Banks or Government


P

PeterSaxton

Despite the banks getting a lot of things wrong I think the Government
is being unreasonable to expect the banks to support businesses or
home owners in the present climate.

I would recommend that the Government either lends money directly or
offers an insurance scheme. The Government can outsource the
administration of the lending to banks if they are not able to do it
themselves. The Government could set certain rules, for example, if a
mortgagee loses their job the government could lend the net pay less
increased benefits. This loan would be paid directly by the government
to the bank. It wouldn't be so simple for businesses, of course.

This is a lot better than giving conflicting messages to banks.
 
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F

Fred

PeterSaxton said:
Despite the banks getting a lot of things wrong I think the Government
is being unreasonable to expect the banks to support businesses or
home owners in the present climate.

I would recommend that the Government either lends money directly or
offers an insurance scheme. The Government can outsource the
administration of the lending to banks if they are not able to do it
themselves. The Government could set certain rules, for example, if a
mortgagee loses their job the government could lend the net pay less
increased benefits. This loan would be paid directly by the government
to the bank. It wouldn't be so simple for businesses, of course.

This is a lot better than giving conflicting messages to banks.
The banks are owned by shareholders. It is up to them how the bank is run.

We shouldn't forget that the main losses have been taken by the shareholders
through the fall in share value. It's a business and to be honest I don't
have a whole lot of sympathy for them. They appointed the directors who put
in place the risky schemes.

When the banks give a loan or mortgage they make a judgement of risk.
Currently, and not surprisingly, you won't get a mortgage for more than 75%.
Why should they if they expect asset prices to fall further? I think we
(the government) are mad to indemnify lenders!
 
G

GSV Three Minds in a Can

from the said:
The banks are owned by shareholders. It is up to them how the bank is run.

We shouldn't forget that the main losses have been taken by the shareholders
through the fall in share value. It's a business and to be honest I don't
have a whole lot of sympathy for them. They appointed the directors who put
in place the risky schemes.

When the banks give a loan or mortgage they make a judgement of risk.
Currently, and not surprisingly, you won't get a mortgage for more than 75%.
Why should they if they expect asset prices to fall further? I think we
(the government) are mad to indemnify lenders!
The trouble is that =every saver= is a lender ... that's where your
money goes/went!
 
P

PeterSaxton

The banks are owned by shareholders.  It is up to them how the bank is run.

We shouldn't forget that the main losses have been taken by the shareholders
through the fall in share value.  It's a business and to be honest I don't
have a whole lot of sympathy for them.  They appointed the directors who put
in place the risky schemes.

When the banks give a loan or mortgage they make a judgement of risk.
Currently, and not surprisingly, you won't get a mortgage for more than 75%.
Why should they if they expect asset prices to fall further?  I think we
(the government) are mad to indemnify lenders!
You seem to agree with me except for your last sentence. So what
should the Government do to stop houses being repossessed and
businesses going bust?
 
F

Fred

The banks are owned by shareholders. It is up to them how the bank is run.

We shouldn't forget that the main losses have been taken by the
shareholders
through the fall in share value. It's a business and to be honest I don't
have a whole lot of sympathy for them. They appointed the directors who
put
in place the risky schemes.

When the banks give a loan or mortgage they make a judgement of risk.
Currently, and not surprisingly, you won't get a mortgage for more than
75%.
Why should they if they expect asset prices to fall further? I think we
(the government) are mad to indemnify lenders!
You seem to agree with me except for your last sentence. So what
should the Government do to stop houses being repossessed and
businesses going bust?

___________________________________________________________

Interest rates are at their lowest. People still need to live in houses so
demand will still generally be there. People who can't pay their current
mortgage now, still won't be able to in a year or two's time.

There is nothing the government can do, all making credit easier will do is
exacerbate things later. We're in the bust part of the boom an bust cycle
and have to live with it. Spending your way out of recession doesn't work.
Just look at Japan. The government borrowing there is something out of this
world!

