Friday, October 17, 2008

The banks will soon be flush lending out government money. They can get 4% interest.

We are told that the government needs to recapitalize banks because they are unable to make loans. The question is who are they making loans to? What do these loan applicants need money for? There is no sector of the economy that is expanding. Nobody is asking for venture capital. There is no new construction starting. Nobody is hiring. Retail sales are plummeting. Unemployment is skyrocketing. Many States are starting to run out of the reserves to pay benefits to the jobless. Credit card companies are cutting off consumer lines of credit to the over extended, as they begin to forecast hundreds of billions in defaults in the next few years. Real estate prices are still declining and the foreclosure rate continues to increase. In times like these, it's unlikely that anybody asking for money, is a good risk to pay it back.

Unable to interest anyone else in their Ponzi schemes, the bankers have turned to Uncle Sam. They will dine off government money as long as they can. No loans will be made, except to themselves. I wonder how much money the government will give the bankers, before they catch on. I wonder who the bankers think will participate, once the government goes broke?

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