mish : ...Problem Defined
"Before one can work out a solution, the first step is to identify the problem. The problem is not a lack of liquidity, it is not a lack of trust, it is not lack of consumer confidence, it is not subprime lending, and in fact the problem is not housing at all.
The problem is consumers and corporations are deep in debt with no way to service that debt.
Attempts to bail out banks and brokers at taxpayer expense will do nothing but add to consumer debt, weaken the US dollar, and literally waste $700+ billion dollars that can and should go to more productive uses.
What Caused The Problem?
- The Fed
- Fractional Reserve Lending
- The Treasury
The root cause of this problem is the Fed micromanaging interest rates, the Treasury cheerleading every step of the way, and Congressional sponsored spending that went wild. The critical issue that ties everything together is fractional reserve lending allows banks to borrow money (credit really) into existence with insane amounts of leverage.
To top it all off, Greenspan slashed rates to 1% fueling the biggest global housing bubble the world has ever seen. Congress needs to figure out a way to eliminate the Fed." mish
peteythepantywaist : nah!...why dint i think a that?
zooneh : cos yo jussa poxy painter dude from PALOOKAVILLE...wot lives inna garret wiya dog wotz half cat, a spider with 7 legs...anna rat wot think itta mouse!