I can't see why, if a businesses would otherwise fail now without a cash
injections, why it won't just fail at a later date with one, and take more
money down with it. Even sound businesses will refrain to make any
investment with the overall market uncertainty, even if money was available.
 
T

tim.....

GSV Three Minds in a Can said:
The trouble is that =every saver= is a lender ... that's where your money
goes/went!
I hope that I'm getting that money back.

The problem is that I'm going to have to pay a lot more tax on my income in
the future instead.

tim
 
T

tim.....

The banks are owned by shareholders. It is up to them how the bank is run.

We shouldn't forget that the main losses have been taken by the
shareholders
through the fall in share value. It's a business and to be honest I don't
have a whole lot of sympathy for them. They appointed the directors who
put
in place the risky schemes.

When the banks give a loan or mortgage they make a judgement of risk.
Currently, and not surprisingly, you won't get a mortgage for more than
75%.
Why should they if they expect asset prices to fall further? I think we
(the government) are mad to indemnify lenders!
You seem to agree with me except for your last sentence. So what
should the Government do to stop houses being repossessed and
businesses going bust?

--------------------------------------------------------------------------------------------------

For the former I think that HMG should just "own" the house and let the
(old) owners stay in situ on a market rent. If they have lost their job
then HB will pay this, but if they're turned out they're going to be on HB
anyway, whilst their house idly "rots", so what's the difference (in cost)?

For the latter, I think that you are right

tim
 
M

M Holmes

PeterSaxton said:
You seem to agree with me except for your last sentence. So what
should the Government do to stop houses being repossessed and
businesses going bust?
Nothing. Those people and businesses malinvested in the bubble and the
bubble is now over. We need to free them up for the new businesses
which will create profits without the mass borrowing and speculation it
took to create profits during the bubble.

If we prop them up, it will merely throw away money, and make the
depression last longer.

FoFP
 
M

Mark

You seem to agree with me except for your last sentence. So what
should the Government do to stop houses being repossessed and
businesses going bust?

--------------------------------------------------------------------------------------------------

For the former I think that HMG should just "own" the house and let the
(old) owners stay in situ on a market rent. If they have lost their job
then HB will pay this, but if they're turned out they're going to be on HB
anyway, whilst their house idly "rots", so what's the difference (in cost)?
This would seem to be a good pragmatic approach although it would set
the average daily mail reader foaming at the mouth.

--
(\__/) M.
(='.'=) Owing to the amount of spam posted via googlegroups and
(")_(") their inaction to the problem. I am blocking most articles
posted from there. If you wish your postings to be seen by
everyone you will need use a different method of posting.
See http://improve-usenet.org
 
T

tim.....

M Holmes said:
Nothing. Those people and businesses malinvested in the bubble and the
bubble is now over. We need to free them up for the new businesses
which will create profits without the mass borrowing and speculation it
took to create profits during the bubble.

If we prop them up, it will merely throw away money, and make the
depression last longer.
Sorry. The money that's lost is lost.

Hanging the criminal doesn't make it come back.

tim
 
M

M Holmes

Sorry. The money that's lost is lost.
Indeed, but throwing away more through bailouts and guarantees is
stupidity piled on stupidity.
Hanging the criminal doesn't make it come back.
Letting businesses which can't make a profit go bankrupt isn't hanging
anyone. It frees up the people and resources of that business for a more
profitable one. perhaps Branson or Warren Buffet might care to take on
profitable divisions in bankrupt banks. We will after all still need
some banking services. However, letting the same stupid bastards who
lost trillions lose yet more is reckless beyond perdition.

As for the folks making cars that nobody wants to buy, why, apart from
saving the bacon of Labour MP's, would we want to waste money on that?
Do we want some gigantic art installation where we watch hundreds of
millions of shiny new cars slowly rust?

Denial is no doubt reassuring, but the liquidationists have the right of
it if we want to get out of this faster and with more of our wealth intact.

FoFP
 
T

tim.....

