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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: LindyBill who wrote (380729)	9/3/2010 8:28:00 AM
From: carranza2	2 Recommendations Respond to of 793955

An interesting but way too rosy take. Corporations are siting on huge piles of cash, but are not hiring. Banks are sitting on even bigger piles of excess reserves but are not lending. Prudently, IMO, because their exposure to bad loans made on commercial real estate is enormous. The exposure will be felt in 2011-2012, and they will need the excess reserves to cushion the inevitable write-off that are coming. If you ever wonder why loans are not being made, that is the reason. Because banks are not extending credit, economic growth is stifled. The US consumer has for the longest time driven our economy and indeed the global economy. He took on huge debt in the past two decade as easy money was shoved down his throat. He is paying off this debt and not consuming nearly as much as before. I don't think he will again go on an easy money spending spree again even if the could again use his home as an ATM, which he of course cannot. Long story short: The easy money party's over. Deleveraging and debt payment takes years. It will take a very long time to get back to where we were before. I therefore disagree with this rosy scenario.