We could break all the windows, and then windows would be in demand and that would solve all our problems! Window manufacturers would have to increase their production, and new window making plants would be opening to meet the demand, and…
Well, hopefully we won’t reach a Window Event Horizon.
-XT
Sure, sounds good. Except no one seems to have enough money for new windows. Nor do they have enough in savings for a down-payment.
What we need is to first break the windows, then have the government subsidize new windows, and put in tariffs so people only buy American made windows. Then we need to lower lending standards so everyone can get equal access to window loans.
What could possibly go wrong?
I’m not sure. In a Shoe Event Horizon, the economy collapses and the people, so disgusted with shoes, rapidly evolve wings so that they never have to trod on the hated ground again. I’m not really positive what the effects would be of a Window Event Horizon…possibly the economy collapses and we all rapidly evolve to become mole like burrowing creatures, giving up our windows for all eternity…
Where do I sign up! Sounds like a wonderful plan.
-XT
Americans saving rate is 6 percent now. It was zero before the crash. That would imply that they are better able to handle debt now. But banks are making it difficult to obtain credit. The impact on the economy is easy to see. It suppresses demand.
I’d like to think that the savings rate has gone up BECAUSE credit is harder to get.
What’s that, you can’t lease another car and will have to wait until next year?
That 6% people are saving right now is what they would have been spending on interest.
Why are people so eager to pay interest.
It’s a tax on being stupid and impulsive.
Banks/government shouldn’t make it easier to borrow, they should make it easier to save.
Once people start saving, they’ll have money to spend without credit.
It is not just people replacing things that need to be replaced, but small companies that actually hire need to get money for expansion and hiring.
Yes XT ,the things you buy don’t last forever. They have to be replaced, like refrigerators, air conditioners, computers and TV sets. Some people have to finance those purchases and can not now. Even you can see how that suppresses spending, profits and hiring. It keeps stores from growing and hiring. People with jobs go to movies, eat out and buy even more stuff. Banking is not some esoteric business that has no reflection on America. It is an integral part that is not acting in its proper function .
Banks are screwing their customers to recoup what they lost in fraudulent financial deals a few years ago. They have jacked up interest rates and fees regardless of how well you paid your debts. They are looters.
I don’t know why you included me in your rant there, but since you did:
No shit? Really? You mean…things wear out? Or become obsolete? And…have to be replaced?? I’m sure you think these are pearls of wisdom dropping from your lips, but it looks like drool to me. You might want to wipe your chin there, chief.
Who are these people who can’t get financing? In the last 2 months I’ve bought a new car, a TV and replaced an old refrigerator. I had zero trouble getting the loans for any of that stuff. In the last year I refinanced my house at an interest rate over a point less than my original loan…my payment went up $60, but the terms changed from a 30 year loan (which we still owed 23 years on) to a 15 year loan. I own a small business…no problem getting loans. I know people who own small businesses…none of them seem to be having issues either.
So…who are these people who can’t get loans?
What I see is that uncertainty has a bigger effect on small businesses expanding or hiring today…uncertainty in the markets, and uncertainty in what the hell the government is up to, what taxes are really going to be when things like the health care reforms take hold, what the real effects and costs are going to be on their business models. I don’t expect you to see this, because you are, frankly, an idiot who doesn’t have a clue how real business works, or how banking works. You just weigh in with your standard line of horseshit as usual, and without any idea what you are talking about.
-XT
The cause of the increase in the savings rate is no mystery. And it has nothing to do with ease of getting credit. Savings rates are up because people always save more in times when there is widespread fear and uncertainty about the economy. The savings rate goes up when you fear you might lose your job. Anyone who isn’t saving extra money right now if they are in an even remotely vulnerable job is a fool.
As for credit being harder to get, they’re mostly talking about business credit. If you want to open a new business and want a revolving line of credit from your bank, that might be harder to get. That’s because the banks are also worried about being repaid, so they tighten standards because the odds of the borrower going bankrupt increase.
Another reason the savings rate has gone up is because the collapse of the asset bubble destroyed a whole lot of balance sheets, both private and public. Companies that had paper assets of 50 million to draw against suddenly are re-evaluated at 30 million. This means less collateral for borrowing. People who planned to use their home values for retirement found out they couldn’t, and are now saving their money.
These are all natural, healthy responses to reality, and should not be discouraged or short-circuited with more government intervention. The economy is adjusting to a new reality. This isn’t a temporary demand-driven recession due to the business cycle. This recession is the start of a correction that has been coming for a long, long time. Out of control entitlement spending, out of control discretionary spending, and governments both local and federal around the globe have been running big deficits.
Into this already toxic mix comes the Obama administration, spending money like mad to delay the invevitable. They need to learn that when survey after survey shows that one of the biggest things Americans are worried about is the debt, you’re going to have a really hard time inducing them to shop by borrowing money and giving it to them.
What’s also happening right now aside from the asset collapse and the financial panic is that we’re reaching the point where the futures markets and long term planners are running into the lead years of the big entitlement crunch, along with a whole lot of really bad converging trends like major demographic changes and the collapse of the population in Japan. They’re starting to see a weak economy as far as the eye can see, and in that kind of environment the most rational thing to do is to hunker down and protect your investments - not to go on a shopping spree because the President asked you to.
