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

To: Wyätt Gwyön who wrote (104743)	9/1/2009 10:50:50 AM
From: Elroy Jetson	Read Replies (1) \| Respond to of 110194

The contraction in credit is the "less" part in the monetary contraction. The new credit which has been created is less than the amount which has been destroyed. This is the slow leak (economic contraction) taken in place of a sudden contraction. In either event the contraction is inevitable. There was too much debt available relative to income. Many real estate developers and consumers will have to file for bankruptcy. On paper the damaged balance sheets of banks have been "restored" but this is a fiction. The banks still own this bad paper. The Fed has merely lent against these assets with repurchase agreements. The banks take possession of the bad paper again at the end of the repurchase agreement period, when they will supposedly have earned their way out of their problems through fee income etc. .