The Market has the answer

These are critical financial times. The world's economy is having a reality check done after the longest period of continuous global growth since the 1920s. 2008 is the repetition of 1929, when the bubble could not be blown bigger and therefore burst.

Lots of discussions are being held about how to tackle this dire situation, but one thing is clear: policy-makers and people representatives do not know better than the people. Economy is the only "science" where the so-called experts spend their whole time trying to figure out why they always get their forecasts wrong. Politicians cannot even call themselves "economic experts", but still they attempt to rule the economy that affects everyone else.

These strenous times are showing clearly that the policy-makers, rulers, politicians and else are useless. The only entity that minimises the probabilities of getting it right is the market, which means the world's people. You and I, and the plumber and the banker, the housewife and the kids, taking 7 billion decisions per second, 24/7. Whether to go out or stay in, whether to pay the gas bill or default in the mortgage, whether to hail a taxi or to buy some wine. The market is the better instance of democracy that we know.

And the market has decided that the party is over. The scary day of September 18 2008 the US economy got to the verge of collapse, because the market believed, caught in panic or not, that there is not enough wealth (not money) to pay the world's excesses. Listen to the Democratic US Representative Paul Kanjorski, member of the US Congress Capital Markets Sub-Committee, who said that:

On Thursday (Sept 18), at 11am the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its window to help and pumped a $105 billion in the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn't be further panic out there.

If they had not done that, their estimation is that by 2pm that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed. It would have been the end of our economic system and our political system as we know it.

We are no better off today than we were 3 months ago because we have a decrease in the equity positions of banks because other assets are going sour by the moment.

However, politicians keep trying to convince us that they will save the world by giving them more money ($700 billions before, $800 billions now, $1.5 trillions later). They are lucky that the average person is as economically illiterate than them, but a lot more honest.

You know, gents of the politician class, stop trying to fool us, the taxpayers: you have no better idea of how to behave to maximise the probabilities of survival than the sum of everyone of the world's people taking decisions voluntarily and entering in voluntary transactions, i.e., embodying the Market.

The Market has the answer and the answer is dire, but it is the best response we the People have, because the Market are we.

Love and freedom.