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JAPAN NEWS AND DISCUSSION

Obama urges banks to find ways to increase lending

World Dec. 15, 2009 - 04:43AM JST ( 4 )

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4 Comments

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5SpeedRacer5Dec. 15, 2009 - 09:17AM JST

I saw this headline in 1994 or so. Except the name was not Obama, it was Ozawa or something like that.....

Seriously, does anyone remember this exact same thing happening in Japan? Maybe it was 1998, 1996? Banks were flush with cash, but would not lend.
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GJDailleultDec. 15, 2009 - 09:27AM JST

It's simple stuff, a bubble bursts when you run out of borrowers to take on more speculative debt. The people who borrowed before now can't sell to a new borrower and so can't pay the money back. Banks now can't lend to real businesses because they know that they are not going to get paid back on the speculative loans, and that they are broke. The government pours in money to "rescue" the banks, but the amount is still less than the amount being lost - kind of like a patient who is bleeding to death, you can give him a transfusion but if you can't stop the bleeding he is still going to die. And the bankers take the rescue money and cook the books to make it look like profit, and pay themselves nice, fat bonuses.

Some people know all that, but they can't say it. Other people haven't even figured it out yet. So you get smoke and mirrors solutions, and "tough talk" from Obama. It's all just to keep the plane in the air and prevent panic.
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GJDailleultDec. 15, 2009 - 09:42AM JST

5Speed is right there, it is an exact replay of what happened in Japan, and the danger is that the result will be even worse. Borrowing free money from the Fed and then investing it at 3% or so is a nice way to make money, even an idiot like me could do it, but it is not banking. Quantitative easing (aka giving away money to banks) didn't work in Japan, so why is it going to work in the USA?
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skipthesongDec. 15, 2009 - 04:57PM JST

Quantitative easing (aka giving away money to banks) didn't work in Japan, so why is it going to work in the USA?" I've said almost exactly the same thing, only I used the quote from my father in law and posters here were basically throwing rocks at me.