Wednesday, November 26, 2008

Does it make sense to encourage credit card spending?

Hank n' Ben are at it again, rolling out another 800 billion salvo, this time with the goal of getting more mortgage and credit card debt into the hands of the public.

Am I the only one who thinks this is borderline lunacy?

People, our country is poorer. The bursting of the housing bubble lowered national wealth by trillions of dollars. We are going to have a recession because of that, financial crisis or no financial crisis.

I do agree that the Fed has an important job to serve as lender of last resort and protector of the viability of the overall financial system. Several of the previous 500 billion plus salvos were more or less aimed at accomplishing that goal.

This latest to me just seems like a badly misbegotten stimulus package. House prices need to find bottom, not be propped up by subsidized mortgage lending. Consumers need to be using less credit, not be enticed into further debt by government subsidies.

Isn't this eerily similar to what got us into this mess to begin with?

4 comments:

Mike said...

Everyday I wake up, watch the news and want to smash my television set. It's ironic that the very same thing that got us into crisis is supposed to get us out.

Shawn said...

of course, if you did smash the TV, that would be a fiscal stimulus.

Norman said...

Surely Ben Bernanke knows this doesn't make sense. Is it just the political pressure? I mean, what's the logic here?

gabby said...

There are lots of things to be thankful for but i guess none of them is my debts. I don't want to sound bitter but it is something i can hardly be proud of. My family knows about all my debts, they really wanted me to help on this but then, all of them have their own life too, until they discuss me about the free credit repair
credit report score
Three Credit Report
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now i am almost free from debts =) hope you guys continue to be happy despite of the crisis we are having in this world.