I wonder if the Mish (ies) wil EVER give up this ghost

[Spartacus]

#2 below ;

IMHO Canada and Australia have PROVED in the last 2 years, proved beyond a shadow of a doubt that if you make loans attractive enough people WILL BORROW. No matter what the current debt load is, They'll take on new debt at even more outrageous ratios than ever before.

_____________________________________________
Unfortunately, that is not the case as noted by Bloomberg in FDIC's Bair Concerned Banks Making Only 'Safest Loans,' Urges More Lending

Federal Deposit Insurance Corp. Chairman Sheila Bair said she’s “concerned” that U.S. banks are making only the safest loans, and encouraged the companies to step up their pace of lending.

“There needs to be well-managed risk-raking to get the economy going again,” Bair said today in a Bloomberg Television interview at the White House, prior to a meeting of bank chief executive officers with President Barack Obama.

So Why Aren't Banks Lending?

1) There are no credit-worthy businesses that want to borrow.

2) Consumers are tapped out and do not want to borrow.

[iyamwutiam]

Re: I wonder if the Mish (ies) wil EVER give up this ghost

c. people are tired of usury.

Especially from the IRS and credit card companies. They now see that essentially it is possible to make 1000% on your principal when finance fees, ATM fees, CC fees and interest compounded (daily by the IRS) does.

Many will not flee till the seawater approaches the deck chair. But I am already seeing many older americans leaving for Nicaragua, Mexico etc.

If the fact that Faber and Rogers have already moved abroad -doesn't give you an inkling of what perspicacious investors are doing with their analysis of this countries future than -...I dont know what else to say.

[hayekvindicated]

Re: I wonder if the Mish (ies) wil EVER give up this ghost

c. people are tired of usury.

Especially from the IRS and credit card companies. They now see that essentially it is possible to make 1000% on your principal when finance fees, ATM fees, CC fees and interest compounded (daily by the IRS) does.

Many will not flee till the seawater approaches the deck chair. But I am already seeing many older americans leaving for Nicaragua, Mexico etc.

If the fact that Faber and Rogers have already moved abroad -doesn't give you an inkling of what perspicacious investors are doing with their analysis of this countries future than -...I dont know what else to say.

Rogers, apparently, still pays American taxes even though he doesn't live in America any more. Apparently, you pay US taxes if you are an American citizen no matter what you do - as long as you are alive. This is another reason why I've never understood the desperation for people to want to become US citizens.

Okay, maybe if you are a semi starved peasant living in horrendous poverty, American citizenship is like heaven on earth. But if you're even reasonably rich with decent net worth, becoming a US citizen makes no sense whatsoever. Faber, I believe, never became US resident.

[Spartacus]

Re: I wonder if the Mish (ies) wil EVER give up this ghost

If your response is on topic, I don't see it. If it is on topic, please correct my impression.

Rogers moved for better investment opportunities. He didn't move to avoid taking on more debt.

Faber moved from Europe to Asia long ago - he never lived in the US AFAIK.

My point was, Mish (and others in that camp) claims people eventually "realize they have too much debt" and stop adding more debt. Usually when I 've read this from Mish there's some magical awakening or realization, disconnected from rational thought. He writes "people don't want to borrow" with no mention of the cost of borrowing.

Doesn't happen. People will stop borrowing when FORCED TO by debt service load. A rational calculation based on costs. Some magical number, "I have too much debt" won't stop them from borrowing more. If the debt is serviceable, if the credit is cheap enough people WILL KEEP BORROWING. The powers that be CAN keep the debt game going if they want to - just keep the cost of borrowing low enough that rational calculation says "borrow more".

c. people are tired of usury.

Especially from the IRS and credit card companies. They now see that essentially it is possible to make 1000% on your principal when finance fees, ATM fees, CC fees and interest compounded (daily by the IRS) does.

Many will not flee till the seawater approaches the deck chair. But I am already seeing many older americans leaving for Nicaragua, Mexico etc.

If the fact that Faber and Rogers have already moved abroad -doesn't give you an inkling of what perspicacious investors are doing with their analysis of this countries future than -...I dont know what else to say.

obviously many have stopped borrowing from credit card companies. Just proves my point - my point is, if the credit is cheap enough.

Credit card credit is not cheap.
Even during the Greenspan regime people were moving credit card debt to mortgage debt FOR THE CHEAPER RATES, so they could BORROW EVEN MORE.

[Kadriana]

Re: I wonder if the Mish (ies) wil EVER give up this ghost

If your response is on topic, I don't see it. If it is on topic, please correct my impression.

Rogers moved for better investment opportunities. He didn't move to avoid taking on more debt.

Faber moved from Europe to Asia long ago - he never lived in the US AFAIK.

point is, Mish claims people eventually "realize they have too much debt" and stop adding more debt.

Doesn't happen. People will stop borrowing when FORCED TO by debt service load. Some magical number, "I have too much debt" won't stop them from borrowing more. If the debt is serviceable, if the credit is cheap enough people WILL KEEP BORROWING. The powers that be CAN keep the debt game going if they want to - just keep the cost of borrowing low enough.



obviously many have stopped borrowing from credit card companies. Just proves my point - my point is, if the credit is cheap enough.

Credit card credit is not cheap.
Even during the Greenspan regime people were moving credit card debt to mortgage debt FOR THE CHEAPER RATES, so they could BORROW EVEN MORE.

I don't know if that's really true for everyone. There seems to be a growing part of the middle class that have decided they don't want debt anymore. I know a lot of people that are either on the Dave ramsey plan for getting out of debt or some other program where they're trying to pay off their student loans and mortgages faster. It seems to becoming almost fashionable to say you don't have a car payment.

[MulaMan]

Re: I wonder if the Mish (ies) wil EVER give up this ghost

It is called an asset bubble. Assets stopped going up.

Speculators stopped lending, gamblers stopped borrowing.

Normal people stayed the same. Some gamblers have changed thier ways most will just keep doubling down until broke and then start again.