Economics Questions

Re: What did Rockwell mean by saying the credit crunch is actually a borrowing crunch

Stranger — Thu, 28 May 2009 17:46:13 GMT

If you have a profitable business or clean credit rating, there is plenty of credit available to you at low interest rates. However there are no profitable investments in sight. If you are a bubble business or subprime borrower, the banks no longer want to lend to you because the markets they used to sell your sucker debt to, the CDO markets, have blown up never to return.

Re: What did Rockwell mean by saying the credit crunch is actually a borrowing crunch

DD5 — Thu, 28 May 2009 15:27:54 GMT

I think the way mainstream measures it, there is no "credit crunch" since banks are now holding plenty of reserves, courtesy of the FED. However, and perhaps someone would like to comment on this also, I think that in reality, there is a "credit crunch" in terms of the businesses that have been able to exist only as a result of the inflation during the boom. Since time preference of indviduals doesn't match the previous credit expansion, the bust reveals that there really is a credit crunch. Does Rockwell mean it from a mainstream point of view, or from Austrian point of view? Any thoughts on this?

Re: What did Rockwell mean by saying the credit crunch is actually a borrowing crunch

ivanfoofoo — Thu, 28 May 2009 14:09:29 GMT

Actually, it is that banks don't want to lend, people want to borrow, but banks will put lots of obstacles to give a loan. The government usually "solves" this problem by forcing banks to lend anyway.

What did Rockwell mean by saying the credit crunch is actually a borrowing crunch

inquisitiveteenager — Thu, 28 May 2009 13:56:48 GMT

he said there was plenty of reserves in banks, just few people who want to borrow

i understand that in our money system money is created through loans

are we in a 'credit crunch' because nobody wants to borrow?

why do governments call it a credit crunch if it is the lack of borrowing that is the problem?