Tuesday, March 31, 2009

Banks inability to lend is not the problem

Banks inability to lend is not the problem. People have already borrowed up to there earballs. Life happens in cycles. We are moving from a cycle of hyper-borrowing into a savings and debt reduction cycle. In the previous cycle everyone felt wealthy because their house would rise enough in one year to cover the debt they ran up. But as soon as the housing bubble popped and reversed folks got a very sick feeling in there stomach. Because now debt was really debt. No more magic fairy A.T.M. to cover the truth every year. On top of that, people are seeing neighbors, family, and friends loosing jobs left and right. They are not feeling wealthy anymore. Instead they are feeling a desperate need to get out of (not into) debt, and to save for troubled times ahead.

This is the reality. Please folks, the banks ability to lend will not reverse the current situation.

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