Is this the correction in the market?

[sharon kinsella]

A couple of months ago I pointed out on here that we were headed for a recession.

Some people were telling me "Oh no, this is just a correction that's happening becuase things were escalating too fast".

Then - pow - recession.

Now we are headed for a depression.

Please tell me where the big correction went to, I'd really like to know.

[Bret Callentine]

Forgive me for channeling Ryan Costa on this one...

One of my favorite things about the Wright Patterson Air Force Museum in Dayton, is that they don't just get airplanes to put on display, they try to find one of a kind aircraft, planes that have an interesting story or share a poinient piece of history.

One of these planes is a Vietnam era jet (a Sabre if I recall) that holds an interesting destinction. On one particular mission, the plane suffered an engine failure, and despite the pilots' best attempts, it fell into a flat spin. Loosing altitude quickly, the pilot struggled to correct out of the spin but was unsuccesful. After trying everything he knew, the pilot finally gave up and pulled the ejection handle, punching out and parachuting safely to earth.

The jet, however, did something quite unexpected. Now missing a major section where the cockpit used to be, the center of gravity of the plane changed, the balance became such that it came out of its spin, flattened out and glided in for a perfect gear up landing in a field. Other than the fact that they had to install a new seat and windshield, the jet was virtually undamaged. And remains, to this day, the only aircraft known to have landed itself.

I see similarities to our current financial crisis.

I think the market is trying to correct itself, however, I think that if the government doesn't eject, the economy will only continue it's steep decent into complete collapse.

[ryan costa]

Forgive me for channeling Ryan Costa on this one...

One of my favorite things about the Wright Patterson Air Force Museum in Dayton, is that they don't just get airplanes to put on display, they try to find one of a kind aircraft, planes that have an interesting story or share a poinient piece of history.

One of these planes is a Vietnam era jet (a Sabre if I recall) that holds an interesting destinction. On one particular mission, the plane suffered an engine failure, and despite the pilots' best attempts, it fell into a flat spin. Loosing altitude quickly, the pilot struggled to correct out of the spin but was unsuccesful. After trying everything he knew, the pilot finally gave up and pulled the ejection handle, punching out and parachuting safely to earth.

The jet, however, did something quite unexpected. Now missing a major section where the cockpit used to be, the center of gravity of the plane changed, the balance became such that it came out of its spin, flattened out and glided in for a perfect gear up landing in a field. Other than the fact that they had to install a new seat and windshield, the jet was virtually undamaged. And remains, to this day, the only aircraft known to have landed itself.

I see similarities to our current financial crisis.

I think the market is trying to correct itself, however, I think that if the government doesn't eject, the economy will only continue it's steep decent into complete collapse.

It is never a good idea to channel ryan costa

Let me summarize your analogy.

Self-correcting is to self-regulating free markets as.... safe landings are to engine-failed flat spinning jet aircraft with no pilots.

I'm not sure if that was the point you were trying to make. but now I know that of all the aircraft crashes in history at least one crashing jet aircraft randomly stabilized and landed intact after the pilot bailed out.

The analogy can go further. the pilot usually didn't pay for the plane. taxpayers paid for the plane. the pilot has the parachute. the plane usually bites the dust. centuries of isolation, a century and a half of protectionism, and decades of progressive income taxes, high corporate income taxes, and higher capital gains taxes produced the buying power and organizational ability to pay for the development and production of that jet airplane.

The analogy can go further. a jet plane spends most of its life on the ground. either being stored, maintained, or repaired. flying is a short part of its life, and it when it flies too high or fast or far it crashes. as the roaring twenties caused the great depression...so did whatever the last 15 years were cause whatever is going on now.

the process of 'correcting' leads to a range of conditions qualifying as "correct". most of these conditions are the jet plane being on the ground. whether parked there, or crashed into pieces there.

someone said somewhere the big banks and hedge funds should be broken down into smaller entities. This is so when a few of them foul up like our present industry leaders, they don't put the plane into a tail spin. that would seem concurrent with the explanation of why free markets work in theory. this would also inhibit their ability to engineer conditions that allow them to game up the value of various financial instruments.