M Holmes said:
Indeed, but throwing away more through bailouts and guarantees is
stupidity piled on stupidity.
But that's new money that is lost.

If the Banks just "went bankrupt" HMG would have to immediately pay
(assuming it keeps its promise) everyone who saved with that bank, their
savings back.

Keeping the Bank alive means that the e.g. 100 billion pounds of money on
deposit, is backed by the 100 billion pounds of lending that the bank has
made, some of which will go bad.

The bail out represents the amount that's gone/going bad.

I would be mighty pissed off if they came up with a scheme that took my
money just so that they can avoid paying whatshisname's pension. Yes, I am
going to have to pay a share of that pension anyway, but funding it through
a rise in taxes seems much fairer than funding it by confiscating savings
from the people who did no wrong, whilst letting the reckless borrowers off
scott free, IMHO.
Letting businesses which can't make a profit go bankrupt isn't hanging
anyone.
The problem isn't about profit, it's about liabilities and assets. The
numbers are too large for HMG to handle if the Bank is wound up.
It frees up the people and resources of that business for a more
profitable one.
Where are these resources coming from after you have paid out the "savings
guarentee"?
perhaps Branson or Warren Buffet might care to take on
profitable divisions in bankrupt banks. We will after all still need
some banking services. However, letting the same stupid bastards who
lost trillions lose yet more is reckless beyond perdition.
I agree that we should dispose of the personnel, but much of that has
happened
As for the folks making cars that nobody wants to buy, why, apart from
saving the bacon of Labour MP's, would we want to waste money on that?
Do we want some gigantic art installation where we watch hundreds of
millions of shiny new cars slowly rust?

Denial is no doubt reassuring, but the liquidationists have the right of
it if we want to get out of this faster and with more of our wealth
intact.
This is irrelevant to the discussion on Banks

tim
 
M

Mark

I would be mighty pissed off if they came up with a scheme that took my
money just so that they can avoid paying whatshisname's pension. Yes, I am
going to have to pay a share of that pension anyway, but funding it through
a rise in taxes seems much fairer than funding it by confiscating savings
from the people who did no wrong, whilst letting the reckless borrowers off
scott free, IMHO.
I can't see why raising taxes is any fairer. It's still "taking money
from people who did no wrong."

--
(\__/) M.
(='.'=) Owing to the amount of spam posted via googlegroups and
(")_(") their inaction to the problem. I am blocking most articles
posted from there. If you wish your postings to be seen by
everyone you will need use a different method of posting.
See http://improve-usenet.org
 
P

PeterSaxton

Indeed, but throwing away more through bailouts and guarantees is
stupidity piled on stupidity.


Letting businesses which can't make a profit go bankrupt isn't hanging
anyone. It frees up the people and resources of that business for a more
profitable one. perhaps Branson or Warren Buffet might care to take on
profitable divisions in bankrupt banks. We will after all still need
some banking services. However, letting the same stupid bastards who
lost trillions lose yet more is reckless beyond perdition.

As for the folks making cars that nobody wants to buy, why, apart from
saving the bacon of Labour MP's, would we want to waste money on that?
Do we want some gigantic art installation where we watch hundreds of
millions of shiny new cars slowly rust?

Denial is no doubt reassuring, but the liquidationists have the right of
it if we want to get out of this faster and with more of our wealth intact.

FoFP
You seem to be thinking there is some kind of perfect market in
operation. I'm all for a free market coupled with regulation and
sensible government intervention but when banks suddenly withdraw
credit from businesses because of the recession and many people are
thrown out of their homes because they lose their jobs we should
accept that this isn't simple free market economics that is providing
choice for the consumer with a seamless transfer of resources to
products and services that people want or need.
 
M

M Holmes

But that's new money that is lost.
If the Banks just "went bankrupt" HMG would have to immediately pay
(assuming it keeps its promise) everyone who saved with that bank, their
savings back.
True, but since there's a deposit limit of 50,000 Pounds insured, that
isn't the total of all deposits. There'd be some value in selling the
assets of banks. What bankruptcy would get the British economy out from
under is covering all the foreign bondholders, which is what makes the
banking debt worth 2,4 times our GDP and puts us in danger of being
Iceland II. It'd also obviously reduce the shareholder value to damn
near zero.

