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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (75126)	12/9/2006 3:54:13 PM
From: mishedlo	Read Replies (3) \| Respond to of 110194

Credit conditions by the Fed were far from tight during the great depression. But yes, you are correct that banks were in a world of hurt due to plunging asset prices like real estate and the stock market. This is of course exactly what happened in 1929 and again in Japan. In fact I have frequently talked about it. Just because the Fed is willing to slash rates does not mean banks will be willing to lend, or consumers or corporations willing to borrow. We are in an enormous asset bubble right now, and if a serious downturn gets going, 1% interest rates will not save it. Oddly enough neither you or GST seems to understand that it the expansion of consumer credit which created the asset bubble in housing and the debt bubble in consumer spending that makes deflation all the more likely. In other words you have reality twisted 180 degrees. Again, I am speaking simple economic facts that you dismiss. Mish