This is not a Recession. It is a Depression.
By Daniel at 12 October, 2009, 10:01 pm
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“This is not a Recession. It is a Depression. All credit-led economic downturns are. Government created this Depression just as Government created the Depression of the 1930s by refusing to do its job of regulation. This Depression was caused by the same thing all others in modern times have been: banks lending unsecured beyond excess reserves. That is, banks lending in a speculative rather than secured manner.
We have compounded that sin by refusing to force banks to admit to their insolvencies, and there are in fact many, even a majority, that are insolvent. The government cannot make up for the contraction in private credit. All the government is doing is risking its own insolvency. We cannot run trillion dollar+ deficits - Depression or no Depression. We cannot restore our economy to health until we force the bad debt out of the system.”
– Karl Denninger
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