The economy from two angles

Re “A fiscal crash that’s all in your head,” Opinion, May 17

Doyle McManus is right to say that humans may be too irrational when it comes to economic decisions. There is another way of looking at the problem: When it comes to economic decision-making, investors as a group are often all too rational for politicians’ tastes. When politicians actually wade into the economy, then it is the height of prudence and rationality for investors to cash in their chips and hurry out of the casino.

For the foreseeable future, no investor can rest assured that the bonds he might purchase in General Motors -- or California, for that matter -- are redeemable at face value, or that some company one invests in won’t run afoul of a newly created regulation and spend all of its capital on legal defense. There is a cold rationality in standing on the sidelines not willing to be a player in a casino where the rules change upon the casino manager’s whims.

Grant Mulford

Granada Hills

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Indeed, it’s all a mind-set. The biggest single distinction between Republicans and Democrats is how they regulate greed, the fundamental component of capitalism. The uber-capitalists (the GOP) have had sway over the elimination of corporate regulation since the early 1980s. And as with any addiction, a crash is inevitable.

Greed, as with run-amok gambling, needs to be dealt with through rehabilitation, and that must come with re-regulation.

Robert Teigan

Santa Susana