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credit crunch

2007-08-10 16:43:56.983428+00 by Dan Lyke 8 comments

Federal Reserve promises to supply "reserves as necessary" to ease current credit crunch. So, let me get this straight: A lot of people, both individuals and as part of large companies, have been using credit unwisely. If I understand this right, the Fed just kicked $70 billion ($35 billion each on Thursday and Friday) into the money supply in order to mitigate the effects of their stupidity, and to make it easy for people to... use credit unwisely. From the article:

The free flow of credit is important to the smooth functioning of the national economy. Increasingly restrictive lending conditions can put a damper on people's ability to buy big-ticket items such as homes, cars and appliances. ...

So... uh... we have to encourage people to spend money unwisely because otherwise they'll feel the effects of their stupidity? And someone thinks that doing this will have good long-term consequences?

[ related topics: Interactive Drama Heinlein Currency Economics ]

comments in ascending chronological order (reverse):

#Comment Re: Not just the US made: 2007-08-10 21:31:43.841056+00 by: m

The European Have kicked in $213 billion over the past two days. A major German bank is rumored to be near insolvent., BNP Paribas, a major French bank (and hedge fund) is reputed to have stopped withdrawals, though it is not clear whether this is just from the hedge funds or includes all accounts.

#Comment Re: made: 2007-08-10 21:57:19.531311+00 by: Dan Lyke

Yeah, I was in the bank today and talked with the loan guy for a bit, and we had a "well, a week ago I could have told you [this], right now I won't promise anything for another two months or thereabouts".

When the brokers of the commodity are saying "hold onto your hat", it's gonna be a wild ride.

#Comment Re: made: 2007-08-11 09:17:37.175151+00 by: warkitty

I've said all year we're likely in for a major depression. I've been pooh pooh'd all year.

I still say we're in for a major depression. '30's style.

#Comment Novell owns the UNIX and UnixWare copyrights! Novell has right to waive! made: 2007-08-11 10:42:59.537537+00 by: m

On a much happier note, from Groklaw: "Court Rules: Novell owns the UNIX and UnixWare copyrights! Novell has right to waive!"

#Comment Re: made: 2007-08-11 16:25:46.157993+00 by: Dan Lyke

warkitty, we just moved a bunch of our house money into short term muni bonds, I think the first time ever I've timed an investment, and it was largely inadvartent (we were looking for the best we could do with low volatility over two years or so).

yeah, I could see this becoming major, I've been doing a lot of reading about who owns dollars and who's propping up what and where the money supplies are coming from, and the thing I didn't get was how heavily some of Europe is getting caught up in the U.S. mortgage collapse.

m, put on the front page.

#Comment Re: made: 2007-08-13 14:21:21.870261+00 by: radix

The adding of liquidity is to head off a crunch and depression. It's important to note that that is not a bailout of lenders. It looks like the line is (properly) held to not bail out the lenders. There is pressure on lenders to refinance problem borrows and not foreclose (which is probably a better thing for them anyways, selling in a down market doesn't get you your money back).

It does look like a lot of people are betting that this is going to lead to cuts in the prime rate by the Fed (currently 5.25%). I'm not sure that that is going to happen.

#Comment Re: made: 2007-08-14 14:22:41.170628+00 by: Dan Lyke

Given that we appear to have been running a masked (by how the statistics are sampled) 13% or so inflation for the past two years, I can't imagine the Fed lowering interest rates. The overextended want a bigger money supply, but price pressures (see, for example, food and housing costs) are pushing pretty hard against that.

#Comment Re: made: 2008-06-28 23:30:32.293821+00 by: ziffle [edit history]

How did flutterby do with its projections?

Californian Housing Market in Meltdown, Liar Loan Writedowns Have Barely Begun

Wash Mut Melts Down


This is since last summer. I have a bad feeling about the next 6 years.

In the globalists' view, the US can now safely be discarded because it has inherent "flaws."

America has a constitutional system that, even though it has been successfully neutralized to a large extent, was designed to protect individual freedom, and that makes some of her people insist on them. Such cannot be tolerated in a truly globalized world. It tends to make people of other countries want to simulate the US and to insist on keeping their countries' sovereignty intact to protect their own tenuous freedoms.

This is commentary from overseas - they see us more clearly probably. The fiat money, our debts, and desire to attack other countries signal the end of the Republic. The only hope I see is a return to the limits of the constitution and a long recovery period. Alas I feel many will call it the failure of capitalism when its actually the destruction of freedom and capitalism which has destroyed our country.