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09/16/2009

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Dianne Schmidley

Lindsey,

Do institutions ever learn lessons? Humans sure don't. We have examples back to the 'Tulip Mania' of the 16th Century to "teach" us how not to behave. I hate to sound so negative, but I remember the old Pogo cartoon with the caption, "We have met the enemy, and it is us."

BTW, nice response.

Jim&DebbieOverson

Well, I have a hard time really placing the blame on the Federal Reserve and the financial leaders during the 20's leading up to the actual crash in 1929. It had already become such a world-wide, deep problem and the overall situation was so pervasive that it was nearly unsolvable. In addition, the reparations issue regarding Germany had so many issues involved, especially such overriding emotional ones stemming from France, and was such a large number that a global situation had been set up for which there really was no solution. The entire world looked towards the United States to solve the problem, yet many countries, especially Great Britain, were quite upset that the United States had ended up being able to hoard so much gold and that now they were moving toward being the dominant world power, financial, industrial, military and otherwise. I am glad I wasn't in charge of trying to figure out how to address these huge problems at home and overseas.

Now as far as an institution like Lehman Brothers is concerned, I will always be convinced that the institution and others that got themselves into the same sort of situation, that these institutions should have been allowed to just fail. Is it really worse for these institutions to fail, realizing that in institutions this large there are always pieces of it that can be sold off, than having our federal government take on such staggering amounts of debt? Both approaches will lead to very serious long-run consequences and I have a hard time feeling confident that the government will ever be able to address these multi-trillion dollar programs, of which the bail-outs were a part.

Salvatore DeGennaro

Some interesting points made here Lindsey, and I think you are correct regarding your observation that the Fed has learned its lesson but investors and the rest have not. I typically believe that minimalist government interference in any given thing is best, but I have a hard time making sense out of the current crisis. I think that drastic action has been needed, and certainly after reading this book this week it is clear what could potentially happen if action is not taken. It is, however, still ironic that protecting our economy from collapse entails pumping billions of dollars into failing corporations.

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