European Tribune - Comments - Obama's Emergency Banking Act of 2009

Obama's Emergency Banking Act of 2009 | 83 comments (83 topical, editorial, 0 hidden)

Banks are not lending right now for two reasons:

they have liquidity problems, because the market is closed, because banks do'nt trust one another (for good reason);
they are risk adverse, and see the recession as a reason to restrict lending anyway;

Solving the banking crisis will reduce the acuteness of the first one, but will do little for the second, which is set to worsen.

So we may switch one credit crunch for another...

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Wed Feb 11th, 2009 at 10:31:47 AM EST
[ Parent ]

Re: yes (none / 0)

But the second credit crunch is amenable to standard Keynesian shock therapy...

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Wed Feb 11th, 2009 at 11:03:23 AM EST
[ Parent ]

Obama's Emergency Banking Act of 2009 | 83 comments (83 topical, 0 editorial, 0 hidden)

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