Monetary Policy: Monetary Policy Slamming on Breaks. What do you do when banks don’t want to lend? Become the consumer. Government getting ready to spend to stimulate the economy.
Monetary policy is a delicate game of cat and mouse. You raise rates, you lower rates, or you jawbone a little and normally, the markets respond to the Fed like a conditioned hamster looking for a piece of food. Yet the Fed has lost this power. What happens when the public gets a look behind the curtain and realizes there never was any sort of wizard? What happens is extreme market volatility unlike anything we have seen in nearly a century. Now maybe at this point with consumers closing up their wallets, not buying cars, putting away the American Express credit card, and finally deciding to exercise restraint, flooding the system with credit may be counterproductive.
10 FDIC Charts and Graphs Highlighting Bank Problems: FDIC Analysis Examining 2009 Future of over 8,000 Banks Insured by the FDIC.
With all the problems occurring in the banking system, it is rather astonishing that so few have failed in 2008. At least that is the perception being put out there for us to digest. Yet the failure of one IndyMac or Washington Mutual is the equivalent of 100 smaller bank failures all at once.
The Federal Reserve and U.S. Treasury Determined to Sink the U.S. Dollar in 2009. Why Gold and U.S. Dollar went up in 2008.
2008 will go down in history as the worst global market for countless investments since the Great Depression. It was significant even with the late rally which occurred after the November bottom. What this signifies is that market volatility a sign of a very unhealthy marketplace will continue in 2009. Yet the more important point to consider is that the Federal Reserve headed by Ben Bernanke and the U.S. Treasury which will be under new leadership soon, have been showing no signs that they are interested in preserving the value of the U.S. Dollar (USD).
Housing Bubble Genesis: 5 Reasons that Didn’t Cause the Housing Bubble and 5 Reasons that did.
There is a danger in having power. Credit at least many decades ago was seen almost as an extension of the morality of the borrower. That is, the way credit was given many times reflected the capacity, collateral, and character of the borrower.  Main Street is already feeling this recession like the worst since World War II and credit is tight for most average Americans just like it was back then. In this recent bubble, all 3 historical credit factors were disregarded. Capacity was never examined in many cases. Collateral? Not much collateral with zero down mortgages. And character was never evaluated. How can one expect unethical lenders to judge the character of a borrower? Their primary concern was getting a fee.
