A Man to Listen to…

Jim Rogers is a pretty smart fella. He is a wealth of information and along with Peter Schiff, Ron Paul, and several members of the Ludwig Von Mises Institute represent the bulk of my favorite people to listen to.

If you read one single article on the current and future situation as it pertains to the economy, this is an excellent overview published by Reuters, written about Rogers. It’s a brief history, summary of future prospects, and even a little investment advice, read it and use it.

Credit Crunch? Not Quite.

Everywhere you look people are crying out that there is a ‘credit crisis’. No one can get a loan. Corporations are clamouring because they don’t have the ‘liquidity’ to run themselves day to day. Why is this? The government is injected trillions of dollars into our economy and none of it is being lended? What’s going on?

The truth is, there is no credit crunch. Times have changed, yes, but there is no lack of credit. There is, however, a change in attitude as to who is eligible for credit.

Over the past several years The Federal Reserve kept interest rates low and stimulated excessive lending, leading to the economic crash we are experiencing. I don’t think many would disagree with that part. But where a lot of people seem to be getting lost is coming to grips with the fact that lending institutions smartened-up.

The excessive lending in the past was not due to everyone being credit-worthy, it was due to cheap credit. Because of the cheap credit, lending institutions could afford to lend to entities that couldn’t afford it. The banks and mortgage companies could afford to absorb the losses on poor loans because their loans were so cheap.

All that has changed is the music stopped, and because some got left without a chair, other don’t want to get up out of theirs unless it’s a solid offer. In other words, banks are not lending money unless they know they’re getting paid back.

What a weird concept.

Ask yourself if a business that relies on credit to run itself day to day, that means pay bills, pay-checks, supplies, etc. is credit worthy? What about the individual who pays for their day to day needs on credit-cards… do you lend to them? Do they get a bailout?

Maybe people, businesses and anybody else seeking credit should change their situation rather than asking the government to change the lender’s. 

When people ask about a ’credit crisis’ or a lack of credit, ask them “to whom?”

Ron Paul’s Thoughts on The Bailout

 

Ron Paul doing what he does best… talking sense while no one listens.