This post on the “When Giants Fall” website really crystallizes the administration’s agenda. One of the key foundations of our capital markets system is confidence, without confidence there would be mass panic and chaos. All of the US treasuries and debt issued by our government is backed by what? It is backed by the full faith and credit of the government
, which lightly translated is confidence. What happens when investors, the true backbone of the capital markets lose faith? That is a daunting question that is fundamentally brought to light in the current administration’s actions of changing the rules. You cannot arbitrarily change the rights of contractual bond holders (i.e. Chrysler Corp.) or that of mortgage holders; this is the slippery slope I refer to. If investors believe that contracts and rules can be changed mid stream they will likely seek a higher risk premium, thus making financing costs soar.
Markets are concerned by this governmental interference as they believe if these current changes take place it will open the door to increased government meddling and thus rewriting additional rules. Once you start the slide down the slope of government intervention you invariably open the door to additional “tinkering” which will add risk premiums and, worse, could drive foreign and domestic capital to other foreign markets.
As a side note I have read and recommend to all my readers to pick up a copy of this book, “When Giants Fall; An Economic Roadmap for the End of the American Era” The Love Guru hd Scary Movie 3 on dvd download Predator Island The Dream Team rip . I do not care if you are a democrat or republican, liberal or conservative this book should be read as a matter of perspective. Michael Panzer uses history as a basis for the points he makes in the book. History is just that, history. It is how one can learn and get perspective from it that makes it empowering. I will warn you that this book does not paint a pretty picture but I find it important to read a drastic point of view supported by facts and history so that it can be used as a reference point.
1 response so far ↓
1 Jeff // May 15, 2009 at 5:17 pm
Dear Mr. Peschong,
I have an idea for your blog. You have articulated, and righfully so, numerous mis-steps by the government, big business, etc. that has created this econonic mess. Throw a change up at your readers and find something positive. Any little positive tid bit that will feed the Pollyanas out there. What do you see the economy looking like after all of this upheaval?
Jeffyana, a devoted reader
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