I talked to a half dozen lenders in August before finding one willing to write a HELOC on an investment property. It wasn`t a question of my property or my income or my credit, none of which was ever discussed. They were just completely unavailable for everyone. I mean it’s possible everyone was lying to me because I’m a rich white guy, but what I was told is that they no longer make those loans on any investment property. Wells Fargo does, but I stopped looking after getting approved.
Yep, extending lending would have stimulated the economy. When the banks crashed the economy, some people told Obama to nationalize one of the banks to keep get the economy rolling. But many would have been offended by that act ,so he did not. It would have been the right thing to do. It would have made it possible for the small businesses to meet payroll and grow. So the economy went downhill, while banks gathered as much money as they could.
So who lends money now? Practically no one.
I’d have to agree with this - we recently cut all ties with a bank my husband had done business with for years because of their taking advantage of “the global economic crisis” to jack up all their rates across the board. For those paying attention, they also kept on posting profits in all quarters; it was an excuse, pure and simple. Canadian banks didn’t need to jack up rates; they just did because they knew they could get away with it. I don’t know which is worse; US American banks using the mess THEY created as an excuse to rob customers, or Canadian banks using the mess that they went out of their way to get involved in as an excuse.
Late edit: Doing more research, they may not have had profits in all quarters; they may actually have had a quarter or two in the red. Which, you’d think, would have been absorbed by the decades of record profits that proceeded them, but apparently not.
But, if I’m reading this correctly, you DID get a loan…you got a loan from Wells Fargo. I have a friend who’s company is about to buy a property to move their offices into (they are currently paying rent)…they don’t seem to be having any trouble at all getting the loan to get the property. Their big problem is that the owner is having trouble evicting the folks who are using the property and who haven’t paid any rent for 6 months. Of course, they (and I) AREN’T ‘rich white people’, so maybe that’s your trouble.
-XT
The president is coming out today ,pushing banks to lend money to small businesses. His economic experts see it as a problem. It has been brought up many times in financial discussions in congress and the senate. However I suppose Obama did not know XT got a loan proving there is no problem. You must call him to keep him from making such an obvious mistake.
Well, he has my number if he wants to give me a ring sometime and discuss the issue…
It’s gratifying to know that you haven’t got a clue what my actual point was, and that you focused solely on the anecdote. It makes me feel that the universe is still rolling along as it should be. Sun…still coming up. Water…still wet. Gonzomax…still too stupid for words.
-XT
XT you are a fool. Anecdotal evidence about you and maybe even Fuzzy is exactly what you offered. I wish you had a clue about what you are saying because that is what you gave. I thought even you would be able to see that, but I was wrong. You bring ignorance and misfounded arrogance to a new level.
Anecdotal evidence such as XT’s are pretty relevant and now here comes mine:
Most of the 20-somethings do not take the time to think this through and then bemoan how screwed up everything is…and I don’t just mean this generation; I mean the last few generations (decades) of 20-somethings. It took my brother 20 years to get out of a hole he dug in 5 years back in the 80s. He was that 20-something back then looking for a weekend of motorsports, booze and river excursions (on credit of course), and then pushed the bills off to the side. He just stopped bitching about paying off those debts he incurred so long ago.
Your creditworthiness is the summation of your day-to-day choices that depends on not just how you bought the item (saved to pay w/cash or purchase with credit), but WHAT item is being purchased, and whether it was actually worth the amount you spent on it. If many people had the foresight to save for cars and houses rather than squandering on (WARNING: generalizations ahead!) jet skis, motorcycles, trailers and RVs, parties at the river and then come home to bills that go unpaid, then this country as a whole wouldn’t be so creditlocked. I’m not saying don’t go have fun…just pay your bills and discover how much money you actually have left for discretionary spending. Go have fun with what’s left whether it be $10, $100 or $1000…and leave the credit cards at home when you do have fun.
No anecdotal evidence is just interesting reading. What is important is whether the difficulty in getting loans is having a bad impact on growing the economy. That is proven with statistics, overall numbers ,not on a case by case basis. It is like saying I won the lottery, therefore everybody can win the lottery.
But the point here is that the “difficulty getting a loan” is about not having a down payment.
A down payment is something you need to save for, it’s not something the government can give you, or tell the banks to ignore. It serves a very important role in the loan process.
A lot of mortgages are underwater now, how many of them do you suppose started with no money down vs how many had 20% down.
No, please tell me . Otherwise you are speculating.
Borrowers did not force banks to remove the rules about saving up 10 or 20 percent of their mortgage . They can not. It was the banks who dreamed that up to make enormous amounts of money . They were allowed to immediately sell them off, removing their own risk. They created toxic mortgages and dumped them onto financial instruments that they sold across the globe.
Then they sold insurance on the packages to such an extent that they absolutely could not back them. How is that legal/ They sold swaps that totaled more that 10 times the GNP of the world. I would suggest that they knew full well that they could not pay them off. it was obvious. It was fraud and they should have been prosecuted for it.
Now banks are keeping the bad times worse because they don’t want to lend to small businesses. That is where job growth lies. Big companies have been offshoring and cutting American employment for decades. Corporations are not the answer to unemployment. Small businesses are.