Instead of taxpayers shovelling out money to help those who invested in
the bonds of deadbeat banks, those holding CDS's on them would have to
pay out instead. I dunno about you, but that seems a lot fairer to me.
They wrote insurance on bank bonds whereas the taxpayers did not.
Keeping the Bank alive means that the e.g. 100 billion pounds of money on
deposit, is backed by the 100 billion pounds of lending that the bank has
made, some of which will go bad.
It's *already* gne bad. It just hasn't been admitted yet.
The bail out represents the amount that's gone/going bad.
So let those who insured it pick up the tab and let bad businesses go
out of business before they lose yet more money. If it was steelmakers,
they'd be out of business tomorrow.
I would be mighty pissed off if they came up with a scheme that took my
money just so that they can avoid paying whatshisname's pension.
If you have less than 50 grand on deposit, you're insured. if you have
more than that, you're stupid.
Yes, I am
going to have to pay a share of that pension anyway, but funding it through
a rise in taxes seems much fairer than funding it by confiscating savings
from the people who did no wrong,
Not what I'm proposing.
whilst letting the reckless borrowers off
scott free,
It's what we're doing now that let's reckless borrowers away with it. If
we let the free market determine interest rates, they'd be considerably
higher because there's a lot of demand for scarce cash. That'd help
depositors and it'd help good banks rebuild their books. It's
artificially holding rates near zero as part of the bailout that
punishes depositors and helps the reckless borrowers who brought us to this.
The problem isn't about profit, it's about liabilities and assets. The
numbers are too large for HMG to handle if the Bank is wound up.
Keep HMG out of it apart from compensating insured depositors.
Where are these resources coming from after you have paid out the "savings
guarentee"?
Warren Buffet and Richard Branson are still prett rich and we'll still
need banks. Perhaps they, or people like them will do it for the profit
it would make them.

The Japanese tried all this with 19 zombie banks 20 years ago when a
very similar credit bubble burst there. 5 survive (barely) despite 20
years of bailouts and the economy has beeen in deflation for most of
that. Meanwhile house prices fell (slowly) 50% to 90% from peak and
they're not only still in the mire, they're now following us into our
mire.

Want that to happen here for 20 years? We could get it over with in 4 or
5 if we just accepted a good hard and fast liquidation of deadbeat banks
and companies. Think of it like taking off a plaster: all the pain will
happen anyway, so it's a matter of how long you want it to last.

FoFP
 
M

M Holmes

PeterSaxton said:
You seem to be thinking there is some kind of perfect market in
operation.
No. I don't. You may be new here, but I've been posting here about the
imperfection of the credit bubble in quite copious detail for ten years
and more.
I'm all for a free market coupled with regulation and
sensible government intervention but when banks suddenly withdraw
credit
They didn't suddenly withdraw it, they no longer had the cash to make
these loans partly because they'd lost vast amounts of money and partly
because the nature of a credit bubble is the making of stupid loans.
Once the bubble bursts and psychology changes, people will no longer
make dumb loans and throw good money after bad. The withdrawal of credit
isn't teh problem. The credit bubble is the problem. Thee withdrawal of
credit is part of the cure.
from businesses because of the recession and many people are
thrown out of their homes because they lose their jobs
Those homes, businesses and jobs depended on the bubble to make them
prfitable investments. After the bubble, they're not and have to go the
way of buggy whips after the invention of the motor car. We *cannot*
sustain the bubble and we cannot reanimate it. If we keep these
malinvestments on, we don't free up the reources or people for
profitable use and we continue to leak wealth from our economy.
we should
accept that this isn't simple free market economics that is providing
choice for the consumer with a seamless transfer of resources to
products and services that people want or need.
No, it's a burst bubble. It happens every three generations or so. No
amount of denial will change this and no amount of shifting debt around
will reduce the amount of debt to be paid down or liquidated. We can't
imporve on that. we can, through stupidity though, create yet more debt
and more lost wealth in a futile attempt to bring back the bubble.

