Freeing up the capital markets

Let's go onto a very very basic fundamental here... that I am trying to argue against!!!

Basically, world banks all over have been fighting a MASSIVE battle to free up liquidity. Unfreeze credit markets. Which they seem to think (as I said, they are basing from theories cooked up after the Great Depression) will solve the financial crisis and let the healing begin.

Er.

Um.

Will I sound stupid if I ask WHY everyone is so caught up about lending?

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Cause, you know. I don't REALLY see that much people trying to BORROW money.

So... if no one is desperate to borrow, why is everyone fighting so hard to make sure that the banks are going to lend?

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No, seriously, consumers who are not in deep financial straights are not eager to increase their debt. Nor should they... in fact, that is what everyone has been educating everyone, for the past few decades, that having too much debt is a bad thing! duh!
Corporations are now cutting costs, not borrowing money to expand their businesses. With a few exceptions. Said exceptions who are making tidy profits are having no problems getting loans whatsoever, actually.
In fact the only people who I think should be getting increased credit facilities are those individuals who have been retrenched, and need a line of credit to support themselves until the economy picks up and they can get a job again. Which, frankly, the Fed could do with a much much smaller bailout package. There's no need to give billions and TRILLIONS to the big financial companies!

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These idiots are going to wake up one day and realise that by the time credit markets are unfrozen, the economic climate will be so bad that NO ONE wants to borrow... except for those people who want to borrow but would be unable to service the loan whatsoever ie they need zero % loans for say 5 years. And NO bank will offer this to them. It has to be the government, pure and simple.
Whatever rate the government lends at to the banks... THE BANKS WILL LEND AT A HIGHER INTEREST RATE TO THE BORROWERS. DUH. Banks are PROFIT MAKING ENTERPRISES. If Fed lends to the bank at 3%, the banks will lend to consumers at 7% or 8% or in fact as high as they can possibly go.

Very good, America. Give out "altruistic non-profit loans" to the big corporations. So they can give out "greedy bloodsucking loans" to your American people.

You dumbasses.

You big big bunch of big big dumbasses.


The worst part? The worst part is, by the time they're done chasing ghosts solving the credit markets, they will realize that UNEMPLOYMENT has gone up to 10% or higher, consumer spending has reached new lows, as everyone is afraid of losing their job AND has also lost faith in the pension funds and hedge funds and investment funds BUT BUT BUT... due to the efforts of the Fed, have regained faith in the safety of the banks...
Can you guess it?
Your people then take their money and put it in their bank accounts saving money in case they lose their jobs! They don't put it into other asset classes which might generate higher returns, they put it in the bank.
Which is giving them probably 0% interest at this point. Thanks, once again to IDIOTS IN THE FED.
But it is no longer about the interest at this point!!! It is about security! All other forms of savings are failing, and income security is at a low, what else would they do???

So starts the vicious cycle where consumer spending drops, savings increase, companies cut more jobs, spending drops, savings increase etc etc etc and you've basically got a 2nd Great Depression.

Except it's even worse this time.

And internationalised too. Thanks to OTHER dumbasses outside of America.

Dumbasses.