Carrol Cox wrote: > Considering that the recession began over a year ago, rather _before_ > lending [dried] up, how do we know that the problem is refusal to lend > rather than refusal to borrow -- their not being anything promising to > spend/invest the borrwoed money on?
It's both. With falling or even negative home equity, prudent people don't want to borrow, while those who want to have bad credit ratings. With mortgage-backed securities nearly worthless, the banks' balance sheets are trashed and they don't want to lend, especially since so many aren't as creditworthy (in the banks' eyes) as they were a year and a half ago. The news reports, however, are all about a shortage of loans (credit rationing) where people do want to borrow at current rates but banks refuse to lend, partly by raising credit standards. So the supply side of the loan market (i.e., banks & other lenders) seems to be the bigger problem. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
