance, and the rule changes that let credit card penalties and interest soar - to determine who people who may have had the credit to back it up turned into people who didnt' have the credit to back it up. That much makes sense to me, because it ties into to things I know something about - how to buy a house, how I've seen people's credit tank, and if everyone else is tanking to, this might be one reason. In the past week or two, I've discovered it may be even broader - the difference between retail and commercial banks, what companies we've allowed to take risks with what. That starts pulling in economics. As I dig deeper, I'm seeing economists talking about M1 and M3 and how Greenspan's policies contributed or did not contribute to the mix.

On top of that, there is a rather steep learning curve, and there's this overwhelming sense that we need to move fast and trust those who've studied this thing that they know what they're doing (hence Bush's request for immediate action with little or no right of review?) This is exactly where I say back the truck up and let me think for a minute. I think the example from this very technical article puts my skepticism best:

[Example 1:] A Turkey is fed for a 1000 days—every days confirms to its statistical department that the human race cares about its welfare "with increased statistical significance". On the 1001st day, the turkey has a surprise.

He's analogizing something different - Imagine that the Turkey can be the most powerful man in world economics, managing our economic fates. How? A then-Princeton economist called Ben Bernanke made a pronouncement in late 2004 about the "new moderation" in economic life: the world getting more and more stable—before becoming the Chairman of the Federal Reserve. Yet the system was getting riskier and riskier as we were turkey-style sitting on more and more barrels of dynamite—and Prof. Bernanke's predecessor the former Federal Reserve Chairman Alan Greenspan was systematically increasing the hidden risks in the system, making us all more vulnerable to blowups. However, if you take it to cliche-like generalizations (We're all the turkey! Koo-koo-ka-choo! Wait, wrong species.) it's imprudent to rely strictly on other's interpretations of what's in our best interest. Even if, absent a Chicken-Run style insurrection, there's really not a whole hell of a lot we can do about it.

For starters, Milbarge has some links up about the basics. The turkey article I cited has some rather difficult statistical analysis - I am emphatically NOT a math person, so I'm going to have to read this many times. For an economoic analysis, I'm afraid I have to start with Wikipedia (fiat currency and monetarism) and go from there to more in-depth treatises. Wish me luck. I also advocate doing the research yourself, at least if you're the type who wants to know where the train you're on is heading, whether it's just for a little side trip or a jump off a cliff.