To: Mike Johnston who wrote (72672 ) 12/22/2007 8:58:51 PM From: pogohere Read Replies (2) | Respond to In thinking about this, it seems like a case of Mr. Rentier Economy meets Ms. Imabit Insolvent. More credit to Ms. Insolvent's bank doesn't lead to new lending because the new credits cover the worthless off-the-books paper taken back onto the books that already were pretty lean on reserves. She has no savings, not much income to speak of and no credit, so she won't be borrowing for a spell. And her bank won't be lending, at least, not like in recent memory, for overpriced, highly leveraged commercial and residential real estate. And since Mr. Rentier built the whole edifice on credit/debt, credit/debt creation has to grow for there to be any growth because continued lending, even if possible at the current rate, won't do the job. Mr. Rentier is looking somewhat shabby. But of course, he hasn't been manufacturing much lately, having shipped the know how, the machinery and the jobs overseas. He's got too many Ms. Insolvents on the other side of that paper he's been peddling and living off. By the way, she stopped making payments and she's not shy about advising her friends to do the same.wallstreetexaminer.com . I gotta wonder--if liquidity is lacking-- if the Fed really has its head on straight, because that failure to liquify would mean it's reproducing a credit crunch/liquidity disaster that fairly replicates the experience leading up to and into the depression of the 1930s. What's a private central banker to do?