FoFP
 
M

Mark

No. I don't. You may be new here, but I've been posting here about the
imperfection of the credit bubble in quite copious detail for ten years
and more.


They didn't suddenly withdraw it, they no longer had the cash to make
these loans partly because they'd lost vast amounts of money and partly
because the nature of a credit bubble is the making of stupid loans.
Once the bubble bursts and psychology changes, people will no longer
make dumb loans and throw good money after bad. The withdrawal of credit
isn't teh problem. The credit bubble is the problem. Thee withdrawal of
credit is part of the cure.


Those homes, businesses and jobs depended on the bubble to make them
prfitable investments. After the bubble, they're not and have to go the
way of buggy whips after the invention of the motor car. We *cannot*
sustain the bubble and we cannot reanimate it. If we keep these
malinvestments on, we don't free up the reources or people for
profitable use and we continue to leak wealth from our economy.


No, it's a burst bubble. It happens every three generations or so. No
amount of denial will change this and no amount of shifting debt around
will reduce the amount of debt to be paid down or liquidated. We can't
imporve on that. we can, through stupidity though, create yet more debt
and more lost wealth in a futile attempt to bring back the bubble.
I broadly agree with what you are saying. However, if interest rates
did rise significantly, then we would have potentially millions of
people who could not pay their mortage, facing reposession, not just
the "reckless borrowers" but ordinary families too.

--
(\__/) M.
(='.'=) Owing to the amount of spam posted via googlegroups and
(")_(") their inaction to the problem. I am blocking most articles
posted from there. If you wish your postings to be seen by
everyone you will need use a different method of posting.
See http://improve-usenet.org
 
M

M Holmes

I broadly agree with what you are saying. However, if interest rates
did rise significantly, then we would have potentially millions of
people who could not pay their mortage, facing reposession, not just
the "reckless borrowers" but ordinary families too.
The thing is that it's possible that they too overindulged in debt
during the credit bubble. Debt is a very treacherous friend.

I think of the bubble bursting as a kind of reset button for the
economy. Humans are awfully prone to wishful thinking and the idea that
instead of saving for something, they can safely have it now through
borrowing. Sooner or later that thinking leads to credit bubbles,
massive misallocation of capital, and crazy prices for those assets
which credit is used to bid up (these seem rather random, varying from
flower bulbs through canals to houses).

During the reset, those prices have to return to reality (usually 67% to
90% down) while other prices and wages fall less so during the
deflatinary phase. The misallocation of capital also has to be cured
through people and resources being freed from companies and projects
which could only ever make sense while the vast amounts of credit are
still flowing freely during the bubble.

Of course it means that those families and companies which overborrowed
in the bubble and who did not trim their borrowing as the bust
approached will go bankrupt. The flipside of that is that some families
will then obtain reposessed houses at a price which won't require them
going into hock for the rest of their lives (or that the restricted
lending won't anyway let them if they are still so inclined).

That will leave them discretionary spending which will drive the new
companies which will form to servive new economic growth. The great
news is that after the deflationary phase, this will be slow, steady and
non-inflationary growth where people will create wealth by working and
saving and not through speculation.

So yes, there will be causalties, but without all this government
interference, they will largely have chosen themselves by the risks they
took. There will also be a great many who ultimately benefit by the
reset in prices. That's pretty much the nature of any economy - if
someone wins on the horses then others also lose, and we don't demand
that the taxpayers pick up the tab for the losers.

We will get through this, although some bad stuff will happen in the
meantime. The real choice is whether we get through it in five years or
twenty. Right now the government is choosing the twenty route on our
behalf, and is guaranteeing only that we'll have lost a great deal more
money than otherwise by the time we get there.

