Confirmation bias
posted in Alaska, Economy, Politics, Weather |We haz it.
I watched the debate (of course) (sigh) (when did I decide to become a politics junkie?). I thought that Biden came across better, but that’s because I’m on his side. Palin’s constant reiteration of “maverick”, as though it were a magic charm, made me roll my eyes; her misunderstanding of what an “Achilles heel” is makes me worry about my dotter’s education here in Alaska; her co-opting of a series of Reagan’s catchphrases, including “There you go again, Joe!” was noticeable; and the last I heard, it was the mess on Wall Street that is impacting Main Street. But, in the end, she redeemed herself by not repeating her gaffes from various carefully prepped interviews. She sounded, in general, nice.
But I’m not looking for “nice” in my presidential or vice-presidential candidates.
So I came away thinking Biden “won”–whatever that means.
Then we went to dinner at the local Indian restaurant. Mixed grill–yum! Tandoori chicken, shish kebab, lamb, curried chicken. Mmmm.
There was another group at the restaurant, talking vivaciously about the debate, and about the current economic situation. I first noticed them when they were talking about the debate; one guy shouted out, “She really nailed it when she said, ‘I’m not one of those Washington insiders who says I’m for this then says I’m not for it’! BINGO! I want someone who’ll say what they mean and mean what they say!”
So, there ya have it: Confirmation bias. I thought Biden came out better; these folks thought Palin came out better.
And then the older woman in the group–who seemed to be a real estate person–started talking about the economic situation and the bailout bill.
She said that a friend had offered on a house, had the mortgage all set up, everything was going swimmingly…and then, the day of closing, the loan offer was withdrawn. She said that these people had great credit. I’ve heard similar things online; this was the first I had heard it “first-hand”. She said that credit was frozen, and she talked about a few businesses she knew that were running on credit and weren’t going to be able to meet their payrolls if it kept up. She wanted the bailout, even though she thought it wasn’t very good, because it was the only thing going right now. She mentioned 401k’s that had taken huge hits during the stock drop on Monday and how people who were close to retirement were getting hammered.
All of which is true (except I wasn’t for the bailout).
Then they talked about not living on credit.
Which seemed a bit of cognitive dissonance to me; the entire notion behind the bailout is, in essence, that we should go back to borrowing money like crazy and spending it like crazy and the economy will just go on chugging along, growing and blossoming, tra la, tra la.
So this afternoon the House of Representatives voted for the bailout–the expanded bailout, with $100 billion of pork tacked on to make it appetizing to a wider variety of senators and representatives.
And the stock market, which had been up some 200 points prior to the vote, dropped. And kept dropping. And ended the day below where it ended on Monday…the day the bailout vote failed.
Say what?! Isn’t the bailout supposed to…oh…”save 401k’s and retirement accounts”? Aren’t we all happy campers now? Isn’t Great Depression II averted? Wasn’t the stock market going to heave a great sigh of relief? The bailout certainly hasn’t saved Wachovia Bank, which is currently being fought over by Citibank and Wells Fargo, like a pair of vultures over fresh road kill.
I’ve been saying it for a while, and I’ll say it again: This mess is too entrenched, too intertwined, too highly leveraged, for this bailout to stop the unraveling. Oh, it may end up slowing it down a bit. But firms that are leveraged 30:1 or more aren’t going to become solvent with a wave of the magic Federal Reserve/Treasury/bailout wand. And those firms are global in scope; just read a bit about what’s happening in Iceland. Or see how the Greeks today passed a blanket deposit guarantee bill after runs on the banks, emulating Ireland, which did the same thing yesterday. Or read about the Dutch government taking over Fortis NV, a portion of Fortis, which is one of the largest financial companies in Europe, today.
I’m gettin’ a heapin’ helpin’ of confirmation bias about the economy these days…
Oh, yeah, and it’s snowing here: Great big fat flakes. Holy moly. Our first snow of the winter season.
