Hope & Change With New Congress

[extanker]

i,m retired and the wife still works but we have been buying condos and townhouses in our old people gated community. there are some pretty good deals now days...we are becoming suburban slumlords...beats what the savings account is paying

[Perfectlap]

^ more money in bank deposits does not encourage more loan making. This has been the unwelcome surprise of the Fed, Hank Paulson under Bush and now Geithner under Obama. If the banks have excess cash, as they do now with trillions in reserve, they will simply find other ways to use it like funding foreign investment projects or lending to Wall Street trading firms. The banks will take your deposits, pay you a Turkish Lira in interest and tell you to have a nice day.

The banks can be up their necks in cash but unless credit demand remains weak the cash pegged for consumer loans -- and busines loans frankly since they exist on consumer demand-- will sit idle. The banks are sticking to pre-bubble lending standards that do not correllate with post-bubble incomes and spending. Sure you bailed us out, took the haircutt and the bounce will only be "bonused" to our guys. This spells a very very weak recovery that although it is trending in the right direction sets up the economy like a big 757 jetliner that loses two of its engines mid-flight.
We can't produce the necessary lift to climb fast enough. All this had little to do with the govt and much to do with the role of the American worker in a new economy. We outsourced and consumed ourselves out of rising wages. What did you think was going to happen when China's GDP goes from under $1 trillion to over $6 trillion on American consumptio of cheap goods? The banks have no skin in the game because even with 10% unemployment the big ones at least are turning profits. When 8 of every 10 Americans owns $1 of every $10 dollars invested on Wall Street and are making no more than they were 10 years ago you have to start wondering what the game plan has been all these years.

[brp987]

[QUOTE=Perfectlap. We outsourced and consumed ourselves out of rising wages. What did you think was going to happen when China's GDP goes from under $1 trillion to over $6 trillion on American consumptio of cheap goods?[/QUOTE]

At the rate that we are paid, the outsourcing only awaited China's adoption of capitalism. But then how is it that Germany has escaped our fate? Even while outsourcing some BMW production to the US.

[Brucelee]

Banks are lending. Indeed, it would be stupid not to do what earns you money.

That said, they have higher lending standards now. That is not hard to understand, as they just spent two years being beaten to a pulp with loan defaults, band failures etc.

If I were running a bank, I would do the same thing: cut the default rate.

How hard is this to figure out?

That is the supply side.

Demand is also weak. We are in a period of deleveging which is a good thing for the average schmo. Only Paul Krugman doesn't get this issue.

[Perfectlap]

[QUOTE=brp987]

Originally Posted by Perfectlap. We outsourced and consumed ourselves out of rising wages. What did you think was going to happen when China's GDP goes from under $1 trillion to over $6 trillion on American consumptio of cheap goods?[/QUOTE

At the rate that we are paid, the outsourcing only awaited China's adoption of capitalism. But then how is it that Germany has escaped our fate? Even while outsourcing some BMW production to the US.

actually they were awaiting our adoption of unfair trade. They've been ready for capitalism for quite a while. But the barriers that were in place all those decades, that allowed for rising U.S. wages, job growth comensurate with population growth, increases in household net worth, etc. ALL came down in one fell swoop. Rather than incrementally opening up the markets to allow our workforce enough time to shift towards the German economic model you reference, one of high end manufacturing, we let Pandora out of our box in a blink. We spent 40 years fighting a coldwar against communist dictatorship only to turn around and fund, on the most massive scale ever witnessed, a more freedom-hating bunch of communists who are now buying up the world's assets on the cheap and pouring millions into advanced weapons like air craft carrier-killer missiles. Glad to see we put ourselves into trillions of debt at the end of 80's to beat the Soviets only put ourselves in the wealthy pocket of China in the 2000's with our manufacturing tossed in as icing.

[extanker]

i think it will be chinas planet in 50 years . maybe sooner if they choose

[Brucelee]

I always love the use of the term "we."

I assume you referring to someone other than me, as no one asked my permission to do pretty much anything.

[Brucelee]

Given all that, would you move to China?

I wouldn't.

[extanker]

Originally Posted by Brucelee

Given all that, would you move to China?

I wouldn't.

i,m a fat cat money luvin capitalistic pig that like fast cars that get bad mileage...i aint eatin fish heads and rice.....besides i,m old and wont be around when china starts throwning her weight around. this country has its share of problems but its been very good to me