Credit Is Key To Stopping Financial Crisis In 2009

The financial crisis began in the credit markets, and eventually it will end there. But as the financial industry rounds out one of the most wrenching years in its history, bankers and policy makers are struggling to see the way out of this mess. Despite triage by Washington and trillions of dollars of taxpayers' money, credit is not flowing nearly as much as many had hoped.

The problem, as Mr. Bagehot observed, is trust -- or rather, the lack of it. Even after receiving millions, in some cases billions, of dollars from the government, banks are reluctant to lend money. Crucial parts of the financial system have stopped functioning. The exuberance of the boom, which led bankers to make loans to people who could not repay them, has given way to a seemingly intractable fear of making any loans at all.

Read the whole story here.

Comments

[AngieMom57]

Credit is not the answer. Transparency is the answer.

For the millions of American's who are near to or actually in foreclosure of their homes see:

First National Bank of Montgomery vs Jerome Daly

Watch: http://video.google.com/videoplay?docid=7065205277695921912

There are SOLUTIONS!

[TJCole]

You see the bankers know well enough not to ever trust each other, but they must some how once again fool the average American into trusting them...!

[Mildmannered]

Six months ago, who would've guessed that Bush's legacy might actually be something other than his terrible Iraq War. Well, he may have actually done it with this absolutely terrible economy, the worst at least in my lifetime.

Or maybe his legacy will be Katrina. Or maybe the destruction of the Republican party

You are going to keep the history book writers busy, Mr. President Bush.

[unite4change]

If the banks received TARP money to free up credit, which they haven't done, they should be forced to return the money with penalties. It's our money, these banks should be lending but they are basically circulating the money among their buddies.

[Anciano]

Obama will be a fresh start. Why invest money in a sinking ship and last years model?That"s why we have taken a vow not to spend one cent on anything we don't have to buy at retail such as food or fuel until the Obama administration is sworn in. Bush"s rebates that added $1200 to our tax liability and his pleas to go shopping show the great importance of consumer spending to the legacy of Republican economics. Bush hijacked the country for the benefit of the wealthy for eight years, so let the wealthy keep the Bush consumer economy going for the next three weeks until the Republicans are rightfully flushed in disgrace. Learn about and patronize your smaller locally owned businesses and pay cash so it's under the radar of statistics. We're hoarding our discretionary retail spending until the Obama Administration when the recovery can begin. An "unexpected jump in February retail sales" will make a nice White House-warming gift for Obama.

[BOBONDE]

GOP DEPRESSION #2 -WE TRIED THINGS THE CONSERVATIVE REPUBLICANS WAY FOR 8 YEARS AND IT DID NOT WORK!

[Chanel05]

This is what will help us all!

http://www.cnn.com/2008/CRIME/12/31/recession.robberies/index.html

[PhilipTaylor]

SMART REGULATIONS and CRIM1NAL CONVICTIONS to return FEAR to control CORRUPTION!

[Carolab]

QUICK: That sounds like an argument against regulation, though. Is that what you're saying?

Mr. BUFFETT: It's an argument explaining--it's an argument that managing complex financial institutions where the management wants to deceive you can be very, very difficult.

http://www.marginalrevolution.com/marginalrevolution/2008/10/regulation-a-di.html

Ergo, we need criminal convictions to help enforce the regulations--as you said, PT.

[PhilipTaylor]

Besides regulations you have to have PEOPLE WHO REGULATE and don't "TURN a BLIND EYE" on the facts, the first and second set of books!

For Buffett lets remember that it was the Investment Banksters who circumvented the mortgage regulations to find a loophole that allowed them to build their MULTI-TIER Ripoff of middle class and poor people, many who never thought they could afford a house.

Fannie and Freddie were losing massive market share so they were forced to compete and were late to the game and as a quasi-government agency they were the last out and were left holding the bag!

[TJCole]

End Corporate "Personhood!"

[rich misty]

Ponzinomics

[gjohntheterrible]

With a special introduction by Barney Madoff

[research]

Opposite World!!!!!!

The economy does not depend on credit,

Credit depends on the economy!

The article say it depends on if we are in a recession still!

Put that money into

OBAMA'S STIMULUS PLAN!!!!!!!

Read Obama's plan, it's great.

Everybody read up on FDR versus Hoover if you haven't already.

Invest 700B+$ in government orders facilities upgreads of solar wind and green,

With orders in hand, the business supplying these products, will get loans, unless the banks are very stupid. In that case, the USA creates a Green banks, to assist companies ramping up to supply orders.

There are NO liberal newspapers.

[picard922]

hear hear

[VivaZapata]

The markets have done well the last two days despite some very negative financial reports. Is it the war?

[gjohntheterrible]

Reganomics - Trying to build a house by trying to install the roof before the foundation and the walls are even built.

[AutumnRecluse]

Barny-nomics... Give the person a house when they can't even afford the driveway...

[gjohntheterrible]

WRONG - That was Bush's "improvement" on Reganomics. Along with

"Service Economy"

"Outsourcing is good because we get cheaper goods"

[picard922]

Oh please, how selective the memory that omits the past 8 years when Republicans happily dismantled safeguards and ran like piggies to the bank with the yield of speculative investment instruments that ought to be criminal. At least when the bank forecloses on a house because it made a bad loan, it has a house. Even after the Fed has poured trillions of dollars in the derivatives market, we have nothing to show for it. And somehow this is all about Barney Frank? What are you smoking?

[andyboy]

Look how great the auto industry is rebounding. It's amazing and heroic what they've done. It's not easy writing a check from someone else's account to a crony.

These solutions are really alot of "hard work".

[Samalabear]

I am so sick of these stories. Clueless. Credit and funny money got us into this mess and it can't get us out of it. By the time all is said and done more than 75% of Americans will no longer be creditworthy anyway (if this is not the case already).

[AutumnRecluse]

In order for the American Dream to work, you have to be able to loan entrepreneurs the funds necessary to start and grow businesses. What is needed is smart lending practices that are neither too tight or too liberal...

[gjohntheterrible]

Hmmm smart lending practices. Where have I heard that term before? Nope wasn't when Mortgage lenders were busy handing out loans like condoms during spring break in Cancun.

[ErnestineBass]

Banks and the Fed continue to look for a "top down" solution. Typical foolishness.

[Rule Of Law]

And the new meme is that they are suddenly afraid to lend money? How can they lend what they've already spent on bonuses, preferred dividends to wealthy shareholders, and acquisitions.

[AutumnRecluse]

That is the solution. Money flows from the top down in a capitalistic society. Then those people at the middle and bottom inject money back into the cycle at various points.

[gjohntheterrible]

Except now you have money on the top but no money in the middle and the bottom. Successfully isolated the workers by claiming that what they do is not worth the wage they make. Let's see said corporation produce what they do without any workers or even manage to see said product or service when no one can afford it.