Bad times to be a bank.
Well the markets are down, there is talk of nationalizing the banks. It seems the financial stimulus which just past has had no effect.
Financial Stimulus has been done before, by Hoover in 1931/32, Reconstruction Finance Corporation which distributed $9.465 Billion. It helped a little but took 9 years before it was done, mainly WWII ended it. One thing that bogged it down was Hoover and his administration bureaucracy trying to keep the funds form helping bad debt, bad decision makers, undeserving. Hoovers bailout plan actually helped turn the market crash into the Great Depression, now I hear talks of the same from the Obama and his administration. Even adjusted for inflation Hoover only spent 140 billion, not 787B. There is one thing not to want to pay for someone with a higher standard of living then yourself, but how do you determine who that is, who made risk, who is irresposible? This is the beraucracy that killed out economy in 1931. It’s simple if you don’t want to help these people, it’s everyone in trouble, so do nothing if you believe this. Don’t try to sort if you lived resposibly to afford a nicer car, or second bathroom and compare them to there neighbors to see if they made bad decisions. When it is this far reaching you must help everyone, not the people foreclosed, not the people living within there means, everyone needs to help bring us out of this. I am very much in favor of goverment refinanced fixed rate mortgage loans, say 40 year, 4%, for anyone and everyone. That will stop the housing slide.
The other things we have to be careful of is “The Lost Decade” in Brazil from there stagflation due to high growth rate on debt. And of course the Japanese Assest Bubble, from 1986 to 1990, in which real estate and stock prices were greatly inflated. The bubble’s collapse lasted for more than a decade with stock prices bottoming in 2003, until hitting an even lower low in 2008 amidst a global recession.
Unfortunately most of the current solutions we are looking at happened in these 3 other crisis by there goverments. It’s time for something new. However there is hope, it seems these problems only take about a decade or so to settle and I will only be in my late 30’s.