No Credit No Spending No Jobs
Over the past seven years, banks loaned cities, businesses, and individuals trillions and trillions of dollars. You think money supply grew, debt grew exponentially more. Debt spends exactly the same as money. If you don't believe me, just take your credit card to Target and see what you can buy.
Did America Buy!!!! New Houses. New SUVs. New TVs. New Vacations.
Simply from the stimulous of NEW credit, millions and millions of jobs were created in America in many different industries: Construction, Sales, Retail, Finance, Manufacturing, Government just to name a few. Even health care benefitted because higher incomes allowed people to pay high insurance premiums.
But for issuing credit, sales would have never occured and millions of jobs would have never been created. While these new jobs were being created from credit, many of our manufacturing jobs were being sent overseas. Who needs to make anything when you can borrow as much as you want.
Banks made hundreds of billions issuing, packaging, and selling that debt around the world. Bank executives made billions in bonuses. Who cares if the banks knew that the debt was likely to default, why worry about what will happen in a few years when you can capture profits now.
Well, now the banks have slowed lending to people, business, and cities. Spending is slowing. Debt is defaulting. All those jobs that were created as a result of credit......, thousands are being eliminated everyday.
Heck, in one swoop, Merrill is cutting 10%, Citi is cutting back 20%. TWENTY PERCENT!!!!! Bear is cutting 50%. FIFTY FIFTY FIFTY PERCENT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!That is just in the last few days.
There is no replacement for these job cuts. The jobs were created by spending from NEW credit and are being eliminated because credit is evaporating. No credit no jobs. No job no spending. No spending, no taxes. No taxes, no services. No services, no jobs. Here we go again.
The jobs cuts are really just starting to kick in. Unless banks start lending again, we still have millions and millions of job cuts to go. You think exports are going to make a difference, think again...the numbers are not even close.
Jobs created by credit will be lost as credit is eliminated.
Credit stimulated unprecedented spending. Lots of jobs were created. Lots of homes were purchased. Credit is being eliminated. Now lots of jobs will be lost. Lots of homes will be foreclosed. So goes the the credit cycle.