Wikinvest Wire

Meredith Whitney is not optimistic

Tuesday, December 08, 2009

Uber-bank analyst Meredith Whitney thinks the U.S. government is "out of bullets" when it comes to helping out with credit and employment in its still ailing economy.

There's more here in a separate report at CNBC where we hear repeated the conventional wisdom that Americans being denied credit is one of the major factors behind the struggling U.S. economy. Whitney sees consumers as being "kicked out of the financial system" due to limited access to credit but, surely, some of them are really leaving voluntarily.

Of course our credit and consumption based economy doesn't function very well when credit stops flowing but it would probably be important to know to what extent it is lack of demand, rather than lack of supply, that is causing credit (and our economy) to drop.

As if completely clueless about the nature of the problems facing the U.S. economy, CNBC provides the following link at the bottom of the Whitney story:

Slideshow: 10 Tips to Get Out of Debt

That's not going to help the country "recover"...

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Anonymous said...

A debt based economy. It became this way because the central bank confiscated goods from consumers, and loaned the goods to spendthrifts. Stop printing, and let consumers buy stuff without so much debt. As the CPI goes down, consumers can buy more goods without debt.

Lending money to people who don't repay can't work, which banks have now belatedly figured out. Now the central bank is trying to convince people who do repay to borrow twice as much, to make up for the lack of lending to people who don't repay. People who do repay think about all the overtime they will have to work to repay, and say no thanks.

Just stop printing. Let the CPI prices go down. Consumers can then buy more without debt. There is no good reason for the central bank to confiscate goods, and then loan them back. That is a silly system that pointlessly lowers the standard of living.

We don't need a central bank to control spending via this absurd strategy. The free market works just fine all by itself.

Harel said...

Why don't they just follow the basic ideas of money. letting people borrow that should not borrow and then charging amounts that have no sense of reality is not going to work.

GDP, S&P, fundamentals, all are a bunch of words and ideas that confuse. If the financial industry was so smart why then did it fail?

The same people who were there and caused the problem are now trying to fix it... SERIOUSLY.

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