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Not enough government stimulus
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M
morganist
Quote from endsongs:
There was plenty of stimulus. It was just mis-appropriated. Rushing those huge sums to the banks without any guarantees they would use it to create jobs or lend to consumers ( which they of course haven't done) was a massive miscalculation.
i agree however unless the credit market recovers the ability to generate capital will not be there. unless the stimulus continues, which it cannot indefinitely.
this is the problem the credit market cannot recover plus the fiscal stimulus cannot continue (unless switch to command structure economy) so where is the investment from.
Maybe religious unrest is part of the problem but really, we have had that every generation since Jesus was born... I'm seeing the main vector in the entire dilemma is that the "Harvard Brats" that are leading the nation are Atheists... without absolute morality there isn't much morality at all... look at a jail for example... it's full of people without absolute moral guidelines so what is punishable in a jail? Molestation, probably because it's the only crime a lot of those guys have not done themselves....
So what is punishable in the eyes of a Harvard Grad?? Not being a Marxist maybe? Reading a Bible maybe...
So what is punishable in the eyes of a Harvard Grad?? Not being a Marxist maybe? Reading a Bible maybe...
M
morganist
Quote from maxpi:
Maybe religious unrest is part of the problem but really, we have had that every generation since Jesus was born... I'm seeing the main vector in the entire dilemma is that the "Harvard Brats" that are leading the nation are Atheists... without absolute morality there isn't much morality at all... look at a jail for example... it's full of people without absolute moral guidelines so what is punishable in a jail? Molestation, probably because it's the only crime a lot of those guys have not done themselves....
So what is punishable in the eyes of a Harvard Grad?? Not being a Marxist maybe? Reading a Bible maybe...
you posted this above see my answer also above.
Yes, if only we have more moral, God fearing men like GW Bush and Cheney to lead us, we would have less tortures, less mass spying on Americans and less invasions of foreign lands based on fear and greed.Quote from maxpi:
Maybe religious unrest is part of the problem but really, we have had that every generation since Jesus was born... I'm seeing the main vector in the entire dilemma is that the "Harvard Brats" that are leading the nation are Atheists... without absolute morality there isn't much morality at all... look at a jail for example... it's full of people without absolute moral guidelines so what is punishable in a jail? Molestation, probably because it's the only crime a lot of those guys have not done themselves....
So what is punishable in the eyes of a Harvard Grad?? Not being a Marxist maybe? Reading a Bible maybe...
Where do we get those men?
All this was a long way in the making, and Clinton, GBW, Obama made little difference.
Quote from tmarket:
Yes, if only we have more moral, God fearing men like GW Bush and Cheney to lead us, we would have less tortures, less mass spying on Americans and less invasions of foreign lands based on fear and greed.
Where do we get those men?
You're confusing me...Quote from morganist:
no it is not that linked to base rate. i wrote the following to the chancellor of the exchequer.
"Banks limitations on lending...
it is a bit more complicated than this too but it is just a brief.
i wrote another paper but is much longer.
if this doesn't explain it i could forward you that paper. but i think this will suffice.
Let's just stay with the subject I was actually asking about and try not to digress.
Your initial post said that low rates act as a disincentive to lend. What specific "rates" did you refer to in that statement?
M
morganist
Quote from Martinghoul:
You're confusing me...
Let's just stay with the subject I was actually asking about and try not to digress.
Your initial post said that low rates act as a disincentive to lend. What specific "rates" did you refer to in that statement?
i mean low returns on saving.
low rates for saving will deter saving due to lack of return. thus less money for lending due to less money being saved to lend out. the post with the letter will explain the problems with saving and lending. it had to deter from your original question because there is a reason why there is a disparity in the saving rate and the lending rate.
Quote from morganist:
i mean low returns on saving.
low rates for saving will deter saving due to lack of return. thus less money for lending due to less money being saved to lend out. the post with the letter will explain the problems with saving and lending. it had to deter from your original question because there is a reason why there is a disparity in the saving rate and the lending rate.
I think you need to learn how the banking system works. You're forgetting that cheap loans turn into someone else's deposits. With high rates there are no cheap loans to go around like hotcakes, so debt generation slows down, although it is still active.
If your "solution" is so dependent on banks manufacturing loans out of deposits, it's not a solution at all but more of the same problem.
M
morganist
Quote from Anaconda:
I think you need to learn how the banking system works. You're forgetting that cheap loans turn into someone else's deposits. With high rates there are no cheap loans to go around like hotcakes, so debt generation slows down, although it is still active.
If your "solution" is so dependent on banks manufacturing loans out of deposits, it's not a solution at all but more of the same problem.
please read this letter. i hope that it explains the point i am trying to make. if not can you respond to this not the other posts.
Banks limitations on lending.
The aim to get banks lending especially to small businesses to the degree necessary to create economic recovery is unlikely to be achieved. The credit market is not the same as it was before the credit crunch and will not be the same again in the future. The reason banks were able to provide so much credit and at such low rates prior to the credit crunch was in effect what led to the credit crunch in the first place. The high availability of credit was down to the banks selling on the debt to other investors passing the risk on as they no longer held the debt on their own portfolios. The credit crunch occurred when investors stopped buying this debt, which was an amalgamation of debt products made up of different risk levels concealed in a credit derivative, this meant that as the banks could no longer sell on the debt which previously eliminated their risk.
This resulted in banks having to hold more of the debt than they did when investors were purchasing the credit derivatives, which in turn increased the overall risk of their portfolios. As the banks now have a higher risk element associated to the debt they have to receive a higher return to compensate for the potential loses the increased risk creates. In short although the base rate of interest is very low the interest rate in practice at banks has to stay high to compensate for the higher risk level they hold. Also it is important to point out that the base rate of interest does not have to be followed by banks unless they are CAT standard mortgages (in which case they have to be within two percent of the base rate) or directly follow the base rate.
The unfortunate reality of the situation is that due to the economic climate on top of the explanation provided above the risk of investing is substantially higher than before the credit market constraint. The deeper aspect of this situation is that it is becoming increasingly difficult to find an investment that can provide profits with reasonable risk or a return that justifies that risk. This would be seen in the individual market if people did not save money in banks, they would find it difficult to invest safely in the current conditions. Because people save money in banks the bank acts as an agent for the individual to invest the money they saved on their behalf. The banks are now in the dilemma the individual would have been in if they had to invest the money themselves, which is there is a limited supply good investments. People continue to save (and in fact the saving rate is increasing) but the investment is not carried on to businesses as the responsibility of investing has been passed on to the banks.
In short the only reason why individual saving is increasing is because the individual passes on the responsibility of investing the money to the banks, who cannot invest the money safely. Due to this passing on of responsibility it is difficult to see why the banks are not increasing their lending even though they have more money at their disposal to lend out. It is however as a result of lack of demand of credit derivatives, tougher economic outlook and the bank acting as an agent on the behalf of individuals. The only solution to the problem is to eliminate the risk to enable the same level of lending seen before the credit market constraint. However due to the manner in which the reduced risk was achieved in the pre credit crunch period (when bad debts were bundled up with reasonable debts and concealed to make them seem less dangerous in a credit derivative) it is not possible to return to those credit market conditions. Also even with those products the credit crunch occurred when investors stopped purchasing the credit derivatives showing the lack of interest in such a product.