That they can't fix it is perhaps not so obvious without seeing the
history of the other great credit bubbles. That they don't know how to
fix it is however quite obvious.

Look at Northern Rock:

1. On the day there was a bank run, analysts were sure that the bank
could have been closed, and all depositors given all their money back
after the sale of assets (it was illiquid but not insolvent at that
point). The government fluffed that chance.

2. The government bailed out Northern Rock and required it to pay back
the taxpayers all the money loaned.

3. It then forgave 3 billion of loans.

4. Lately, Northern Rock was doing fairly well at paying the rest back,
then the government reversed course, poured more money in, and demanded
it outlay loans at 90% in a market where house prices are falling by 16%
per annum. It says it wants to prevent negative equity, but this
guarantees it for those fool enough to fall for the government pimping
of these dumb loans. The government also says it wants a return to
tradional banking. Prior to the bubble that was 25% deposits at 3 times
salary and you save with the lender for two years beforehand to show you
can spare the necessary amount of cash each month to service the loan.
90% deposits don't exactly match up to that standard.

The government in short has scant idea what to do, and ultimately it
will have been seen to have prolonged the depression and thrown a great
deal of good money after bad. In fact they're so inept, I'm hoping that
we need the IMF sooner rather than later so that grownups are in charge.

FoFP
 
P

PeterSaxton

The thing is that it's possible that they too overindulged in debt
during the credit bubble. Debt is a very treacherous friend.

I think of the bubble bursting as a kind of reset button for the
economy.  Humans are awfully prone to wishful thinking and the idea that
instead of saving for something, they can safely have it now through
borrowing.  Sooner or later that thinking leads to credit bubbles,
massive misallocation of capital, and crazy prices for those assets
which credit is used to bid up (these seem rather random, varying from
flower bulbs through canals to houses).

During the reset, those prices have to return to reality (usually 67% to
90% down) while other prices and wages fall less so during the
deflatinary phase. The misallocation of capital also has to be cured
through people and resources being freed from companies and projects
which could only ever make sense while the vast amounts of credit are
still flowing freely during the bubble.

Of course it means that those families and companies which overborrowed
in the bubble and who did not trim their borrowing as the bust
approached will go bankrupt. The flipside of that is that some families
will then obtain reposessed houses at a price which won't require them
going into hock for the rest of their lives (or that the restricted
lending won't anyway let them if they are still so inclined).

That will leave them discretionary spending which will drive the new
companies which will form to servive new economic growth.  The great
news is that after the deflationary phase, this will be slow, steady and
non-inflationary growth where people will create wealth by working and
saving and not through speculation.

So yes, there will be causalties, but without all this government
interference, they will largely have chosen themselves by the risks they
took.  There will also be a great many who ultimately benefit by the
reset in prices. That's pretty much the nature of any economy - if
someone wins on the horses then others also lose, and we don't demand
that the taxpayers pick up the tab for the losers.

We will get through this, although some bad stuff will happen in the
meantime. The real choice is whether we get through it in five years or
twenty. Right now the government is choosing the twenty route on our
behalf, and is guaranteeing only that we'll have lost a great deal more
money than otherwise by the time we get there.

That they can't fix it is perhaps not so obvious without seeing the
history of the other great credit bubbles. That they don't know how to
fix it is however quite obvious.

Look at Northern Rock:

1. On the day there was a bank run, analysts were sure that the bank
could have been closed, and all depositors given all their money back
after the sale of assets (it was illiquid but not insolvent at that
point). The government fluffed that chance.

2. The government bailed out Northern Rock and required it to pay back
the taxpayers all the money loaned.

3. It then forgave 3 billion of loans.

4. Lately, Northern Rock was doing fairly well at paying the rest back,
then the government reversed course, poured more money in, and demanded
it outlay loans at 90% in a market where house prices are falling by 16%
per annum. It says it wants to prevent negative equity, but this
guarantees it for those fool enough to fall for the government pimping
of these dumb loans. The government also says it wants a return to
tradional banking. Prior to the bubble that was 25% deposits at 3 times
salary and you save with the lender for two years beforehand to show you
can spare the necessary amount of cash each month to service the loan.
90% deposits don't exactly match up to that standard.

