Tuesday, July 29, 2008
Banking and the US economy
I hesitate to be a doom-and-gloom merchant. Heaven knows there's enough of that sort of thing going on already! Nevertheless, the signs that the US economy - indeed, that of most of the world - is heading into deep water, and won't be out of it for some time to come - probably years - are growing stronger every day.
If you haven't been reading much about it (or even if you have), I'd like to suggest the following articles as mandatory reading to prepare yourself for what's ahead.
1. Uncomfortable Answers To Questions On The Economy - the state of the economy in broad, general terms.
2. US Banks Sharply Reduce Business Loans - the impact of the so-called "credit crunch" beyond the housing sector.
3. America's House Price Time Bomb - how many home-0wners are simply walking away from their obligations, leaving our banks to hold the (unaffordable) baby.
Put those three articles together, and you'll have a pretty good picture of how things are likely to look over the next twelve months at least. I think we're in for much harder times that we've yet experienced. Those who are forewarned can at least make whatever preparations they can.
Furthermore, look at this in the context of the upcoming elections. If you see any individual or group promising the earth, ask yourself: Where are they going to find the money to do this? If it'll take raised taxes, or increased Government borrowing, don't believe a word of it. In the current economic climate, to do either is foolhardy at best, probably dangerously deluded, and perhaps a sign of economic illiteracy. Don't vote for a fool - or a party - like that!