http://www.nakedcapitalism.com/2008/01/markets-want-christmas-in-january-rate.html Sun, 22 Nov 2009 07:56:24 -0500 http://wordpress.org/?v=2.8.4 hourly 1 http://www.nakedcapitalism.com/2008/01/markets-want-christmas-in-january-rate.html#comment-3143 Carl Sat, 19 Jan 2008 12:45:00 +0000 http://www.nakedcapitalism.com/2008/01/markets-want-christmas-in-january-rate-cuts-edition/#comment-3143 I agree that shoring up the asset values is the main thrust of the effort to stimulate the economy. The measures proposed would slow the collapse of such values if and only if they arrived very soon, which is very unlikely. So I would suspect that the decline in housing values specifically will be much faster than most are predicting, resulting in much more stress on the banks which are going to wind up owning far more inventory than they ever thought. This is not a good long term situation and will result in very high losses and further write downs. The social stresses are rising and with that real consumers are becoming more cautious in there spending. Lots of empty houses owned by banks and deteriorating neighborhoods are not an inducement for consumer confidence.<br/>The end of the credit crunch, while welcome and a necessary precondition for any sort of recovery from the ongoing housing mess, is not sufficient to reverse years of bubble blowing by a virtually unregulated and unrestrained lending system. I think the credit crunch is just taking a little vacation and will be back to work much sooner than is anticipated. I agree that shoring up the asset values is the main thrust of the effort to stimulate the economy. The measures proposed would slow the collapse of such values if and only if they arrived very soon, which is very unlikely. So I would suspect that the decline in housing values specifically will be much faster than most are predicting, resulting in much more stress on the banks which are going to wind up owning far more inventory than they ever thought. This is not a good long term situation and will result in very high losses and further write downs. The social stresses are rising and with that real consumers are becoming more cautious in there spending. Lots of empty houses owned by banks and deteriorating neighborhoods are not an inducement for consumer confidence.
The end of the credit crunch, while welcome and a necessary precondition for any sort of recovery from the ongoing housing mess, is not sufficient to reverse years of bubble blowing by a virtually unregulated and unrestrained lending system. I think the credit crunch is just taking a little vacation and will be back to work much sooner than is anticipated.

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