What they mean to say is that there is a credit crunch, but that doesn’t mean that consumers can’t get loans, it means that banks won’t lend each other money. The banks that still have cash are afraid to lend money to other banks that don’t have cash on hand. When that happens, banks begin to fail. When you don’t repay your car loan, the bank takes your car. When a bank lends another money and then that bank fails, the first bank is SOL.
Thank you for the answers.
Here’s hoping that, over time, people are so saturated by this habit of the media that they begin to tune off, and the media see less and less benefit from keeping up the tactic…
… On the other hand. I’m not sure if that’s happening with something similar - SPAM.
Do graphics like this help the situation?
Does Media help the situation? Or does it contribute negatively in a massive way?
Granted, many financial downturns are crises of confidence. But are you arguing that it’s better to not have people fully informed? People not knowing exactly what was happening in the Mortgage and Derivatives markets is what got us into this mess.
I don’t believe self-censorship is a good thing in cases like these—much as in war, where the argument is often made that telling the public “bad news” about the war’s progress, showing casualty photos, discussing Abu Ghraib, etc., is bad for morale and will lead to our defeat. I think the need to be fully informed outweighs the need to keep everyone’s chin up.
I see your point.
If only we lived in a world where the right people were informed about the right things and nobody was saturated with information - mostly negative (because positive - though it exists - isn’t ‘good’ news as news)
p.s. It’s hard not to be a hypacrite about this - I am am adicted to news. I look at news.bbc.co.uk every morning when I wake up on my smartphone. But news is…engaging. I shouldn’t want to know bad news but it engages me.
No. Because other bear markets have no bearing on this bear market. It could go up tomorrow (as it did on Monday) or go even lower. All this graphic shows is that it wasn’t the lowest ever.
The problem with running around like Chicken Little acting like it’s the end of the world is that it usually isn’t.
I recently read something like (I forget the exact numbers, but they approximately like this) in normal times, 80% of car loan applications are approved; in the last month, that number has dropped to 60%. So a majority of people who apply get their loan, but 1/5 of all sales involving loans are not being made. I don’t know what percentage of new car sales are loans (or leases), but I imagine it is most of them. So the auto makers are losing, say, one sale in six on account of credit problems. Non-trivial loss of sales. Add to that the people who say to themselves that maybe I put off the purchanse of a car for another year or two, or maybe I will be a used car and you have a serious loss of business in an industry that has traditionally been an engine of the economy.
I do not expect a 29-style depression precisely because the government is not going to let major banks fail. I do expect a serious recession because of the psychology of the times. What is needed, IMHO, is a massive WPA project to repair and replace all those highways, bridges, dams, and so on, that have fallen into disrepair. This will require large tax increases, but the US must be the least taxed country in the industrialized west. We have to get over the idea that the government is the problem.