Posted on 03/13/2006 7:09:56 AM PST by Willie Green
The Fed has started to audit commercial bank loans because interest rate increases have not been enough to deflate the debt balloon.
As in the late 80s many commercial loans have been too easy to get and are now underwater (asset/liability wise).
The Fed requires an infusion of cash, or the bank must declare the bad loans on their books destroying earnings.
The bansk respond by a halt in commercial lending which has always been followed by a recession.
BUMP
"...mortgaging our children's future."
If that old saw were any more tired, it'd fall to pieces.
Toyota to build Camrys at Subaru plant in Indiana
Kia picks Georgia for first U.S. plant
Thanks for speaking my mind. :)
BUMP
They took a bath on everything from Rockefeller Center to Pebble Beach golf course, even though all the "pundits" were playing the same game of cry wolf then as now.
Here's the nuanced argument I never heard during the ports debacle.
The UAE has a national airline staffed with Muslim Arab pilots who take off from JFK in New York. What is the chance that a pilot or other airline person could turn that plane into a missile and bring down another building? Could they bring in a nuke in the cargo hold? It is a real risk, and yet we run it. We currently trust the UAE to screen those pilots properly and maintain security.
If port terminal operations are sold to a UAE government run company, and staffed with Muslim Arab workers, is there an increased likelihood that they can be infiltrated by Al Qaeda and bring in a nuke? Of course there is. It is easier for AQ to infiltrate a Muslim company than it is to infiltrate an English one. However, is it not appreciably more risky than the airline example.
And, there are dozens of Arab Muslim operations in the U.S. that pose approximately the same risk.
So the question really should be, shall we accept this additional risk of an Arab Muslim company's port operations, or should we ban all the Arab Muslim airlines? The risks are about the same, and we either accept that level of risk generally, or reject it generally.
I'm actually on the fence about that question. I think a good case could be made for banning all Arab Muslim operations outright including the ports. Another good case can be made for allowing the airplanes to land and the ships to dock.
The argument that is irrational is the one we concluded with: Airports: Good. Ports: Bad.
I don't think that bringing in Muslim Arab workers was ever a question at the terminals as terminal workers usually come from the local union hiring halls. Now the ownership of stevedore services breakbulk companies might be more problematic.
How do we know now that the union hiring halls are secure?
Nope, it's a sign of weakness. All this means is that foreigners have accumulated huge piles of USDollars from our humongous trade deficits, that they need to diversify and invest them. So they buy US assets (land and corporations) that will yield them a profit. Alternatively they invest this money in US securities and bonds. Some private, some governmental as in Treasury bills
To be sure, these capital inflows mean that the U.S. is also running a trade deficit of equal magnitude. But all of that has contributed to a rising standard of living.
This juiced up standard of living is achieved by going into deep debt. If you earn $40,000/year and charge $300,000 to your credit cards to spend on life's pleasures, your standard of living will also rise. But it's an unsustainable standard of living. You will eventually default on payments, go bankrupt, and your assets will be seized to pay creditors
You'll just have to forgive me if I tend to listen to actual Wall Street experts on this who have decades of history behind them to back up their analysis rather than you, who I don't know.
Don't believe those Wall Street clowns and Kudlows. It defies reason that you can build sound prosperity on a mountain of unpayable debt. Many have tried. None have succeeded. Your word for the day is - "unsustainable". Go look it up
| Squanderville versus Thriftville (Warren Buffet) ^ |
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| Posted by dennisw On News/Activism ^ 01/07/2004 11:35:03 PM EST with 15 comments fortune ^ | oct 2003 | Warren Buffet By Warren E. Buffett, FORTUNE I'm about to deliver a warning regarding the U.S. trade deficit and also suggest a remedy for the problem. But first I need to mention two reasons you might want to be skeptical about what I say. To begin, my forecasting record with respect to macroeconomics is far from inspiring. For example, over the past two decades I was excessively fearful of inflation. More to the point at hand, I started way back in 1987 to publicly worry about our mounting trade deficits -- and, as you know, we've not only survived but also thrived.... |
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They did. We just bought it back when the market was low. ;-)
Found that on Safehaven too?
Who are you replying to? I never wrote those words.
Your wrong the American economy is the largest in the world, but by far the healthiest. There are already countries with higher GDP and lower unemployment.
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