Posted on 08/24/2007 5:35:44 AM PDT by Hydroshock
Hope you like soup lines then.
There are no quick fixes for this issue. And thank you.
Won’t matter if I don’t have a job.
Be afraid, be very very afraid. And don’t learn any economics. It would hurt your brain.
And throwing more cheap money at this problem will only make it worse. The recession is coming, the only questions are how, bad, and how long. This why my wife an I have redoubled our efforts to increasing savings and paying off debts.
That's fine, but the federal government is already ahead of that problem...and NPL's aren't even a major concern to GDP at the moment. SOC's (Sarbanes-Oxley Committees) are at this very moment auditing *every* major lender for their mortgage terms/conditions/situations, etc.
But banks can handle foreclosures and NPL's. It's the larger problem, that of the secondary market for commercial paper now running out of Buyers that is of concern.
The Fed's emergency easing of the Discount Window rates and conditions this month greatly eased that problem.
Actual Fed Funds rate cuts and some more cash injections will go a long way toward steering us into a soft landing, in fact.
And here's the kicker: our fundamental economy is actually in good shape. We've got low unemployment, low taxes (except, property taxes in major states like Florida need to be reformed), high productivity, high corporate profits, fair P/E valuations on the stock markets, etc.
We just import too much...and that sends too many Dollars overseas to Players who reinvest those monies in ways that distort our traditional operations. To wit, now those exporters are hoarding Dollars again rather than buying every piece of commercial paper offered on the secondary market.
Well, that sort of change is the stuff of a liquidity crisis because when a lender can't sell its old loans on the secondary market, it has no new money to then make more loans.
Lets see the economics we are all learning, giving out cheap money to people who can not afford to pay you back to buy things they can’t afford is bad. It causes recessions like the one coming up.
I’m trying, but considering my line of work, you’re goals are making it harder to do so.
Oh please. How many people think that putting money into a commercial paper market that is without cash makes things worse?!
It is a *lack* of money being available that makes this situation problematic. But your answer to a dearth of money is to withhold money!
I'm still waiting for you to learn what inflation and deflation are. So when is the recession going to start? 4th quarter this year? 2nd quarter next year? Be specific.
When has deflation ever ushered in prosperity?
What I think you’re failing to realize is this:
The liquidity crisis is now keeping even good creditworthy borrowers from getting financing. It’s not just the “cheap money for people that can’t afford it” faction that’s being affected now.
Lowering the Federal Funds rate won’t return things to that level - just level things out so people that deserve loans can get them. Lending guidelines have already tightened...they won’t loosen them back up to that point that got us in trouble in the first place.
There is plenty of money out there an that is the problem, just at this time no one is spending it.
That statement is true at all times. LOL
How do you know that there is plenty of money? Where is it?
You do know that it isn't being spent. Hold that thought, I can work with that.
So. To cheap and easy credit is the root cause of this problem and in the long run it will only make things worse. My point is that nothing now can stop some sort of pain, but doing what you and others want will make it a lot worse. Better to let a recession happen now then a depression later.
False dichotomy.
Incorrect.
You correct a liquidity crisis by adding cash, not withholding it.
Even you have admitted above that people aren't spending money. Well, you'd better think of ways to get them to spend.
I agree. Our fundamental economy is what we need to nurture here, and not let it strangle with a lack of credit. Keep it running strong, and we can work our way through this problem. If we were to let the overall economy become weak, then our current problems will only be compounded.
As to my focus on NPLs, it could be well because my lens on deflation was formed by the Japanese experience. But it did turn out to be the hardest part of the problem to deal with in Japan, be it for cultural or other reasons that well might not apply in the U.S. since our economic past has shown a healthy willingness to let the weak houses fail that I don't think is as true in Japan.
And kowtowing to the homosexuals??????
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