rssThe ‘Terrible Paradox’ of the Nation’s Credit Freeze
Tuesday, May 05, 2009 at 2:38 pm
- 4 Comments
Larry Bossidy, former Honeywell chairman and CEO, today pointed out the under-appreciated predicament facing not only the finance industry but also the Washington policymakers who have spent hundreds of billions of dollars in the name of thawing frozen credit markets. Namely, there are contradictory pressures on the banks to lend more at the same time they’re being asked to be more prudent with their loans.
From CNBC:
The credit market thing, I think, is overplayed. The loan demand is way down. They keep yelling [that] the banks aren’t lending, but the loan demand isn’t very strong either. So you’ve got this terrible paradox where you want the banks to get stronger on the one hand, and I guess loosen credit standards on the other.
The message is clear: Relative to an era when bad loans were flying off the shelves, the current lending environment probably does feel pretty chilly. Yet who would argue for the return of the same bad loans that caused the crisis to begin with?
The bubble dilemma revisited. ..
4 Comments
Comment posted May 5, 2009 @ 12:14 pm
“Yet who would argue for the return of the same bad loans that caused the crisis to begin with?”
Most of Washington, DC, it seems.
People are trying to pay back debt instead of taking out more loans they can't afford, and Washington thinks it has to make up the spending gap, so it spends more tax money it doesn't have. We should have learned that previous levels of indebtedness were unsustainable, but Washington doesn't want to admit that it only brought us “fake” growth.
At the center of the lunacy, we see organizations like Fannie and Freddy, which were created to make housing more affordable, begging for help in keeping housing prices up. Central economic planning creates market distortions, which leads to malinvestment, which leads to the need for those malinvestments to be liquidated. And now the central planners are starting the cycle again.
Comment posted May 5, 2009 @ 12:38 pm
paradox?? this country has a FAKE i repeat FAKE economy ! 2/3 of it is morons buying junk on credit from places like china-mart. two massive pump and dump spec bubbles in ten years time. 600B in welfare for the 5 sided black hole. shipping jobs to places like bangawhore now that they have lights and bathrooms after bringing in the H-1B monkeys for 20 years as corporate welfare for TARP recieving garbage corps like amex. shittybank, bofa. america….circling the drain…glad to see it
Comment posted May 5, 2009 @ 7:14 pm
“Yet who would argue for the return of the same bad loans that caused the crisis to begin with?”
Most of Washington, DC, it seems.
People are trying to pay back debt instead of taking out more loans they can't afford, and Washington thinks it has to make up the spending gap, so it spends more tax money it doesn't have. We should have learned that previous levels of indebtedness were unsustainable, but Washington doesn't want to admit that it only brought us “fake” growth.
At the center of the lunacy, we see organizations like Fannie and Freddy, which were created to make housing more affordable, begging for help in keeping housing prices up. Central economic planning creates market distortions, which leads to malinvestment, which leads to the need for those malinvestments to be liquidated. And now the central planners are starting the cycle again.
Comment posted May 5, 2009 @ 7:38 pm
paradox?? this country has a FAKE i repeat FAKE economy ! 2/3 of it is morons buying junk on credit from places like china-mart. two massive pump and dump spec bubbles in ten years time. 600B in welfare for the 5 sided black hole. shipping jobs to places like bangawhore now that they have lights and bathrooms after bringing in the H-1B monkeys for 20 years as corporate welfare for TARP recieving garbage corps like amex. shittybank, bofa. america….circling the drain…glad to see it
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