PatriotsReign

This is a boring topic for most, but it's really one of the top issue facing economies of developed nations today.


In the United State as well as inside the Euro Union, when governments bail out banks, it does not mean they'll increase lending. It also does not imply that they "Should" lend more.

Lending is about risk vs. reward and as long as risks are high, banks will not and should not lend more.

I'm just wondering why government officials don't realize just because they keep bailing out and re-capitalizing banks does not obligate them to lend out more money. Banks don't care what governments and people want and we need to accept that as banks are private institutions who are only obligated to their share holders.

So we all need to stop crying about banks NOT lending because it's the right thing to do. We got into this mess by banks over-lending and taking too much risk. Moving forward, all of us should want banks to be more prudent. That's what banks are supposed to do!

Survey of Banks Shows a Sharp Cut in Lending in Europe

"Banks tightened their lending standards for businesses as well as for individuals, according to the central bank. Of the banks surveyed, 35 percent said they were applying stricter criteria to business loans compared with 16 percent in the previous quarter. Banks also became more reluctant to provide mortgage loans. And they said they expected credit to become more scarce in months to come."

http://www.nytimes.com/2012/02/02/bu...er=rss&emc=rss

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"No one walking this earth knows what is truly righteous"

Real World

I think, or maybe I should say hope, that the politicians/pundits are saying what they say because it's a talking point publically. If they don't realize the simple premiss that you don't lend when there's too much risk involved, then we're beyond ****ed.

I always get a kick out the "they're not lending" lines. It's dumb down for the moronic public. It's risky lending that got us in this mess to begin with. When you lend money to people who you know aren't likely to pay it back, you're creating a problem, as opposed to helping fix one. Only the qualified, and deserving, should be lent money. PERIOD.

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"The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him."
Leo Tolstoy, 1897

PatriotsReign

Exactly...add to this the fact that Obama now wants to bail out some people's mortgages as a "solution" to the real estate stagnation, and gov't officials will be scratching their heads again wondering why banks STILL aren't lending.

Compared to pre-2008, the pool of qualified home buyers has effectively been cut in half. Now consider that even qualified buyers will have to be even MORE qualified as time passes and maybe they'll realize why real estate will stagnate for a long time moving forward.

FACT: We do not want to repeat the mistakes we made prior to the great recession. So that means we do not want to artifically inflate any sector of our economy.

That doesn't mean Wall Street wouldn't LOVE a little artificial inflation as long as it means selling more stocks.

I pray the end result of all this BS is that we learn to live with our economy as it is. If/when we get back to economic growth, great. But if another recession comes along, oh well...we need to learn to live with that too.

In my best Andy Rooney imitation:

"Ever notice how our gov't rushes to stop a recession, but when it over heats, they do nothing but pat themselves on their backs?...I wonder why that is...."

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"No one walking this earth knows what is truly righteous"