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|Further Down The Spiral|
by noteworthy at 8:46 pm EDT, Sep 14, 2010
There used to be a time if you didn't have money to buy something, you just didn't buy it.
In a housing market that is now depressed throughout the economy, mortgage holders and troubled borrowers would both be better off if they were able to renegotiate their loans and avoid foreclosure. But when mortgages have been sliced and diced into pools and then sold off internationally so that no investor holds more than a fraction of any one mortgage, such negotiations are impossible. And because of the financial industry lobbying that prevented mortgages from being covered by personal bankruptcy proceedings, no judge can impose a solution. The phenomenon of securitization, created in the belief that a large-scale housing crash would never happen, has trapped investors and troubled borrowers in a mutually destructive downward spiral.
If America is now circling the drain, Goldman Sachs has found a way to be that drain.
You can make an argument that the end of the housing crash is near.
But that's not what I found.
Lost decade, anyone?
The Economist's Washington correspondent:
By some measures, America already has a lost decade in its rearview mirror. A couple more would mean a lost generation. Worst of all, it would mean my generation.
Man, what a great time to be alive!
Stop talking about time like you need to save it. You just need to use it better.
|RE: Further Down The Spiral|
by Decius at 9:10 am EDT, Sep 15, 2010
In the short run, the only way to avoid a deep slump when almost everyone in the private sector is trying to pay down debt simultaneously is for the government to move in the opposite direction—to become, in effect, the borrower of last resort, issuing debt and continuing to spend as the private sector pulls back. In the heat of a Minsky moment, budget deficits are not only good, they are necessary.
Is there any credible economist who disagrees with this? If not - why has the Republican party aligned their entire strategy in opposition to this idea?