Is this really 'bad' news?

Discussion in 'Economy' started by Bern80, Oct 7, 2008.

  1. Bern80
    Offline

    Bern80 Gold Member

    Joined:
    Jan 9, 2004
    Messages:
    8,094
    Thanks Received:
    720
    Trophy Points:
    138
    Ratings:
    +726
    Bernanke: Crisis could prolong economic pain - Yahoo! News

    Just reading this article. Mostly focuses on across the board tightening of credit. One way to look at this is that essentially lenders are saying it is going to be harder for you to buy things with money you don't have. I'm haveing a really hard time seeing that as a bad thing.
     
  2. Skull Pilot
    Offline

    Skull Pilot Platinum Member

    Joined:
    Nov 17, 2007
    Messages:
    31,749
    Thanks Received:
    4,491
    Trophy Points:
    1,130
    Ratings:
    +10,070
    It has to happen. banks need to pull back and make credit harder to get. it's the only way to get back on solid ground.

    Only the government would say that the way to have a healthy economy is to give more people free money to buy stuff they can't afford.
     
  3. Kevin_Kennedy
    Offline

    Kevin_Kennedy Defend Liberty

    Joined:
    Aug 27, 2008
    Messages:
    17,590
    Thanks Received:
    1,581
    Trophy Points:
    205
    Location:
    Ohio
    Ratings:
    +2,027
    They're only delaying the inevitable with this bailout and now Bernanke lowering the interest rates again. The market must stabilize itself. It means tough times, but it's absolutely necessary.
     
  4. Zoomie1980
    Offline

    Zoomie1980 Senior Member

    Joined:
    Jan 16, 2008
    Messages:
    1,658
    Thanks Received:
    128
    Trophy Points:
    48
    Ratings:
    +128
    That kind of tight credit is fine. It's good for you. But short term business loans that most businesses are structured around MUST be there at ALL COSTS.

    I'll provide an example. A Grain or Cotton shipper. A small four person company.

    In the summer the merchant buys his grain or cotton for future purchase. He then sells that contracted product to mills. As the harvest progresses he must actually pay for the grain or cotton until the mill pays them. He also has to put up money for hedges in futures. No virtually NO ONE has the cash capital to pay the farmer and wait for a month or two before the mill pays. Even small amounts of cotton or grain require $500,000 or more in outlays. That requires SHORT TERM CREDIT! That credit has DRIED UP. Those merchants are OUT OF BUSINESS even though they have rock solid contracts insuring payment from mills!!!!! It is is INSANE
     
    • Thank You! Thank You! x 1
  5. editec
    Offline

    editec Mr. Forgot-it-All

    Joined:
    Jun 5, 2008
    Messages:
    41,427
    Thanks Received:
    5,598
    Trophy Points:
    48
    Location:
    Maine
    Ratings:
    +5,617
    You lack the vision to understand what's really happening, Bern.

    You still imagine this problem was becuase American consumers spent too much money, don't you?

    You still imagine that the masters haven't screwed up, don't you?

    You'll see what happens when a consumer driven economy fibrilates soon enough.

    Or, you could just read up on the last depression.

    The similarities between what happened then, and what is happening now, are striking.
     
  6. Diuretic
    Offline

    Diuretic Permanently confused

    Joined:
    Apr 26, 2006
    Messages:
    12,653
    Thanks Received:
    1,397
    Trophy Points:
    48
    Location:
    South Australia est 1836
    Ratings:
    +1,397
    But - this isn't baited or partisan - isn't it the case that in a consumerist economy, an economy which works on the consumption of commodities by individuals is going to go backwards if relatively easy credit isn't available?
     
  7. Richard-H
    Offline

    Richard-H Gold Member

    Joined:
    Aug 19, 2008
    Messages:
    2,285
    Thanks Received:
    385
    Trophy Points:
    130
    Ratings:
    +510
    One way to solve it is by increasing salaries and wages so people don't have to by on credit.

    The American people are the most productive people that have ever existed. We work the most hours per year, we have the highest levels of job skills. But as our productivity has soared, especially considering that almost all the middle-class women are working, thereby more than doubling the work force in a single generation, our standard of living has dropped like a rock. Real wages are plummeting. All of the wealth is going into the hands of a tiny number of super wealthy individuals, most of whom aren't even Americans.

    Forget credit, what we need is FAIR PAY!
     

Share This Page