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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: PaperChase who wrote (66514)	8/21/1999 7:32:00 AM
From: yard_man	Respond to of 132070

Didn't GE used to make money by making stuff a little while ago? Now they just make money by lending money? Hmmmm ...

To: PaperChase who wrote (66514)	8/21/1999 10:36:00 AM
From: Mike M2	Respond to of 132070

PC, the salient point is there is a limit to the amount of debt than can be supported by the real productive economy regardless of the source of credit. Credit bubbles require an ever increasing expansion of credit to maintain the stimulative effect at some point borrowers become overextended triggering defaults and delinquencies. In addition, easy credit inflates asset values which often serve as collateral for loans when the cycle turns many loans which at the time of origination seemed to have adequate collateral no longer have sufficient collateral. We saw this in the US with commercial real estate in the early 90s and in Japan. There comes a time when credit growth is out of control - I believe we have been at that point for some time. ho ho ho Mike