Credit Crunch: The Sequel

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Over 2/3rds of the U.S. economy is provoded by consumer spending. (borrowing). This is the problem. Some would-be experts proclaim that credit availability is the answer to economic problems. The word, "Spend" implys that the buyer exchanges assets for a new product. "Spend" is the misused word here. Buying on credit means a loan by other than the one who seeks to possess something beyond assets held.
Credit itself feeds bubbles which eventually break.
Law prohibiting credit beyond half value of an item is needed.
Auto dealers promotional ads proclaim credit to be no problem--just like down payment--furthermore such a seeker of an item which cannot be afforded--leaves the car dealer location at the wheel of a new vehicle --with cash-back in his pocket.
Individuals among this mix of parties qualify for room and board in a mental asylum.

David Coulter of AZ 9:23PM November 25, 2008

Folks, there's this perpetual surprise in the air when we hear about B Sterns or F&F being rescued, however, do realize that the mechanics of a credit bubble generated marketplace demand these type of bailouts. It doesn't serve the credit economy to destroy the mop (F&F) which hides the flaws of easy credit access in the housing, MBS, derivatives markets. What people should have been angry about, since the tech bubble collapse of '00-'02 was why the economy wasn't generating value-added export industry jobs vis-a-vis a booming housing market then vice versa. This hindsight is 20/20 mentality is a part of the problem. These issues were always there in front of us.

Randy of MD 3:58PM September 10, 2008

I'm getting so sick and tired of all of these Free Market Zealots posting their garbage all over the web every time a crisis is reported upon. Here's a news flash, you Friedman wannabes: It's your lousy economic principles that have gotten America into the mess it is now in, not any of the regulations you rail against!
The S&L Crisis, Enron, the Tech Bubble, the Housing Collapse. . . these are all a result of you guys pushing and pushing until Congress and the White House gave in and loosened or in some cases eliminated altogether the regulations that kept unrestricted greed in check.
So you aren't fooling anyone. . . YOU are the problem!

S. Becker of OR 1:10PM September 07, 2008

Now that the treasury has taken over Fannie & Freddie, I guess we can no longer call anything an investment since government bailouts make everything a sure thing. So what will we bailout next, the stock market??? Casinos??? Atlantic City??? Donald Trump??? America must make a change of government control from the bailout buddies to something else. The tax and spend argument against Democrats has become moot since the Republicans adopted the borrow and spend mantra!!! As a former Republican I have watched the bailout buddies since the S&L crisis till our current near collapsed economy always ensuring they are never held accountable for their actions while America bears the brunt of their arrogance and incompetence. America needs a change even if we elect a dead guy since these old money hanger oners are killing our nation by the minute!!!

Ray Fisher of NM 11:41AM September 07, 2008

It matters not whether America services our debt with foreign money or domestically in the great scheme of things unless of course we experience financial collapse. Money is money, it knows no prejudices. Financial collapse means our creditors take possession of our property versus a simple depression when we struggle to pay our debts under towering interest rates. America has now become very close to financial collapse which we could avoid by simply buying savings bonds & boosting personal savings providing liquidity to banks for reviving our economy. America has historically rallied together via Bond Drives since WWI to repair our finances till current times when we rely solely upon foreign loans to service our debt. It is past time to put our financial house in order and correct the sins of our past. Everyone, please adopt a save for tomorrow plan to insure we will have a tomorrow!!!

Ray Fisher of NM 10:29AM September 07, 2008

The government should allow market forces to work unimpeded. Fannie and Freddie should be wiped out - with shareholder and bondholders' worth going to zero.
Real Estate will go from weak to strong hands. Economics is like physics. The government can not change the laws of economics. Its intervention will only make things worse. Just like FDR made a bad recession into a decade long depression. Obama's central planning will only exacerbate the current situation.
Remember central planning never works. The Soviet Union is a cautionary tale

Zenitram99 of NV 6:58AM September 07, 2008

This is what a Republican economy looks like.
FEAR McCAIN/PALIN!

Gryphon of CA 4:19PM September 05, 2008

The dollar only went up because of recent international intervention aka plunge protection team acted in timely manner , mainly korean and russian central banks buying up dollars. The effect will not last long, only enough until Bush leaves office and dumps the hyper inflation depression on the next president. buy gold food and dig yourself a hole to hide in, all hell will break loose soon by years end, December even.

Doomgerbil of LA 3:49PM September 05, 2008

It would seem that as other countries around the world see their economies collapsing in lockstep with the US they will no longer have a reason to support our currency.That would be the "death spiral" I've seen mentioned by several authors.Then default and reorganization?What a crazy way to run a country.So how can the dollar be going up?

Doug of ID 2:45PM September 05, 2008