The pundits still are missing the boat. We don't have a credit crisis because banks don't have money to lend.....we have a borrowing crisis because there are too few qualfied borrowers to borrow. Those that we loaned money to in the past few years were unqualified and are now defaulting and destroying banks' balance sheets.
We are waking up to the nasty fact that much of the revenues in the past few years came from simply loaning money to nonsense deals. Can you imagine how many jobs are created to build a shopping center or condo development that we don't need. How about building an extra five million cars....or hundreds of schools without enough enrollment.. or hiring thousands to service subprime mortgages....and the list goes on and on......
The following is a video featuring Ara Hovnanian:
People are not holding back because they don't have enough incentives to buy homes....there are plenty of incentives....they are holding back because they are afraid of losing their jobs or that half the neighborhood will lose their jobs.
Without figuring out a way to stimulate the economy.....the plane gets closer and closer to hitting the ground. You can incentivize or fund banks all day long....without a productive enconomy...there will be few qualified to borrow.....regardless of the incentives or how low the rate!!!!!