After christmas the truth will be told that failure of bailouts
By Daniel at 22 December, 2008, 10:23 am
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
The Fed is trying to stimulate buying by the consumer by just increasing the money supply through the banking system. THAT WILL NOT WORK.
The problem here is credit worthiness of the consumer which is trickling up to businesses. Banks have restricted credit to only those with very high credit scores no matter how low interest rates go.
All Credit worthy people already have credit, but that wont stop the fed. Remember the only way to get house prices up was to create new buyers out of thin air by loaning to credit unworthy buyers.
Always remember their are more poor people than rich ones, the only way to get poor people to spend is to give them money they don’t have in the form of credit - No credit means no buyers and the economy collapses
Consumers are going to have to start paying off debt in order for them to be able to start borrowing and banks to start lending again.
Banks are not going to lend to a consumer stressed for cash and has NO CREDIT.
The only way to stop this deflationary spiral is either huge stimulus checks given directly to the tax payer or huge tax cuts for the 2008 tax year.
Only congress can change the tax law to put money directly into consumers hands to get money circulating through the economy again. Bottom line.
Consumer debt is going to have to start being paid back for this deflationary spiral to stop spinning out of control.
The Big 3’s going out of business is not all their own fault. They are a victim of the disease spreading around the world and the more victims this disease claims the harder it’s going to be to contain.
WASHINGTON – It’s something any bank would demand to know before handing out a loan: Where’s the money going? But after receiving billions in aid from U.S. taxpayers, the nation’s largest banks say they can’t track exactly how they’re spending the money or they simply refuse to discuss it.
“We’ve lent some of it. We’ve not lent some of it. We’ve not given any accounting of, ‘Here’s how we’re doing it,’” said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. “We have not disclosed that to the public. We’re declining to.”
The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what’s the plan for the rest?
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
No comments yet.