The subprime meltdown has destoyed the banks faith in their own lending practices. I don't care if federal rates are cut in *half* from where they are today. The banks aren't willing to loan money to people with excellent credit right now. They're already struggling with the bad debt they've already got out there, and they can't risk making more even *if* the numbers say the risks are low (as with someone with a perfect credit rating). The banks know that even with a past perfect credit rating, the entire economic situation is fragile enough that low-risk, good-credit folks may find themselves in hardship soon because of the job market, fuel prices, food prices...
(And lest anyone forgot, crop returnes are not expected to be high yeild this year from *anywhere* in the US what with the unusual weather patterns all spring, summer, and now fall.)
I was willing to call our situation a depression rather than a recession at the beginning of the year. I think we're seeing it happen now. And I think things are going to get much, much worse, especially considering the epic level of TARFU the feds have already let come to pass.
This will go down as Greenspan's Folly.
I don't think we've seen the full effect of the sub-prime meltdown on our own economy, let alone the ripples around the world. I do think we're in for greater decline in the situitation than where we are now. I think the rate adjustments aren't going to have any positive effect. As I stated earlier, they can't. I think this is an economic perfect storm, and like the 1930s, the weather was all too ready to make a terrible situation worse.
I'm very concerned on what effect this economy is going to have on globalization. The last time this happened, we got WWII. The only thing we needed to do this time around (for Globalization III) was not screw it up. It would have progressed along fine, all by itself. But Greenspan... that dummy... had to go and export our debt never thinking that someday folks would come knocking on our door wanting to cash in their chips.
Greenspan needed to take a class from Vegas and the Nevada Gaming Comission. Too bad he didn't. Though, like any high-ranking official, he was smart enough to leave his post before the bombs started hitting the ground.
You see... from where he was standing on the top of the heap... he could see them falling from the sky.
Chicken Little in reverse.
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