Be the bid!

[Japher]

invest in what you know - that's sound advice

[Aeson]

Originally posted by KrazyHorse
That's a load of hooey. Why would the possibility of gov't money cause correction to overshoot?

The way it's been handled of course, which was mentioned in the part of the post you are choosing to ignore.

In times of crisis a steady hand is better than running around like a chicken with it's head cut off. When we have distrust rampant in the market, keeping people in the dark about what you're doing is counterproductive as well (unless you can keep them so far in the dark they don't know you're acting at all... which is clearly not the case here... at least not totally). Yet what does the Fed/Treasury do? Incoherent policy, waffling back and forth (even in direct contradiction to statements they made just days/weeks before), hiding the details of as much of their actions as they can... it's just backwards, increasing distrust, increasing instability.

[KrazyHorse]

The way it's been handled of course, which was mentioned in the part of the post you are choosing to ignore.

"Risk" from the possibility that the government might give you a bunch of money will NOT decrease your share price.

You are making less than no sense.

[KrazyHorse]

You can argue that if the government set out clearer guidelines for what it was going to do then share prices would be higher given the same amount of taxpayer money being put in. You cannot reasonably argue that running a lottery where some companies get taxpayer money depresses stock values.

[OneFootInTheGrave]

strange week, but markets are often irrational in short term... worst job losses since 1974 = DOW up 3%... 1200 point rally from last week is still holding up

[Aeson]

Originally posted by KrazyHorse
"Risk" from the possibility that the government might give you a bunch of money will NOT decrease your share price

Originally posted by KrazyHorse
You can argue that if the government set out clearer guidelines for what it was going to do then share prices would be higher given the same amount of taxpayer money being put in. You cannot reasonably argue that running a lottery where some companies get taxpayer money depresses stock values.

Perhaps you should try actually reading what I've said. The first quote above is not it... no matter how hard you try to strip all the qualifications from my post to take it out of context.

And yes, if something is "not good for the market" it would follow that it is not as good as something "good for the market". I have already mentioned what is "not good for the market" (and it's not giving money away, even to failures, though there are problems with that, just longer term) and what would be "good for the market" instead, I find it hilarious that you are so dense as to not be able to grasp that I've already said what you have said is correct to say, rather than what you're trying to conjure to argue against. (Though my wording would be "would not be as low" rather than "would be higher"... which is to say the same thing.)

[KrazyHorse]

I did read what you wrote.

The re-evaluation had to happen. The willy nilly save one entity, bail out another, let some fail... all without prior notice (or in direct contradiction with prior notice) and off public balance sheet crap can only increase fear (volatility) and cause the re-evaluation to overshoot.

This still makes no sense.

The government can increase volatility by introducing new risk factors into the marketplace (the chance that you won't get bailout money) but the increased volatility from this in itself CANNOT directly reduce average stock prices below that in the counterfactual world of no bailouts at all.

If you don't want to get made fun of for saying stupid **** then perhaps you should stop saying it. Dolt.

[KrazyHorse]

The relevant phrase is here, by the way.

cause the re-evaluation to overshoot

[Aeson]

The portions you are ignoring are... "willy nilly", "off public balance sheet"... (along with just about the entirety of the second post where I detailed the line of thought further). I was referring to the haphazard and intentionally obscured methods which the Fed/Treasury have been dealing with this crisis which cause the problem to be worse than it has to be. The portion you are nit-picking and taking out of context is not the entirety of the argument, but rather an example of the "willy-nilly".

"Overshoot" simply means that the Fed/Treasury have screwed up in their response (rather consistently in fact) and through their detrimental actions made the problem worse than it had to be. This is a comparison to competent regulation, not to non-existent regulation as you seem to want to try to force it to be. (Complete market anarchy is obviously not a scenario that even deserves consideration. It especially should not be considered a request on my part given statements to the contrary I have made in this conversation and repeatedly in past related conversations you have also been involved in.)

Disagree with me about that if you wish. But at least try to understand what it is you are disagreeing with first.

[KrazyHorse]

I think your confusion stems from the fact that you're conflating "failing to stop the re-evaluation from overshooting" and "causing the re-evaluation to overshoot".

They are different in English as usually understood. For instance, if you were choking on a piece of food and I gave you CPR instead of the Heimlich I would not have "caused" you to die. I would have failed to stop you from dying.

[Aeson]

Originally posted by KrazyHorse
I think your confusion stems from the fact that you're conflating "failing to stop the re-evaluation from overshooting" and "causing the re-evaluation to overshoot".

No. "Overshooting" as I used it cannot be used as you use it in "failing to stop the re-evaluation from overshooting" as "overshooting" itself means a correction further than what would happen without the derogatory input of the Fed/Treasury. So in my statement what you are referring to as "overshooting" is actually just to the given point that is overshot in my own statement.

They are different in English as usually understood. For instance, if you were choking on a piece of food and I gave you CPR instead of the Heimlich I would not have "caused" you to die. I would have failed to stop you from dying.

Thank you for clarifying the manner of your misunderstanding.

My statements obviously are referring to derogatory actions, not simply benign ones that don't address the problem.

See, instead of of the Heimlich, the analogy should be along the lines of... stabbing the patient in the arm with a knife. (Though choking is potentially fatal if not rectified, whereas our economy would certainly take damage, but is not likely fatally damaged.)

When investor confidence is waning, attacking that confidence further is not good for prices. You're missing the point in focusing solely on the "chance of money". More important is the competence and steadiness the regulators display, and the openness of the actions they take.

To put it simply, who is at the helm is important. Fed/Treasury have displayed their incompetence. That cannot help, and certainly will hurt.

[KrazyHorse]

My statements obviously are referring to derogatory actions, not simply benign ones that don't address the problem.

Nope. As previously stated, randomly assigning money to corporations can't make things worse for them (in terms of company value as revealed by prices) than not assigning any money at all.

Are you not aware of the no-arbitrage principle?

[KrazyHorse]

More important is the competence and steadiness the regulators display, and the openness of the actions they take.

??????

How is this the Fed et al CAUSING the overcorrection?
The extraordinary steps being taken by these government actors cannot (as I have demonstrated already) make it WORSE for any company. Understanding this, the market can at worst believe that the Fed isn't going to help matters at all. The overcorrection, such as it is cannot be CAUSED by a lack of confidence in the Fed being able to STOP that same overcorrection.

[KrazyHorse]

You sound like the radical Friedmanite gold standard nuts who claim that the Fed worsened the great depression by causing deflation despite the fact that the Fed increased the monetary base throughout the Depression in the face of falling real output.

You have to keep in mind that CAUSE is determined by a counterfactual in which the Fed does NOTHING at all. In the gold standard case mentioned above you have to take as your counterfactual the alternate monetary base (specie) remaining basically constant.

[Aeson]

Claiming that a comparison (my own even) has to be between what we have and no action at all is disingenuous at best. Firstly, it is my comparison, and I have explained what I was comparing (Our Fed/Treasury actions (derogatory in my estimation) vs those of a competent or at least not actively derogatory Fed/Treasury). Secondly, perhaps you are restricted from making such a comparison, but I am obviously not.

But the heart of the matter is... I am not discussing the impact of extra money at all. I certainly am not claiming that increasing money supply causes deflation. I am referring to the damage that is caused by having incoherent policy, incompetent regulation, and lack of transparency. I have stated such 3 times now.

Once you figure out what has actually been said, we might have something to discuss. Otherwise, my explanations are there... read them as you will.