The government in short has scant idea what to do, and ultimately it
will have been seen to have prolonged the depression and thrown a great
deal of good money after bad. In fact they're so inept, I'm hoping that
we need the IMF sooner rather than later so that grownups are in charge.

FoFP
Because these events are so rare people do not believe they will
happen.

The government should have ensured that there were limits on borrowing
- easier said than done but possible.

It's not sensible to just allow the economy to be messed up in such an
extreme way.

When the government tries to help they do it in an incompetent way and
cause problems for people who haven't done anything wrong, eg. savers.

I am in favour of the government trying to avoid the majority of
businesses going bust. Even if the businesses don't borrow they have
problems due to the lack of demand.

Your solution would result in most businesses going and bust and most
homes being repossessed and then people with capital starting
businesses again. This is a lot different than the efficient transfer
of resources in a discrete way.
 
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M

M Holmes

PeterSaxton said:
Because these events are so rare people do not believe they will
happen.
I'm sure that's largely true, but such events can be read about in
books. They do happen every three generations or so. All it takes is for
a generation to forget just how treacherous a friend debt can be, and
we're off to the races again. The longer ago the last such bubble, the
easier perhaps to forget.
The government should have ensured that there were limits on borrowing
- easier said than done but possible.
Perhaps back at the start in 1985. By the time a bubble is going, a
greed-maddened public will simply replace any politicians who try to get
in the way. I recall that even back then, Margaret Thatcher was advise
to curtail the nascent housing bubble by removing mortgage interest
relief. Having a good understanding of her public, she stated "Over my
dead body".
It's not sensible to just allow the economy to be messed up in such an
extreme way.
That assumes that the economy is something under someone's control. It
isn't. It's just a bunch of people trading with each other. To that
extent the economy is a tool. If people misuse it, it will break.

People thought that by continually trading houses to each other using
higher and higher numbers on the cheques, they could get rich. In a way
they could, by borrowing against those higher values. Unfortunately all
that debt still needed serviced, though some seemed to assume it was
somehow money for nothing. It's no different from Fred and Barney
becoming millionaires by selling each other their caves, swapping
houses, and then each smashing up the million quid tablets.

It can't be stopped, but anyone who tries can be replaced.
When the government tries to help they do it in an incompetent way and
cause problems for people who haven't done anything wrong, eg. savers.
They're not trying to help as yet. They're trying to resurrect the
bubble. See the nonsense about restarting the securitisation markets so
that we can go back to the banks making dodgy loans and then passing
them onto someone else in a long chain of pass-the-debt-bomb.

They're nuts and they're throwing all our future earnings at a problem
that has already solved itself. The securitisation markets were part of
the problem and their death is part of the cure.
I am in favour of the government trying to avoid the majority of
businesses going bust. Even if the businesses don't borrow they have
problems due to the lack of demand.
Demand will return to pre-bubble levels because people are going to have
to relearn to save and spend rather than borrow-and-spend. The
businesses which built up to service the borrow and spend mentality will
have to shrink or vanish because they're making more than we now want.
That's already happened with cars. It will happen with a great deal
more. We'll all be the poorer if we continue to pay for people to make
cars which they'll simply have to rent space for while they rust.
Your solution would result in most businesses going and bust
Most? No.
and most
homes being repossessed
Most? No. Many? Yes.

They'll go bust and be reposessed eventually anyway. The reset is
underway and cannot be reversed. It can be slowed though, in which case
those businesses and people will lose yet more money befre they go
under. Quite how that does the owners or people a favour escapes me.
and then people with capital starting
businesses again. This is a lot different than the efficient transfer
of resources in a discrete way.
I'd hardly call throwing trillions at the problem an "efficient"
transfer. We might later need that cash to help people.

FoFP
 

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