New data show that consumer spending fell 3.1 percent in the third quarter, its sharpest drop in 28 years. New York Times columnist David Leonhardt examines the latest numbers. Continue reading
Question/Comment: Is it correct to assume that the credit crisis is mostly psychological? Banks hold bad paper which needs to be exposed and somehow that debt needs to be paid or securitized again, so that banks regain confidence in other … Continue reading
- The government hopes the $700 billion bailout will get banks to lend again. Why not require them to do so?
Question/Comment: So the government hopes the $700 billion bailout will get banks to lend again. Why not require them to do so? According to the Wall Street Journal some of the banks are using the money for possible acquisitions, for … Continue reading
- Now that governments have to inject billions into world banks, do you think monetary policy should be adjusted to better maintain a balance between currency in circulation and bank funds?
Question/Comment: The ratio between commercial bank money and currency in circulation has been widening for decades. While the Federal Reserve’s monetary policy has protected our economy from runaway inflation, it may have been starving the market for currency. Now that … Continue reading
As the world’s industrialized nations continued to roll out more plans to bolster flagging economies, European leaders called for a review of the global financial system.
Question/Comment: How could a U.S. domestic problem (the housing bubble) become a global liquidity crisis between banks putting all banks and consequently the economies worldwide in trouble? What needs to be done to prevent a global economic meltdown? Paul Solman: … Continue reading
Question/Comment: If banks do not have money to lend, how can Citicorp, Wells Fargo, etc. come up with billions to purchase failing banks and finance firms? Paul Solman: They aren’t forking over any cash. “Purchase” means subsume. Wachovia becomes part … Continue reading
Question/Comment: Are there any banks or investment houses not involved in risky practices? I would like to deal with a financial institution that has integrity. Where can I find it? Paul Solman: No, banks and investment banks are in an … Continue reading