Finance articles/Personal finance articles/Business finance articles

Great Depression is going to pale compared to the coming crash! Nothing has been fixed.

25 Aug

Business Loans Are Down

Posted in on 25.08.10

Great Depression is going to pale compared to the coming crash! Nothing has been fixed. We have borrowed and spent on granite counter tops and consumer goods. We are now drowning in debt. Keynesian spending on consumer economy without production is a sure way to bankruptcy for us all.

Banks are not out of the woods yet! Bank troubles are just starting. Banks have been lending to the wrong borrower for decades. Business lending has decreased every year since 1980. At the same time, banks have increased lending to the consumer. Instead of pristine government debt in their books, banks carry junk debt with depreciating collateral in their books now. 90% invested in consumer debt many banks are insolvent and are kept alive by accounting changes and government cash to remain liquid. Deflationary crash continues:

http://www.tradingstocks.net/html/signs_of_deflation.html

Consumer debt does not pay itself. Consumers consume. They do not create value. On the other hand, business loans create value and expand the economy. Our money supply has been stuck in financial markets that limited business access to cheap money. With expensive labor, and expensive loans the businesses were at great disadvantage for decades. Here is how entire population stopped creating value and started to chase speculative gain hoping to get rich at each other's expense:

http://www.tradingstocks.net/html/financial_mania_continues.html