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Politics : Formerly About Advanced Micro Devices
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To: TimF who wrote (419207)9/23/2008 7:10:04 PM
From: tejek  Read Replies (1) of 1574976
 
One of Uncle Sam's first moves following the market crash of 1929 was to enact the Smoot-Hawley tariff. This unprecedented hike in tariff rates told the world "America is closed for business!" Less able to sell products to Americans, foreigners earned fewer dollars with which to buy products from Americans.

The resulting contraction of cross-border trade, combined with the waste of keeping inefficient domestic producers in business, only deepened and prolonged the Depression.

We won't need a Smoot Hawley tariff to stop trade. You know why.....there will be no money for trading. Why is that you ask? Because banks are becoming increasingly afraid to lend any money. And why is that? Because they are afraid they won't have enough cash to cover any bad debts they may incur. And what happens when banks don't lend money? Businesses can't expand. They don't have enough working capital. People get laid off. This is a global economy.....everything is pretty much interlocked. If banks aren't lending in the US, they won't be lending in Somalia or Borneo or Germany. Everything will lock up finacially.....few will have any money to buy goods.

So then, you want to know what's going to happen.......then don't rely on a libertarian professor from George Mason University. One of the reasons we are knee deep in this crap is because we have a professor from Princeton running the FOMC. And he has been behind the eight ball trying to get a handle on these credit/subprime problems that first surfaced over a year and half ago.
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