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The Good Times With Proper Lending Standards?



October 06, 2008 – Comments (1)

Anyone that thinks low interest rates are good for the economy isn't looking at all the effects.  The only ones benefiting are those able to refinance at lower rates.  For the rest of the economy they are creating unsustainable assumptions, causing investors to take unreasonable risks looking for better returns, and creating debt slaves for the unestablished.

We've been riding the interest rates down since the 80s.  The numbers look great the first couple times the game is played and since debt is supposed to be paid back, those numbers are borrowed numbers.  

Low interest rates create bad things in an economy, but that was coupled with throwing away all lending standards.  Much of this money that is being lost was just given to people without a hope of it ever being repaid.  There would have been paid in the economy because of the nature of low interest debt even with proper lending standards.  Now there is a combination, debt slaves and for the unqualified lotter winfalls that didn't really go to individuals who borrowed, but the people working in those industries.

Low interest rates totally destroy labour "equality."  All this"free" money enabled sectors that were first in line to have unsustainable wages.  Open your eyes and look at the difference in wage increases in different occupations.  And now those industries will feel the most pain as their wage retract the most to get in line with the rest of the wages.

Proper lending standards would have some of this crap in line.  Truly proper lending standards would have kept it all in line, except people are so accepting of risky standards as ok, most don't even know what a proper lending standard is.  What was promoted as a proper lending standard really was a debt slave lending standard.  A proper lending standard is a truly affordable lending standard.  

1 Comments – Post Your Own

#1) On October 06, 2008 at 2:04 PM, GeekLaw (37.12) wrote:

As painful as this recession has been on my personal net worth, I have to say that I have watched with nearly unbounded glee as those in "high finance" and real-estate have been taken like lambs to the slaughter.

I like your arguments about debt inequality. The populous has watched the finance and real-estate industry fleece our country men by charging percentage based commissions rather than fee-based services.

As real-state prices nearly doubled, those in the industry benefited from a doubling in salary despite failing to add any additional value (I’ll refrain from making jokes about failing to add value to begin with).

Similarly, those in finance benefited from massive increases in compensation owing to a steady percentage of ever increasing transaction amounts. The same work yielded more than a doubling of compensation, thus creating a massive imbalance or a vacuum if you will.

Nature abhors a vacuum, and now these industries will learn first hand how nature deals with such imbalances. It won’t be pretty. It will be painful. But, equilibrium must be attained.

I like to think about my losses in the market (standard fair boring index funds) as the price of admission. I’ve lost a lot of paper wealth, but its worth every penny to see the suffering of those who caused the problem.


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