Banks are not lending because they know what they are facing from 2010…

quote
The Keynesian Kool-Aid drinkers keep insisting that big deficits and rapidly growing piles of public debt don’t really matter as long as there is “slack” in the economy. But they live in a fantasy world where ill-conceived policies are not subject to vetting by market and other forces. As the Greeks (among others) are now discovering (to their chagrin), spendthrift nations eventually pay a price for their fiscal irresponsibility. That is also the point being made in the following Reuters report, “US Needs Plan to Tame Debt Soon, Experts Say”:

http://www.financialarmageddon.com/2009/12/cause-for-alarm.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+financialarmageddon+%28Financial+Armageddon%29
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read the excerpts article he is referring to and see what you think. Banks are not lending because they know what they are facing from 2010 write-downs, I believe. The foreclosures many are holding off the market or not foreclosing on can’t last. That could add millions of homes to the inventory of unsold homes making even more problems if home prices drop more.

However, this article deals more with debt and the need to show the world that lends to us we can manage that debt. We have 400% debt to GDP when household, corporate, city and state debt is added and all of them pull the economy down as debt service takes money that could be spent creating jobs and sends it to interest on debt.

The Federal interest is actually lower than it was when debt was lower due to short term debt being the favored place foreign nations are buying debt but, that will come to an end and even the federal government will have a huge interest on debt problem when interest rates rise or if they move back to longer term debt as rates on that rises as it is beginning to do.

If they cut spending as the article says they should do, then the economy will be at greater risk than now and it is at high risk now.

- JanPaul

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