Central Banks: Encouraging Credit Booms and Busts
Welcome once again to Ponder This… With fireworks getting more explosive by the day in the financial sphere, Steve Moyer felt it was high time to review some of what has been called for over the past three years within the pages of Ponder This… both as a newsletter and a blog.
His latest analysis, Real Estate and Asset Deflation 10: Ballgame Over can be found by clicking here. It is certainly an eye-opening and very worthy read, especially as the world’s central banks work overtime to inject extra cash to solve problems associated with the unwinding of too loose credit in the first place.
Additionally, please consider reviewing the following articles which provide further ammunition to the scenarios we have been proposing over the past three years, as loose credit went way beyond any historical guidelines, setting up a guaranteed scenario of credit dislocations, which we are only seeing the beginning of.
Shoddy work puts damper on new home buyers’ excitement.
Subprime contagion spreading in spite of Bernanke’s assertions to the contrary.
Lower-risk borrowers begin to feel the crunch.
Overly risky positions now being unwound by large institutional investors (batten down the hatches!!).
Countrywide Financial, the largest mortgage lender in the U.S., calls the scenario one of “unprecedented disruptions.”
Our most revered economist, Paul Kasriel, points out the holes in bullish economists’ arguments.
Another sound article by market oracle Mike Whitney - aptly quotes Ludwig von Mises.
Stay tuned to Ponder This… as we continue to analyze the fallout from the historically loose credit of the past five years beginning to reverse itself. Remember, the problem was too loose credit to begin with, so as calls are made for central bank liquidity, rarely is the solution to a problem more of the same which caused the problem in the first place. Too much activity by global central banks will only go to make the final day of reckoning uglier and more destructive.
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Filed under: Social Mood, Economics, Steve Moyer - Investment Commentary, Featured Guests
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